TaxTMI 
TaxTMI 
2025 (8) TMI 1158
X X X X Extracts X X X X
X X X X Extracts X X X X
.... using 99 trucks, through Indian Land Customs Station, Ghojadangha, West Bengal. Investigations revealed that no goods were exported or transported, and the licenses obtained were fraudulent. Some of these licenses obtained by the 'primary importer' were purchased, as permissible by the EXIM Policy, and used by M/s India Cements Ltd. and Seshasayee Paper and Boards Ltd., the transferee importers for import of goods, as permissible by the EXIM Policy. After investigation, a Show Cause Notice was issued to the appellants. After following due process, the Customs authorities confirmed the duty demanded along with interest. Penalties were also imposed under section 114A of the Customs Act, 1962, on the appellants. No redemption fines were imposed since the goods were not available for confiscation. Aggrieved by the order the appellants are before this Tribunal in appeal. 3. Shri S. Murugappan, Ld. Counsel appeared for India Cements Ltd. and Shri D. Santhana Krishna, Ld. Counsel appeared for Seshasayee Paper and Boards Ltd. Smt. Anandalakshmi Ganeshram, Ld. Authorized Representative appeared for the respondent. 3.1 Shri S. Murugappan, Ld. Counsel submitted on behalf of M/s India C....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... viii) No penalty can be imposed under section 114A of Customs Act 1962 ix) No interest is chargeable. A host of judgments were referred to in support of the above points. The Ld. Counsel hence prayed that the impugned order may be set aside. 3.3 The Ld. A.R. Smt. Anandalakshmi Ganeshram has reiterated the points given in the impugned order. She further referred to the following judgments in the departments favour; i) M/s Farida Prime Tannery Vs CC, Chennai [Final Order No. 1358/2005 dated: 28.09.2005], ii) Balaji Impex Vs Commissioner of Cus. (Seaport), Chennai [2019 (367) ELT 349 (Mad.) and; iii) M/s Munjal Showa Ltd Vs Commissioner of Customs and Central Excise (Delhi) [2022 (382) ELT 145 (SC), The Ld. AR prayed that the appeal may be rejected. 3.4 The rival parties have relied on a large number of judgements in their favour, on multiple issues, leading to a citation over load. Only a few of the decisions/ judgments were actually cited at the Bar. Even otherwise the Hon'ble Supreme Court in Rashmi Metaliks Ltd. Vs Kolkata Metropolitan Development Authority, [(2013) 10 SCC 95], held: "6. The sheer plethora....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hey would use indigenous components of the value of Rs. 2,32,69,200/- and that labour, packing and other charges would be to an extent of Rs. 2,07,83,447/-, whereas in actual facts they used components only to the extent of Rs. 8 lakhs and paid approximately only Rs. 5 lakhs towards labour charges. It is also held that neither M/s. Nicolian Brothers nor M/s. Titan Medical Systems Pvt. Ltd. had undertaken any manufacturing activity at all. The Hon'ble Court held : "13. As regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrepresented to the licensing authority, it was fairly admitted that there was no requirement, for issuance of a licence, that an applicant set out the quantity or value of the indigenous components which would be used in the manufacture. Undoubtedly, while applying for a licence, the appellants set out the components they would use and their value. However, the value was only an estimate. It is not the respondents' case that the components were not used. The only case is that the value which had been indicated in the application was very large whereas what was actually spent was a pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nised concept of law held that the effect of fraud is not to render the transaction void ab initio but renders it voidable at the instance of the party defrauded and transaction continues valid until the party defrauded has decided to avoid it. It found that in the said 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. They thus went on to hold that in the 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. 5.4 The issue has also been examined in detail by a Larger Bench of this Tribunal in Hico Enterprises Vs Commissioner of Customs, Mumbai [2005 (189) ELT 135 (Tri.- LB)]. 5.5 The above judgmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he definition of that term in Section 2(25) of the Act. Since the respondents' case is that the licences on the basis of which the goods were imported were forged licences, if the allegation of forgery is true, the goods must be held to have been brought into India contrary to a prohibition imposed by law as contemplated by Section 111(d) of the Act, and in that case such goods are liable to confiscation and the power to seize under Section 110(1) of the Act can be invoked by the Customs authorities and the goods, though cleared after payment of duty can be seized under Section 110(1) of the Act. The contention on behalf of the petitioner that the goods having been imported into India for home consumption would cease to be imported goods and the decision of the Customs authorities to release the goods upon payment of the duty imposed cannot be revised by any authority other than the Board in exercise of its power under Section 130(1) of the Act therefore fails and is rejected. *****. *****. ***** 36. The next contention of the learned counsel for the respondents was that the license used by the petitioner for the purpose of clearing the goods was not a genuine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s availed on such forged/fake DEPB licenses/Scrips. 9. In that view of the matter and on the principle that fraud vitiates everything and such forged/fake DEPB licenses/Scrips are void ab initio, it cannot be said that the Department acted illegally in invoking the extended period of limitation. In the facts and circumstances, the Department was absolutely justified in invoking the extended period of limitation." ( emphasis supplied ) 7. The facts of the issue in the above judgments are different from those discussed earlier, where the licence/scrip were obtained fraudulently by misstatement or misrepresentation. The judgments make it clear that in cases where licence/scrip were fake/forged, customs duty exemption would not be available either to the original licence holder or to the transferee importer. In such a case the principle that fraud vitiates everything, would be applicable and such forged/fake DEPB licenses/Scrips are void ab initio. 8. Revenue has relied on the judgment of the Hon'ble Madras High Court in the case of Balaji Impex (supra). The importer in that case was issued with a show cause notice proposing to deny the benefit of duty exemption....