TaxTMI 
TaxTMI 
2024 (11) TMI 141
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.... : 1770, 1765, 1775, 1771, 1773, 1774, 1772, 1776, 1766, 1767, 1768 & 1769 of 2016 For the Appellants : Mr.B.Hari Radhakrishnan For the Respondents : Mr.Rajnish Pathiyil (for R1) R2- Tribunal Case Nos. : 807, 783 & 808 of 2013 For the Appellants : Mr.Rajnish Pathiyil For the Respondents : Mr.S.Murugappan (for R1) R2- Tribunal Case Nos. : 89, 90, 85 & 88 of 2013 For the Appellants : Mr.B.Satish Sundar For the Respondents : Mr.Rajnish Pathiyil (for R1) Case Nos. : 816, 809, 789, 779, 822, 806, 813, 785, 821, 828 & 777 of 2013 For the Appellants : Mr.Rajnish Pathiyil For the Respondents : R1 - Person not found R2- Tribunal Case Nos. : 18 of 2013 For the Appellants : Mr.S.Murugappan For the Respondents : Mr.Rajnish Pathiyil Case Nos. : 826, 794, 795, 801, 802, 803, 791 & 827 of 2013 For the Appellants : Mr.Rajnish Pathiyil For the Respondents : : R1-Tapal not yet returned either served or unserved R2-Tribunal Case Nos. : 810, 784, 788, 823, 792, 829 & 778 of 2013 For the Appellants : Mr.Rajnish Pathiyil For the Respondents : R1-Incorrect address, R2 - Tribunal Case Nos. : 253 of 2013, 3123 of 2012 For the Appellants : Mr....
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....dulent events including the preparation of the fake DEPB scrips and TRAs. Penalty was also upheld. 5. In the case of the importers, the duty and interest was confirmed, and the penalties were set aside in full. In the case of the traders/brokers/ sub-brokers too, the duty and interest was upheld, and the penalty was reduced to 50%. As against the aforesaid conclusions, cross appeals have been filed by (i) Satish Mohan Agarwal challenging the confirmation of the adjudicatory order in full (ii) by the importers/licence holders/traders aggrieved by that portion of the order confirming part of the duty/penalty and (iii) by the Revenue contesting the deletion of duty, interest and part/whole of the penalty. 6. The substantial questions of law admitted for consideration are as follows: 'C.M.A.No.84 of 2013 (appeal filed by Nemichand Desarlla, who is a License Broker) 1. Is the 2nd respondent Tribunal right in confirming penalty of Rs. 75,000/- on the appellant in terms of Section 112(a) of the Customs Act, 1962, especially when it has been shown and established that the appellant had no prior knowledge of the forged/fabricated nature of the DEPB Licence/TRAs, whic....
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....lement application against the show cause notice and gets the case settled with grant of immunity from penalty, fine, confiscation etc.?' 'C.M.A.Nos.85 & 89 of 2013 (appeal filed by P.Suresh Kumar and Sohanlal, who are License Brokers) 1. Is the 2nd respondent Tribunal right in confirming penalty of Rs. 50,000/- on the appellant in terms of Section 112(a) of the Customs Act, 1962, especially when it has been shown and established that the appellant had no prior knowledge of the forged/fabricated nature of the DEPB Licence/TRAs, which was purchased in open market, being freely transferable, and more so when such licence/TRAs came in sealed cover? 2. Is the findings of the 2nd respondent Tribunal at paragraph 12 of the order impugned as against the appellant sustainable? In this connection, is the Tribunal correct in entering a finding that the appellant should have made enquiries with Customs Authorities and others as to the validity of the licence sustainable in light of the fact that the licence/TRAs were purchased and sold in the ordinary course of business and there was not even a reasonable belief entertained as to the nature of the said licence/TRAs ....
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....ributable to the appellant qua the liability of the goods imported for confiscation, especially when no order of confiscation has been passed by the 1st respondent and the penalty imposed had been set aside by the 2nd respondent Tribunal itself in the impugned order? 4.Is the order of the 2nd respondent Tribunal vitiated on account of the fact that it has taken into consideration irrelevant and extraneous material while leaving out germane and relevant ones as expatiated in the grounds? 5.Is the 2nd respondent Tribunal as a final fact finding body expected to sift, weigh and examine the evidences and material in detail before rendering findings and has such an exercise been done in the facts and circumstances of the present case? 'C.M.A.No.87 of 2013 (appeal filed by P.Suresh Kumar, who is a Licence Broker) 1.Is the 2nd respondent Tribunal right in confirming penalty of Rs. 75,000/- on the appellant in terms of Section 112(a) of the Customs Act, 1962, especially when it has been shown and established that the appellant had no prior knowledge of the forged/fabricated nature of the DEPB Licence/TRAs, which was purchased in open market, being freely....
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....d gets the case settled with grant of immunity from penalty, fine, confiscation etc.?' 'C.M.A.Nos.88 & 90 of 2013 (appeal filed by C.Mukesh Balar and P.Suresh Kumar, respectively, who are License Brokers) 1.Is the 2nd respondent Tribunal right in confirming penalty of Rs. 5,00,000/- on the appellant in terms of Section 112(a) of the Customs Act, 1962, especially when it has been shown and established that the appellant had no prior knowledge of the forged/fabricated nature of the DEPB Licence/TRAs, which was purchased in open market, being freely transferable, and more so when such licence/TRAs came in sealed cover? 2.Is the findings of the 2nd respondent Tribunal at paragraph 12 of the order impugned as against the appellant sustainable? In this connection, is the Tribunal correct in entering a finding that the appellant should have made enquiries with Customs Authorities and others as to the validity of the licence sustainable in light of the fact that the licence/TRAs were purchased and sold in the ordinary course of business and there was not even a reasonable belief entertained as to the nature of the said licence/TRAs at that point of time? 3.Is the....
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....ion? 3.Whether the newly introduced Section 28 AAA of Customs Act effective from April, 2012 will operate retrospectively to levy duty on the goods imported and duty paid under DEPB licences validity issued by DGFT during 2003 because there was no provision under the Customs Act to levy duty on such circumstances during the relevant period? 'C.M.A.No.253 of 2013 (appeal filed by M.K.Oil Corporation, who is a Trader/Importer) 1.When a demand has been made by invoking the extended period in terms of Section 28 of Customs act and when it is established that non-payment of proper duty is not on account of collusion or wilful misstatement or suppression of facts by the importer himself or his agent, then, is it still open to the respondents to recover the duties involved by holding that there is a fraud by others and that vitiates everything? 2.When a demand has been issued in terms of the proviso to Section 28 of Customs Act, 1962, can the respondents confirm the demands by going beyond the scope of Section 28 holding that when fraud is involved, duty in any case has to be recovered? 3.When certain officials of the State itself are involved ....
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.... of the Customs Act, 1962 which envisages imposition of penalty equal to the duty payable as determined under subsection (2) of Section 28, and the interest payable thereon under Section 28AB or five thousand rupees whichever is higher, allows any scope for discretion to the adjudication authority to determine the penalty to an amount other than that which is mandated under Section 112(a) of the Customs Act, 1962? C.M.A.Nos.1770, 1771, 1765, 1766, 1767, 1768, 1769, 1772, 1773, 1774, 1775 & 1776 of 2016 (appeals filed by the Satish Mohan Agarwal, who is the seller of DEPB scrips) (i) Whether the Officers of the Directorate of Revenue Intelligence have jurisdiction to issue demand/show cause notice, as they are not 'Proper Officers' as defined under Section 2 (34) of the Customs Act, 1962 and consequently whether the impugned order is liable to be set aside on this ground? (ii) Whether the Hon'ble Tribunal is right in upholding the imposition of penalty under Section 112 of the Customs Act, 1962 especially when Section 112 only empowers imposition of penalty on a person who acts or omits to do any act in relation to goods so as to render such goods liable t....
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....posed on appellant Shri Satish Mohan Agarwal in view of his pivotal role in the entire fraud beginning from making the fake, forged, false, fabricated and fraudulent DEPB scrips/TRAs. (3)Penalties against the following abettor traders/Brokers/Sub-brokers in appeal are reduced by half as indicated hereunder.' 7.We first address the appeals of the importers/traders/licence agents/brokers. In this regard, we need only refer to the order of the CESTAT that has set out the background of the case in extenso. 8.The object of the Duty Entitlement Pass Book Scheme is to neutralize the incidence of customs duty on the import content of the product exported under the Scheme. An exporter applies for credit against exports, of the specified rates of import of raw materials, components, parts, packing material etc. The credit is sought with the Director General of Foreign Trade at the specified port, being the port of export. 9.The policy provides for DEPB scrips to be issued against exports. The scrips are freely transferable. DEPB scrips may also be issued by the DGFT against imports from ports other than the ports of export under the TRA facility as per the terms and conditi....
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....ommissioner of Customs (Port, Chennai) (184 ELT 339), the substantial question of law related to duty liability in the context of fake DEPB scrips. It was contended by the assessee in that case that there was no collusion on the part of that assessee and hence no portion of the liability would accrue to it and that it would be entitled to the benefit of the scrips. 17.This contention was rejected, the Court holding that there is no question of deriving any credit from forged scrips. While one may defend his case stating that there was no collusion or fraud, the liability for duty, interest and other statutory consequences are unavoidable. 18.The conclusions of the CESTAT are based upon the results of investigation which have established conclusively that the DEPB scrips and TRAs were fabricated and forged. The parties were thus held to be liable on the ground of fraud which, rightly has been held to vitiate the transactions in full. 19.The orders of the lower authorities and the order of the Tribunal, the final fact finding authority establishes clearly that the documents were fake. The explanations tendered by the individual appellants have also found to have no credence ....
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....f 2013 Mr.Neemichand Jain 10 713 of 2012 785 of 2013 Mr.Sashi Prakash Lohia 11 714 of 2012 786 of 2013 M/s.Prashra Overseas Pvt. Ltd. 12 715 of 2012 787 of 2013 Mr.Pradeep Kabra 13 716 of 2012 788 of 2013 Mr.Neemichand Jain 14 717 of 2012 789 of 2013 Mr.Sashi Prakash Lohia 15 718 of 2012 790 of 2013 M/s.Symrise Pvt. Ltd. 16 720 of 2012 791 of 2013 Mr.Sashi Prakash Lohia 17 721 of 2012 792 of 2013 Mr.Neemichand Jain 18 722 of 2012 793 of 2013 M/s.Delphi - TVS Diesel Systems Ltd. 19 724 of 2012 794 of 2013 Mr.Sashi Prakash Lohia 20 725 of 2012 795 of 2013 Mr.Neemichand Jain 21 726 of 2012 796 of 2013 M/s.M.K.Oil Corporation 22 728 of 2012 797 of 2013 Mr.C.Mukesh Balar 23 729 of 2012 798 of 2013 Mr.Suresh Kumar Jain 24 730 of 2012 799 of 2013 Mr.Suresh 25 731 of 2012 800 of 2013 M/s.Saptagir Camphor Ltd. 26 732 of 2012 801 of 2013 Mr.Sashi Prakash Lohia 27 734 of 2012 802 of 2013 Mr.Sashi Prakash Lohia 28 735 of 2012 803 of 2013 Mr.Neemichand Jain 29 7....
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.... as the traders and brokers are concerned, we do not find the discretion exercised to be perverse. 25.However, as far as the importers are concerned, the Tribunal has deleted the penalty in full and we see no justification for the same. The discussion in regard to the liability of the importers has been set out at paragraph 10 and the Tribunal notes that the evidence gathered by Revenue unambiguously and succinctly proved that the TRAs used by the importer / appellants were fake, false, forged and fabricated. 26.The Tribunal stated at paragraph 10.3 as follows: 'When the importer appellants acquired DEPB scrips from market without being acquired from original acquirer, as an abundant caution, to avoid evil consequence of fraudulently obtained scrips, could have safeguarded their interest causing enquiry from JDGFT as to genuineness of the scrips. But that was not done. Such appellants failed to acquire title over the scrips but became beneficiary of ill got scrips. Notificational benefit was availed at the cost of public exchequer which is required to be surrendered for the undue gain made. Bona fides were not established by the appellants for which they submitte....
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....on made in the case of the company had been accepted, the benefit of that acceptance would enure even to the officers of the company so long as other stipulations under the scheme were satisfied. 31.The Department on the other hand, had contended that the scheme would be applicable qua a specific applicant alone. The Bench observed that, both views were probable views and concluded that the benefit must enure to the individual, in light of the settled position that if two views were possible, the one in favour of the assessee must be adopted. 32.Their conclusion was based on the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order where, if a declaration had been made in respect of certain tax arrears, and where in respect of the same arrear, a show cause notice had been issued to any other person, then the settlement in favour of the declarant would be deemed to be full and final in respect of other persons on whom show cause notices had been issued. Thus, an order providing a settlement in favour of the declarant will be deemed to be full and final in respect of the other persons as well. 33.Section 127-B of the Customs Act reads as follows: '127-B. Applica....
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.... present matters have not conformed to any aspect of the procedure as set out aforesaid. 38.Section 127-C sets out the procedure to be followed by the Settlement Commission on receipt of an application under Section 127-B in minute detail, such as admission, calling for report from the Commissioner in regard to the application, examination of records and report of the Commissioner and thereafter passing of an order. 39.Thus, in our considered view, there is a vast difference between the Kar Vivad Samadhan Scheme and the scheme of Settlement as envisaged under the Customs Act. At paragraph 14 of the judgement in Onkar S.Kanwar the Supreme Court states as follows: '14.We have heard the parties. In our view, a reading of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order shows that where a declaration had been made in respect of a tax arrear and where in respect of the same matter a show cause notice had also been issued to any other person, then the settlement in favour of the declarant has to be deemed to be full and final in respect of other persons on whom show cause notices had been issued. It is settled law that when an Appeal is pending there is no fin....
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....raph 24 of the opinion, the Third Member states as follows: '24.Although the distinction between the KVS Scheme and the Settlement mechanism is that, while the KVS Scheme provides for settlement of tax arrears of each individual person, including those of co-noticees, settlement mechanism provides for settlement of the entire case as a whole, the fact that only the person liable to pay duty can make an application for settlement does not mean that the case in so far as the remaining co-noticees can continue even after a final order of settlement has been passed in relation to the case.' 41.In Omkar S.Kanwar, the Supreme Court held that an application filed by the Company under the Kar Vivad Samadhan Scheme, would accrue to the benefit of the Director as well. In doing so, they specifically noticed that the object of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order is to extend the benefit of a settlement by the declarant to all other co-noticees. 42.Thus, any restriction placed on the benefit, as extending only to cases where the show cause notice is pending adjudication, would be unreasonable and discriminatory, as the Scheme did not contemplate such re....