TaxTMI 
TaxTMI 
2026 (1) TMI 1242
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....original license issued to M/s. Kuberappa & Sons were subsequently cancelled by DGFT ab initio as they were obtained fraudulently. Hence it appeared to the department that the TRAs procured by the appellants herein had also been rendered invalid due to the above cancellation. After due process of law, customs duty exemptions for their imported goods were denied, duties and interest ordered for recovery, and penalties imposed under relevant sections of the Customs Act, 1962. Their appeals to the Commissioner (Appeals) were rejected, leading to these appeals before the Tribunal. 3. The learned Advocate Shri S. Murugappan appeared for the appellant and Ld. Authorized Representative Shri Anoop Singh appeared for the respondent. 3.1 Shri S. Murugappan, learned counsel for the appellants, submitted that investigations conducted nearly three years after the import and clearance of the impugned goods, indicated a misdeclaration by the exporter, resulting in the DGFT authorities reportedly cancelling the licences originally issued to Shree Kuberappa & Sons in 2010, after they had been utilised by the appellant. The appellants were not party to these proceedings and remained uninformed....
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....e set aside with consequential relief and justice rendered. 3.2 Shri Anoop Singh, the Ld. Authorized Representative for the respondent submitted that: A) The key issue is that said licenses have been cancelled ab initio by the competent authority i.e. DGFT under FTDR Act and Rules made thereunder. Hence the imports made was irregular and the impugned order merits to be upheld. He relied upon the following case laws i. Friends Trading Company Vs UOI - 2011 (267) ELT 33 (P & H) (Para 10.6 of O1A/Pg 186) ii. ICI India Ltd. Vs Commissioner of Customs (Cal): 2005 (184) ELT 339 (Cal) which was also upheld by the Hon'ble Supreme Court in 2005 (187) ELT A31 (SC) (Para 10.5 of OIA/Pg 186) iii. Commissioner of Customs [Preventive) Vs Aafloat Textiles (1) Pvt. Ltd.: 2009 (235) ELT 587 (SC) (Pg 184) iv. M/S. MUNJAL SHOWA LTD. Vs COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE (DELHI-IV) AND M/S. FRIENDS TRADING CO Vs UNION OF INDIA AND ORS 2022 - (9) TMI 1076 SUPREME COURT. v. M/S BALAJI IMPEX Vs THE COMMISSIONER OF CUSTOMS (SEAPORT), CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL - 2018 (9) TMI 330-MADRAS HIGH COURT vi. SHRE....
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....tled 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 paltry amount. To be noted that the licensing Authority having taken no steps to cancel the licence. The licensing authority have not claimed that there was any misrepresentation. Once an advance licence was issued and not questioned by the licensing authority, the customs authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf. 5.2 Similarly, in East India Commercial Co. Ltd. Vs The Collector of Cus....
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....llation 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 judgments makes it clear that in a case where the licence/scrip was were obtained fraudulently by misstatement or misrepresentation by the original licence holder and later sold to innocent transferee importers, the concept of 'fraud vitiates everything' is not applicable. Further if the licence was not cancelled by the appropriate authority at the time of the import of the goods, the said licence should be honoured by the Custom authorities. 5. We find that para 5.5 of the order in India Cements Ltd. (supra) summ....