TaxTMI 
TaxTMI 
2026 (8) TMI 1154
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.... Station, West Bengal. The investigation revealed that a syndicate headed by Shri Paresh Daftary and Shri Jyoti Biswas fabricated export documents in the names of several exporters for obtaining export incentive licences under the DEPB, DFIA and VKGUY Schemes. Investigation established that exporters including M/s Royal International, M/s Aum Silk Mills, M/s Balaji International, M/s Yashraj International and M/s Wardhman International obtained DEPB/DFIA licences from DGFT on the basis of forged shipping bills and fabricated export documents even though no exports had actually taken place through Ghojadanga Land Customs Station [LCS] Verification conducted by Customs authorities confirmed that the shipping bills relied upon for obtaining the licences had never been filed before the Customs authorities and also being non EDI port, TRAs were required to be issued for utilization at other port. Investigations established that no TRAs had been issued by the LCS for utilization of these Licenses. These fraudulently obtained transferable licences were thereafter sold through brokers to various importers across the country for utilisation towards payment of customs duty on imported goods.....
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....nsel contended that the Show Cause Notice as well as the impugned order did not record any finding that the Appellant had participated in fabrication of export documents or knew the exporters. Further, there was no evidence that the Appellant had dealt with Paresh Daftary, Jyoti Biswas or any alleged syndicate or had knowledge that exports were fictitious. 3.2 Learned counsel further stated that the appellant was a bona fide purchaser for valuable consideration. He stated that the DFIA licences were freely transferable under the Foreign Trade Policy and the Appellant had purchased the licences through normal commercial channels for valuable consideration. Also, the payments were made through banking channels to the exporter i.e. Royal International. Learned counsel submitted that in the present case, the Revenue had sought to impose an impossible obligation upon every purchaser of transferable licences to investigate the entire export transaction undertaken by another person. He stated that neither the Customs Act nor the Foreign Trade Policy had cast any such obligation upon a transferee purchaser. 3.3 He also contended that DFIA licences were issued only after scrutiny by t....
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....presentative further submitted that the Tribunal vide Final Order Nos. 51065-51067/2025 dated 16.07.2025 had dismissed all the appeals and upheld the orders confirming duty, interest and penalty. 4.1 Learned authorized representative contended that exactly the same defence as taken by the appellant M/s Icon Fibers, had been taken by M/s. Freudenberg Nonwoven India Pvt. Ltd., who had pleaded that the DFIA licences were purchased from M/s P. Kishanchand Textiles Ltd. and therefore they were bona fide purchasers. However, Learned Authorised Representative contended that no verification was made from DGFT; no verification was made from Customs; no enquiry was made regarding the genuineness of exports; no enquiry was made regarding Royal International; no due diligence whatsoever was exercised. Accordingly, the ratio laid down in Freudenberg squarely defeats the defence raised by the appellant. He prayed that the appeal may be dismissed. 5. We have heard the learned counsel for the appellant and the learned authorized representative for the Department. The issue before us is whether the appellant is liable to duty/penalty on the fraudulent DFIA licenses utilized by them. At the ou....
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....rable from the license brokers. After the purchase of license, the importers did not apply for the issue to Telegraphic Release Advice (TRA) from the port of Registration (POR) as was required to be obtained the TRAs from the brokers. Not only that, they also failed to ascertain the veracity of such TRAs from the Port of Registration. Thus, the-due diligent that was required to be exhibited by the importer was not carried out." (emphasis supplied) 7. It clearly transpires from the aforesaid decision of the Tribunal in Mereceds Benz that though a contention had been raised that the appellants were not aware that the TRAs were manipulated or forged, but this contention was not accepted and it was held that since the appellants had not applied for issue of the TRAs from the port of registration as was required to be done and they also failed to ascertain the veracity of such TRAs from the port of registration, due diligence that was required was not exhibited nor carried out. The appeals were accordingly, dismissed. 8. In view of the aforesaid decision of the Tribunal in Mercedes Benz, no relief can be granted to the appellant." 6. We now examine the fact....
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....aid DFIA License. We further note that the Tribunal had specifically held that importers had completely relied upon broker's procurement and utilisation of licences and that such conduct cannot amount to due diligence. In addition, the Tribunal observed that the importers simply accepted the documents supplied by brokers without independently verifying their authenticity and therefore they cannot avoid liability. In the instant case, we note that the appellant had obtained the said DFIA license from intermediaries. The licences originated from Royal International, and the licences themselves were products of fake exports. The appellant had never verified the genuineness of the licences, which cannot be accepted. 6.5 We also find that the Tribunal held that the said controversy stood concluded by the earlier Larger Bench/Coordinate Bench decision in Mercedes Benz India Pvt. Ltd, which held that the importers purchasing transferable licences cannot escape liability, verification from DGFT website alone is insufficient, importers must verify the TRA and documents, absence of due diligence renders them liable for duty, interest and penalty. The relevant paras are reproduce hereinaft....