TaxTMI 
TaxTMI 
2023 (7) TMI 1481
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....12231 in the name of Shri Ram Narayan Kedia with office at Room No. 727, Marshall House, 7th Floor, 33/1, N S Road, Kolkata-700001 was in the process of shipping four export consignments to Malaysia under Duty Free Import Authorization scheme (DFIA) through Haldia dock by resorting to misdeclaration of description, quantity and value of goods. Intelligence further suggested that Shri Alok Kedia, son of Shri Ram Narayan Kedia was the key person involved in the fraudulent export activities. 2.2 Acting on the aforesaid intelligence, discreet surveillance was maintained in and around haldia dock and on 30th December, 2010, four consignments in 20 containers attempted to be exported to Malaysia by Maa jawala Enterprises under the cover of shipping bill nos. E-189, E191 & E-192, all dated 27th December, 2010 were identified at Haldia dock complex. Description of the goods declared in the shipping bills was "Processed Betel Nut (Supari) Powder and declared quantity was collectively 400MT in 8000 bags. The overseas buyer was Ned Marine Logistic, NBR 1 Jalanzamrud, Taman Gembira-41200, Kalang, Selkngore, D.E. Malaysia and declared FOB value was collectively Rs. 2,06,79,250/-. The aforesa....
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....1/573 dated 13.1.2011 forwarded copies of the 14DFIA license. Subsequently, by another letter No. 18/98/2010-2011 ECA/CAL/Part-II/2636 dated 1.3.2011 they forwarded copies of VKUY licenses. The DGFT authority also forwarded copies of the show cause notices issued to 'Maa Jawala Enterprises' for invoking provisions of rule 7 (1) (K) of the Foreign Trade (Regulation) Act, 1993 and also to initiate action under Section 9 of the Foreign Trade (Development and Regulation)Act vide letter No. 18/98/2010-2011 ECA/CAL/part-II/2728 dated 17.3.2011. Pursuant to issue of the said show cause notices also defaulter order was issued by the Deputy Director General of Foreign Trade, Kolkata and was communicated vide letter No. 18/98/2010-2011/ECA/CAL/284 dated 7.7.2011. 2.5 During further investigation, it was revealed during investigation that Maa Jawala Enterprises had obtained 18 licenses under DFIA against fraudulent exports of betel nut powder out powder out of which 13 were made transferable and sold to various persons namely (i) M/s Shyam Trader, (ii) M/s Baba Traders, (iii) M/s Wadhwani Commodities trading Pvt. Ltd., (iv) Perfect Cardamom & Spices Manufacturing Co. Pvt. Ltd., and (v) Baj....
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....censes, were effected by collusion and willful mis-statement to defraud the Government revenue, for which, extended period of limitation under Section 28 (4) of the Customs Act, 1962, is invokable and after issuance of show-cause notice, the impugned order was passed on the following parts of the impugned order: M/s Shree Shyam Trader (i) The Ld. of Commissioner confirmed the demand of duty of Rs. 83,34,346.35 that is foregone on account of utilizing DFIA license No. 0210134793 dated 03.12.2009 and 0210149322 dated 13.10.2010 for the import of betel nuts vide Bill of Entry No. 772679 dated 02.08.2010 and warehouse Bill of Entry No. 834582 dated 10.09.2010 (Ex-bond Bill of Entry No. 633092 dated 29.12.2010) through Nhava Sheva Port vide Notification No. 98/2009-Cus dated 11.09.2009 and to be paid by them under erstwhile proviso to Section 28(1) and now under Section 28(4) of the Customs Act, 1962 alongwith interest at applicable rate. (ii) He also ordered the enforcement of Bank Guarantee No. 00281GPER00211 dated 23.03.2011 for Rs. 13,95,517/- issued by Bank of Baroda, Girish Park Branch, 219 C.R. Avenue, Kolkata - 6 and furnished by Shree Shyam Trader for provi....
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....xbond Bill of Entry No. 631006 dated 28.12.2010), 848556 dated 18.09.2010 (Ex-bond Bill of Entry No. 631009 dated 28.12.2010) and 867074 dated 28.09.2010 (Ex-bond Bill of Entry No. 631010 dated 28.12.2010) towards adjustment of the duty so payable on the said import consignments. (iii) He ordered confiscation of the betel nuts imported through Nhava Sheva Port under the cover of warehouse Bills of Entry No. 867117 dated 28.09.2010 (Ex-bond Bill of Entry No. 631006 dated 28.12.2010), 848556 dated 18.09.2010 (Ex-bond Bill of Entry No. 631009 dated 28.12.2010) and 867074 dated 28.09.2010 (Ex-bond Bill of Entry No. 631010 dated 28.12.2010) assessable value being collectively totaling Rs. 1,15,03,483,58 utilizing DFIA license No. 0210139171, 0210139153 and 0210139155 all dated 11.03.2010 and 0210149322 dated 13.10.2010 and provisionally released to the importer under Section 111(o) of the Customs Act, 1962. However, I offer the option of redemption in lieu of confiscation on payment of fine of Rs. 23,00,000/- under Section 125 of the Customs Act, 1962. (iv) He imposed a token penalty of Rs. 50,000/- on Shri Soumen Das, Notices No. 6 under Section 112(a) of the Customs ....
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.... Customs Act, 1962. M/s Perfect Cardamom & Spices Marketing Co. Pvt. Ltd., (i) The ld.Commissioner confirmed the demand of duty collectively totaling Rs. 1,27,53,018.78 foregone on account of import of betel nuts vide Bills of Entry No. 632768 dated 12.05.2010, 622922 dated 22.12.2010, 606580 dated 14.12.2010, 622922 dated 22.12.2010 and 924086 dated 28.10.2010 through Nhava Sheva port by M/s Perfect Cardamom & Spices Marketing Co. Pvt. Ltd., vide Notification No. 98/2009-Cus dated 11.09.2008 and utilizing DFIA licenses No. 0210117811 dated 22.09.2008, 0210122723 and 0210122724 both dated 30.01.2009 and to be paid by them under erstwhile proviso to section 28(1) and now under Section 28(4) of the Customs Act, 1962 along with interest at applicable rate. (ii) He ordered confiscation of the betel nuts imported vide Bills of Entry No. 632768 dated 12.05.2010, 622922 dated 22.12.2010, 606580 dated 14.12.2010, 622922 dated 22.12.2010 and 924086 dated 28.10.2010 through Nhava Sheva port, assessable value being collectively Rs. 1,14,79,147.57 utilizing DFIA licenses No. 0210117811 dated 22.09.2008, 02101122723 and 0210122724 both dated 30.01.2009 under Section 111(o) ....
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.... same after due verification. 6. The appellants are not in any manner related to Maa Jwala Enterprises. Payment was made by the Appellants to Maa Jwala Enterprises for these DFIA licenses through proper banking channels. 7. The DFIA licenses under dispute were valid at the time of clearance and were already utilized. 8. The ld.Counsel, further submitted that at the time of purchase of DFIA licenses, it was revealed that the licenses were fraudulently obtained by mis-representation of facts. It was only revealed during DRI investigation. All the licenses have been purchased by the appellants against the consideration. 9. It is submitted that the value of DFIA licenses for transfer is not based on the amount of duty saved. The premium of any DFIA license is determined basis the prevailing market price and cannot be linked to the duty forgone. The DFIA license under dispute are for import of Betel Nuts (Split), which is prone to smuggling from Nepal and Bangladesh, due to which the premium on DFIA licenses covering duty free import of betelnuts is low. 10 It is further submitted that the license obtained by mis-declaration/mis-representation is only voidable and not voi....
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....one such license as an example is extracted below: 16. From the above, it revealed that at the time of importation by the appellants, these licenses were valid in law until and unless the same are cancelled by the Licensing Authority. The appellants being transferees of the above cited licenses, are bonafide purchaser of the licenses in question and imported the goods and cleared thereof. Therefore, subsequent suspension or cancellation of the license cannot affect the imports made prior to such suspension and cancellation. 17. In these regard, the appellant has relied upon the decision of the Hon'ble Supreme Court in the case of East India Commercial Company Ltd vs CC, 1983 (13) ELT 1342 (SC), wherein the Hon'ble Apex Court has held as under: "35. Nor is there any legal basis for the contention that licence obtained by misrepresentation makes the licence non est, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under Section 3 of the Act so as to bring the case within Clause. (8) of Section 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a lice....
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.... (113) E.L.T. 358 (S.C.). The same is the view taken by the Apex Court in Sampat Raj Durgar case (cited supra). Imports against replenishment Licences were permitted duty free if the importers produced an import Replenishment Licence the goods or the materials were imported into India. In the instant cases when the goods were imported into India, and even when the Bills of Entry ware filed, neither were the licences suspended nor the same cancelled. In all these cases, Bills of Entry were filed by the petitioners well before the suspension and/or cancellation of the licences in question, thus the imports were made under valid licences, the goods could not be subjected to levy of customs duty in the peculiar facts and circumstances of the cases in hand. In the circumstances, we hold that in all cases at hand, the goods were imported, under valid licences. The goods imported were neither prohibited nor restricted by or under the Customs Act, as such, it was not open for the Customs Authorities to withhold clearance thereof. 17.4 Further in the case of Pee Jay International Vs. Commissioner of Customs, 2016 (340) ELT 625 (P & H), the Hon'ble High has dealt this issue and o....
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....ppeal was meritless. The matter was referred to be considered by Third Member on difference of opinion. After the matter was considered by Third Member, the appeal filed by the appellant as well as the department were rejected. The department was raising the issue regarding levy of penalty, whereas the appellant was concerned about the demand of duty, as penalty had been set aside. 10. In Vallabh Design Products' case, (supra), this court dismissed the appeal filed by the revenue involving identical issue finding that the importer therein was not a party to the fraud and there was categoric finding that he had purchased DEPB from the open market in bona fide belief of its being genuine. Reliance was placed upon an earlier judgment of this Court in Leader Valves Ltd.'s case (supra). There also, similar findings were recorded. 11. The same view was later followed in Fertichem India and M/s. Deebee Marketing Pvt. Ltd.'s cases (supra). 12. The judgment of this Court in Munjal Showa Limited's case (supra) is distinguishable on facts as in that case, transfer release advices issued against DEPB scrip were forged and even DEPBs were also forged. There was no fin....
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....dulently or is a party to the collusion or connivance with the offender. Genuineness of the certificate can be examined by the authority. In case of falsity, action should be taken against the selling dealers, except in the case of plea of fraud, collusion or connivance between the parties. Relevant paras thereof are extracted below: "25. In legal jurisprudence, the liability can be fastened on a person who either acts fraudulently or has been a party to the collusion or connivance with the offender. However, law nowhere envisages to impose any penalty either directly or vicariously where a person is not connected with any such event or an act. Law cannot envisage an almost impossible eventuality. The onus upon the assessee gets discharged on production of Form VAT C-4 which is required to be genuine and not thereafter to substantiate its truthfulness by running from pillar to post to collect the material for its authenticity. In the absence of any mala fide intention, connivance or wrongful association of the assessee with the selling dealer or any dealer earlier thereto, no liability can be imposed on the principle of vicarious liability. Law cannot put such onerous resp....
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....Vs. Jt.Director General of Foreign Trade, Ludhiana, 2016 (342) ELT 176 (P & H), wherein the Hon'ble High Court again examined the issue and observed as under: "27. It is well settled that no action taken under a statute can have retrospective effect in the absence of a specific provision in the statute conferring such power. 28. In M.D. University v. Jahan Singh, (2007) 5 SCC 77, Hon'ble the Supreme Court held as under: "19. The Act does not confer any power on the Executive Council to make a regulation with retrospective effect. The purported regulations, thus, could not have been given retrospective effect or retroactive operation as it is now well settled that in absence of any provision contained in the legislative Act, a delegatee cannot make a delegated legislation with retrospective effect. 20. In Mahabir Vegetable Oils (P) Ltd. v. State of Haryana this Court stated: (SCC p. 633, paras 41-43) "41. We may at this stage consider the effect of omission of the said note. It is beyond any cavil that a subordinate legislation can be given a retrospective effect and retroactive operation, if any power in this behalf is contained in the m....
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....e jurisdiction to retrospectively amend an import licence? (ii) Can the respondents amend an import licence retrospectively or otherwise without the grant of any opportunity to the importer? (iii) Is the action of the respondents in initiating proceedings for the confiscation of the goods legal and, thus, tenable? Regarding (i): With the object of providing for the development and regulation of foreign trade, the Parliament has enacted the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the Act). The primary object of this Act is to facilitate "imports into and augment export from India......". Section 9 of the Act inter alia provides for the issue of suspension and cancellation of licence. In Clause (2) "the Director General or an officer authorised by him" is competent to "grant or renew or refuse to grant or renew, a licence to import and export such class or classes of goods, as may be prescribed, after recording in writing his reasons for such refusal." A licence granted under Section 9 has to be in a prescribed form. It is valid for the period which may be specified therein. Terms, conditions and restriction....
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.... the aforesaid question, there is no necessity to opine on the first and third contentions of the Ld. Counsel for the petitioner. 36. Thus, this writ petition is allowed. The order dated 30-112004 (Annexure P-3) whereby the DEPB No. 3010005384, dated 25-8-2000 for Rs. 9,30,514/- was cancelled and a penalty of Rs. 2,00,000/- was imposed on the petitioner and the order dated 72-2006 (Annexure P-6) whereby the appeal of the petitioner against that order has been dismissed, are quashed." 17.6. We further take note of the fact that in the case of M/s Neev Trading Company and M/s Vids Overseas Vs. Commissioner of Customs, ICD, Patparganj, Delhi reported in 2022 (3) TMI 1005-CESTAT, New Delhi, wherein this Tribunal has observed as under: "28. Having considered the rival contentions, we find that the issue involved in the present case is regarding the utilisation of DFIA license Nos. 0310606860 dated 20.12.2010 and 0310606862 dated 20.12.2010 in the case of Neev Trading Co., and Licences Nos.0310603943 dated 01.12.2010 and No. 0310610819 dated 13.01.2011 in the case of Vids Overseas, which were issued by the Director General Foreign Trade (DGFT) for an amount (as speci....
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....cating Authority have erred in not appreciating that these appellants were bonafide purchaser of DIFA licences, which were validly issued and made transferable by DGFT, as well as registered by the Customs Department on their website, on the date of purchase and utilisation by these appellants. Further, admittedly, the licenses in question have been cancelled much thereafter in the month of May, 2012 by the DGFT. 32. We also find in case of Commissioner of Customs vs. Leader Valves Limited reported in 2007 (218) ELT 349 ( P & H), the similar issue came for consideration in respect of DEPB license purchased from open market under the bonafide belief of being genuine. The para 9 of the judgment, which is relevant, is as under; "9. After hearing learned Counsel for the parties, we are of the considered view that this appeal is devoid of any merit. The assessee-respondent admittedly is not a party to the fraud. There are categorical finding that they had purchased DEPB from the open market in the bona fide belief of its being genuine. They had paid full price and accordingly have availed the benefit. Merely because at a later stage, the DEPB has been found to be fabri....
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....w Cause Notice has been issued in this case on 02/12/2016, that is after the lapse of normal period of raising demand under the provisions of Section 28 of the Customs Act 1962. Therefore the demand is also time barred." 33. Accordingly, we set aside the demand of duty and penalty on these appellants. We also hold that in the facts and circumstances, the extended period of limitation is not invokable, as admittedly, there is no case of fraud, mis-statement or contumacious conduct on the part of these appellants." 18. The Revenue has relied on the decision in the case of Munjal Showa Ltd. (supra), which is distinguishable on facts as in that case, during verification, it was found that the DEPB licenses on the basis of which TRAs were issued were forged and it was also found that these DEPB Scrips were forged. But in the case in hand, the DFIA License was genuine and the same were made transferrable by the DGFT and were valid at the time of import effected by the appellants. Therefore, the decision of the case Munjal Showa Ltd. (supra) cannot be equated in this case. 18.1 Further in the case of Friends Trading Company (supra), the scrips obtained by the appellants, we....
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....t, the license is valid. 21. In that circumstances, we hold that as the licenses in question were valid against which, the appellant has imported duty free goods, the duty cannot be demanded from the appellants being bonafide purchasers of DFIA licenses. 22. Therefore, whole of the demands against the appellants are set aside. Consequently, no penalties were imposable on the appellants. 23. In view of this, the appeals filed by the appellants are allowed with consequential reliefs, if any. (Pronounced in the open court on 04.07.2023) ============= Document 1 Obwet Ju Director Gel of 4. ESPLANADE ZARURALE LICENCE AMENONT Amandment Sheet No -- Attached to Liceuse 10210134795 Pile No 02/21/076/00207/AM10/Dated: 03.12.2009 Issued By Office of it. Diestor General of Foreign Trade KOLKATA Issued To: RAM NARAVAN KEDIA "MAA JAWALA ENTERPRISES 33/1.N.S. ROAD,7TH FLOOR, B.NO.717, KOLKATA,W.B 7000011 FOB has bem changed from Rs 800,800.00 to 5284,572.00 POB has been changed from USS 114600.00 to USS 134461:17 POB Value in USS has been changed from 114,600.00 to 114,461.17 CIF has been changed trim Ra. 4,584,000.00 to Rs. 4403....