Custom, Excise & Service Tax Tribunal
Dcw Ltd vs Commissioner Of Customs on 11 June, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal No.C/85/2007
[Arising out of Order-in-Original No.258/2006 dt.30.11.2006 passed by the Commissioner of Customs, Tuticorin]
DCW Ltd. Appellant
Versus
Commissioner of Customs,
Tuticorin Respondent
Appearance:
Shri Karthik Sundaram, Advocate For the Appellant Ms. Indira Sisupal, AC (AR) For the Respondent CORAM : Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member Date of Hearing/Decision : 11.6.2015 FINAL ORDER No.41473/2015 Per R. Periasami
The appellant filed appeal against Commissioner's order dt. 30.11.2006. The present appeal is in fourth of round of litigation before this Tribunal.
2. The brief facts of the case are that appellants are manufacturers of caustic soda and imported Vinyl Chloride Monomer (VCM) in April 2004 under 3 Bills of Entry and cleared the same under 9 DEPB licences at NIL rate vide Notification No.45/2002-Cus. dt. 22.4.2002. The details of DEPB license numbers, licence holders amount, Bill of Entry wise etc. as tabulated in page-2 of the OIO (page 47 of paper book) is reproduced below as under:-
S.No. TRA No.& Date DEPB Licence No. & Date Name of the Licence Holder Credit Amount of License (Rs.) Bill of Entry No. & Date where credit used
1.
043/04-05 dt. 8.4.2004 0610006778/5/06/00 dt. 27.1.2004 Lex Boots, Kanpur 1700846 337281 dated 15.4.2004
2. 042/04-05 dt. 8.4.2004 0610006696/2/06/00 dt. 12.1.2004 Mirza Tanners Ltd.,Kanpur 1039593
3. 044/04-05 dt. 8.4.2004 0610006862/3/06/00 dt. 12.2.2004 Talat Leather Pvt. Ltd., Kanpur 1059160
4. 062/04-05 dt. 12.4.2004 0610006586/2/06/00 dt. 22.12.2003 Mirza Tanners Ltd., Kanpur 984807 337399 dated 16.4.2004
5. 063/04-05 dt. 12.4.2004 0610006588/2/06/00 dt. 22.12.2003 Mirza Tanners Ltd., Kanpur 984760
6. 064/04-05 dt. 12.4.2004 0610006692/2/06/00 dt. 12.1.2004 Mirza Tanners Ltd., Kanpur 1019690
7. 106/04-05 dt. 26.4.2004 0610006793/2/06/00 dt. 28.1.2004 Mirza Tanners Ltd., Kanpur 994332 338073 Dated 30.04.2004
8. 107/04-05 dt. 26.4.2004 0610006792/2/06/00 dt. 28.1.2004 Mirza Tanners Ltd., Kanpur 1020780
9. 108/04-05 dt. 26.4.2004 0610006694/2/06/00 dt. 12.1.2004 Euro Footwear Ltd., Kanpur 725623 The above DEPB licences were purchased from the open market through brokers M/s.R.Somanathan & Co. The results of investigation revealed that all the 9 DEPB licences and the corresponding TRAs were forged and obtained and the benefit of notification has been fraudulently availed by the appellant. The goods were cleared under fake licenses and liable for confiscation. Accordingly, SCN dt. 24.12.2004 was issued proposing confiscation of the goods under Section 111 (m) & (o) of the Customs Act and imposed penalties on the appellant and others under Section 112 (a) /114A of the Act and also demanded customs duty. Commissioner of Customs, Tuticorin in his order-in-original No.26/2005 dt. 3.5.2005 confirmed the demand and imposed penalty on the appellant and also other co-noticees. The appellant had appealed before this Tribunal and vide Final Order No.1396/2005 dt. 28.9.2005 this Tribunal set aside the order and remanded to the adjudicating authority with a direction to give reasonable opportunity to the party for cross examination of the witnesses.
3. The adjudicating authority passed the de novo adjudication order dt. 30.11.2006 which is impugned in this appeal held that all the DEPB licences produced by the appellants for clearance of the goods are fake and confirmed the duty of Rs.95,29,591/- under Section 28 (1) of the Customs Act along with interest and imposed penalty of Rs.50,000/- on the appellant under Section 112(a).
4. On second round of appeal, this Tribunal set aside the order and the Tribunal vide Final Order No.270/2009 dt. 16.3.2009 allowed the appeal on the ground of limitation. The Tribunal held that appellant had no knowledge or reason to believe that the licences purchased from the broker were fake/forged. The Tribunal while allowing the said appeal, relied on various High Courts and Tribunal decisions including the Tribunal's decision in the case of Aafloat Textiles (India) Pvt. Ltd. Vs CC 2006 (201) ELT 39 (Tri.-Mumbai) and Tribunal's Larger Bench decision in Hico Enterprises Vs CC Mumbai 2005 (189) ELT 135 (Tri.-LB). The Revenue filed ROM application in May 2009 against this order and the Tribunal vide MISC Order No.25/2010 dt. 11.1.2010 held that the case law relied upon by this Bench in the case of Aafloat Textiles (I) P. Ltd. (supra) was overruled by the Hon'ble Supreme Court in the case of CC Vs Aafloat Textiles (I) P.Ltd. reported in 2009 (235) ELT 587 (SC) and allowed the ROM. The said appeal was re-fixed for fresh hearing. Hence the present proceedings. The appeal was heard on 4.6.2015, 5.6.2015 and 11.6.2015.
5. Ld. Advocate appearing on behalf of the appellant submitted written synopsis dt. 1.4.2015 and reiterated the submissions and the chronology of events relating to purchase of DEPB licences from their broker M/s.R.Somanathan & Co. He submits that they are importing raw materials since 1998 and they used DEPB licences for payment of customs duty. All these DEPB licences were purchased in the open market through various brokers including M/s.R. Somanathan & Co. They are using the services of their broker M/s.R. Somanathan & Co. from 2003 onwards. The department has alleged that 9 DEPB licences as tabulated above were purchased through broker M/s.R. Somanathan & Co. and most of the transactions were through telephones regarding the availability of the licence and commission etc. Once the licence amounts were negotiated they requested the broker for obtaining the TRAs from the parent Custom House. They made payments on receipt of the licences/TRAs to the licence holders and to the broker through cheques. The entire transaction was to be done within a period of two weeks from the date of initiation by the broker for procurement of licence. They used to purchase licences from open market at a discount rate of 94% to 98% whereas in the present case they purchased the licences including brokerage paid at a rate between 94.5% and 95.25%. He submits that all the licences were originated from Kanpur. The DGFT Kanpur had issued the said licences and the Commissioner of Customs, Kanpur issued the TRAs and the same was received by Customs, Tuticorin. They were made aware of the forged licences vide Asst. Commissioner (SIIB) letter dt. 14.9.2004 (Ref.Page No.307 of the PB). Immediately on receipt of the letter dt. 14.9.04, they filed FIR against all the owners and brokers. The copy of FIR is available at pages 308 to 315 of the paper book. He further submits that they have taken all the precautions and initiated criminal proceedings. He further submits that they have been dealing with the broker M/s.R. Somanathan & Co. since 2003 and regularly purchasing licences and clearing the goods by using the DEPB licences and therefore there was no doubt against the broker. The adjudicating authority in his de novo order again confirmed the Customs duty.
5.1 He relied Tribunal's order dt.28.9.2005 wherein the Tribunal has categorically directed to allow cross-examination of the persons by the appellant. He submits that they specifically requested for cross-examination. He refers to para 4.02 and 4.03 of the order wherein the adjudicating authority expressed his inability and the appellants had agreed to waive cross-examination and to hear the case on merits.
5.2 Appellant also relied on Tribunal's final order dt. 16.3.2009 wherein the Tribunal discussed the issue in detail and allowed their appeal on limitation and clearly held that there was no collusion of imported and the extended period of limitation is not invocable and subsequently recalled the final order based on the apex court's decision in the case of CC Vs Aafloat Textiles (I) P. Ltd.(supra).
5.3 He further submitted that Hon'ble Supreme Court in the case of CC (Imports), Bombay Vs Hico Enterprises - 2008 (228) ELT 161 (SC) upheld the Larger Bench decision of the Tribunal [2005 (189) ELT 135 (Tri.-LB)]. He further submits that Supreme Court's order in the case of Hico Enterprises was passed by Three Judges Bench whereas the Apex Court's order in the case of Aafloat Textiles comprised of Two Judges Bench. He submits that there are two Apex court orders on the identical issue. He submits that Judgement rendered by Three Judges Bench will prevail over Two Judges Bench. In this regard, he relied on State of U.P. Vs Ram Chandra Trivedi (1976) 4 SCC 52.
5.4 He submits that the period involved is April 2004 whereas the SCN was issued in December 2004 and during the relevant period, SCN ought to have been issued within 6 months. As there was no suppression of facts longer period of limitation is not invocable. He submits that adjudicating authority has held that appellant's relation with M/s.R. Somanthan & Co. was of agents/employee relation and he submits that broker is not an employee of their company. As it is a pure transaction between licence broker and the company on principle to principle basis there is no fraud or forgery and it can be established only after cross-examining of the persons concerned. In this regard, he relied on Tribunal's decision in the case of BANCO Aluminium Ltd. Vs CCE Vadodara - 2005 (181) ELT 110 (Tri.-Mumbai). For invoking limitation, he relied on Supreme Court decision in the case of Kaur & Singh Vs CCE New Delhi - 1997 (94) ELT 289 (SC). He submitted that regarding forgery, it is a criminal offence where Section 463 of IPC is attracted and it is to be proved by the criminal court whereas in the present case, the adjudicating authority held that licences were forged based on communication received from the concerned authorities. Licences were held forgery based on statements and visual examination without put into test by any forensic expert. In this regard, he relied Hon'ble Madras High Court decision in the case of CC (Imports) Chennai Vs Flemingo (DFS) Pvt. Ltd. He also submits that Hon'ble Supreme Court's decision in Aafloat Textiles (India) Pvt. Ltd. (supra) is distinguishable as the apex court has not discussed as to how forgery has to be proved in a criminal case. He submits that above Supreme Court judgement is per incurium and applicable only to that case whereas the Supreme Court judgement in the case of CC (Imports), Bombay Vs Hico Enterprises (supra) is applicable to the present case.
5.5 He submits that cross examination of witnesses was not waived by appellant and it is still maintained as stated in the written submissions dt. 6.10.2006 submitted during remand proceedings.
6. On the other hand, Ld. AR reiterated the impugned order. She submits that all the licences are forged. She particularly refers to Licence No.0610006778/5/06/00 dt. 27.1.2004 which showed Seema Exports whereas the said licence was remitted in the Lex Boots. She further submits that appellants were owners of original licences. She refers to transferror's laws as at pages 142, 144, 145. She submits that these TRAs were delivered at Paras International (Ref. Page 147) and relied on statement dt. 14.9.2004 (at pages 260 to 262) of Mr. V.Ramakrishna Rao. They have filed FIR only on 18.10.2004 which is an afterthought after deposing statement before customs authorities. She further submits that appellants have seen the original copies of licences, therefore question of cross examination is not relevant. Once the title does not belong to the licence holder, forgery has been established. She further submits that once the clear forgery has been established, TRAs have been forged and the appellants have not made any attempt to cause enquiry about bonfide of the licence. She submits that Hon'ble Supreme Court's decision in the case of Aafloat Textiles (India) Pvt. Ltd (supra) is applicable to the present case. She relied on the following decisions :-
1) Tata Iron & Steel Co. Ltd. 2015 (319) ELT 546 (SC) wherein the Supreme Court held that extended period is invocable in the case of fraud and forgery of licence.
2) CC Vs Candid Enterprises - 2001 (130) ELT 404 (SC)
3) Sharman Woollen Mills Ltd. Vs CC Amritsar 2011 (263) ELT 136 (Tri.-Del.)
4) Commissioner Vs CESTAT Chennai 2009 (240) ELT 166 (Mad.)
5) Gaur Impex Vs Commissioner 2010 (249) ELT A28 (SC) 6.1 She further submits that Supreme Court decision in the case of Hico Enterprises (supra) has not discussed the Chengalvaraya and Ashok Leyland cases and above cases but it only related to transferree and transferor of licences. He further submits that Supreme Court judgement in the case of Aafloat Textiles (India) Pvt. Ltd. which was again reaffirmed by the Supreme Court in the case of TISCO (supra). She submits that once cross examination is waived, therefore question of agitating this issue before Tribunal is not sustainable.
7. Ld. advocate countered the argument of Ld. AR and submits that the appellant's request for cross-examination of witnesses is still maintained and they never waived the cross examination. Regarding percentage of payment of brokerages, the discounts was in the range between 94% and 95% which is well within limit. He further countered that entire TRA mechanism is between one customs to another customs there is no role of any outsider. He also stated that both Supreme Court's decision in TISCO and Sharman Woollen Mills (supra) stand overruled by the 2 Judge Bench. However, Three Judge Bench judgement of Supreme Court will prevail over.
8. We have carefully considered the submissions of both sides and records. The present appeal before Tribunal is in fourth round of litigation arising out of same de novo adjudication order dt. 30.11.2006. The issue before us is whether clearance of imported goods duty-free by utilizing fake/forged DEPB licences is in order and whether the demand of Customs duty forgone is correct or otherwise and the penalty is imposable or not. The period of import relates to April 2004 and we find in the impugned order the Commissioner of Customs, Tuticorin has dealt the issue in detail in respect of each licence and the modus operandi of forgery of the said DEPB licences and also forgery of TRAs masterminded by the licence brokers. The impugned de novo order dt. 30.11.2006 was passed only against the present appellant M/s.DCW Ltd. whereas we find in the original order No.26/2005 dt. 3.5.2005 the adjudicating authority confirmed the demand against appellant and also imposed penalties on the appellants and several other co-noticees who involved in the forgery of licences. Whereas we find that only the appellant filed appeal and the same was allowed by way of remand by this Tribunal's order dt. 28.9.2005. The persons who involved in the fraud were imposed penalties under Section 112 (a) of the Customs Act at the original stage. They are not before this Tribunal in this appeal.
9. On perusal of the findings and the investigation charges brought out in the SCN we find that use of 9 DEPB forged licences has been established beyond doubt. The licensing authority, Jt.DGFT, Kanpur has clearly confirmed that these 9 licences were not issued by the Jt. DGFT. Similarly, it is established that the corresponding TRAs were not issued by the Kanpur Customs Commissionerate. Therefore, fraud and forgery of DEPB licences and TRAs have been established. 10. Appellant mainly contended that they were under bonafide belief that licences were original and valid as they have been regularly procuring the DEPB licences from the licence broker M/s.R.Somanathan & Co. and also contended that when the department intimated the forgery of licence they have acted immediately and initiated action by filing F.I.R against the brokers and concerned persons. Appellant also contended that the adjudicating authority has not allowed for cross-examination of officials. In this regard, we find that the adjudicating authority has clearly discussed in his findings at para 5.6 to 5.10 that JDGFT in his official capacity have verified and certified that the said DEPB licences were not issued by Jt.DGFT. Similarly Customs officials have also confirmed that they have not issued the TRAs in their official capacity and they are not beneficiaries of licences. Therefore, we do not find any justification with the appellants contention on this issue.
11. On merits, we find that appellants only plea is that they have been regularly procuring the DEPB licences through their licence broker M/s.R. Somanathan & Co. They have been using the services of the licence broker M/s.R.Somanathan & Co. from 2003. On perusal of the statement of various persons including Mr. Chander @ B.R. Chandran who arranged the licence at the request of V.Sankaran of M/s.R.Somanathan & Co. and the statement of V.Sankaran. We find that the main persons who are involved in the forgery is M/s.Jothi Enterprises, Kanpur and M/s.Paras International licence broker who indulged in fraud and forging of DEPB licences and supplied to various other brokers. On perusal of the statement of B.R. Chandran, we find that he categorically deposed that he already knew that the said DEPB licences which were to be arranged by Mr. Sankaran through Mr. Mohd. Korsi were fake and forged at the time of obtaining the licence. He also deposed that this fact was already known to V.Sankaran of M/s.R.Somanathan & Co. before purchase of the said licences.
12. On perusal of the Licence No.0610006778/5/06/00 dt. 27.1.2004, we find that original DFRC licence was issued to M/s.Seema Exports, Kanpur whereas the licence produced at the time of clearance at Tuticorin Customs, the licence was shown post-export DEPB licence issued to M/s.Lex Boots which clearly shows that by using the other licence number created fake, forged licence showing fake signature of DGFT authorities and also created fake TRAs. Appellant mainly contended that even in the licence is forged / fake customs cannot deny DEPB licence as they were the user of licence procured in the market through broker and in this regard, they have relied Tribunals Larger Bench decision in the case of Hico Enterprises (supra) which was affirmed by the Honble Supreme Court. The Tribunals Larger Bench in the above case held that transferee cannot be called upon to fulfil the condition of the notification. The above case is distinguishable and not applicable in view of Honble Supreme Courts later judgement in the case of Commissioner of Customs Vs Aafloat Textiles (India) Pvt. Ltd., wherein the Apex Court has dealt the issue in detail and settled the issue in favour of Revenue The relevant paragraphs of the Honble Supreme Court judgement is reproduced as under :-
12. "Fraud" and?collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct. Michael Levi likens a fraudster to Miltons sorcerer, Comus, who exulted in his ability to, wing me into the easy hearted man and trap him into snares. It has been defined as an act of trickery or deceit. In Websters Third New International Dictionary fraud in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Blacks Legal Dictionary, fraud is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsburys Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Indian Contract Act, 1872 defines fraud as act committed by a party to a contract with intent to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact, which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of fact with knowledge that it was false. In leading English case i.e. Derry and Ors. v. Peek (1886-90) All ER 1 what constitutes fraud was described thus : (All ER p. 22 B-C) fraud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false. But fraud in public law is not the same as fraud in private law. Nor can the ingredients, which establish fraud in commercial transaction, be of assistance in determining fraud in Administrative Law. It has been aptly observed by Lord Bridge in Khawaja v. Secretary of State for Home Deptt. (1983) 1 All ER 765, that it is dangerous to introduce maxims of common law as to effect of fraud while determining fraud in relation of statutory law. Fraud in relation to statute must be a colourable transaction to evade the provisions of a statute. If a statute has been passed for some one particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the Act to something else which is quite foreign to its object and beyond its scope. Present day concept of fraud on statute has veered round abuse of power or mala fide exercise of power. It may arise due to overstepping the limits of power or defeating the provision of statute by adopting subterfuge or the power may be exercised for extraneous or irrelevant considerations. The colour of fraud in public law or administration law, as it is developing, is assuming different shades. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or tribunal. It must result in exercise of jurisdiction which otherwise would not have been exercised. The misrepresentation must be in relation to the conditions provided in a section on existence or non-existence of which the power can be exercised. But non-disclosure of a fact not required by a statute to be disclosed may not amount to fraud. Even in commercial transactions non-disclosure of every fact does not vitiate the agreement. In a contract every person must look for himself and ensures that he acquires the information necessary to avoid bad bargain. In public law the duty is not to deceive. (See Shrisht Dhawan (Smt.) v. M/s. Shaw Brothers, [1992 (1) SCC 534].
13. In that case? it was observed as follows :
Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct. Michael levi likens a fraudster to Miltons sorcerer, Comus, who exulted in his ability to, wing me into the easy-hearted man and trap him into snares. It has been defined as an act of trickery or deceit. In Websters Third New International Dictionary fraud in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Blacks Legal Dictionary, fraud is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsburys Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Contract Act defines fraud as act committed by a party to a contract with intent to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of the fact with knowledge that it was false. In a leading English case Derry v. Peek [(1886-90) ALL ER Rep 1 : (1889) 14 AC 337 (HL)] what constitutes fraud was described thus : (All Er p. 22 B-C) Fraud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false.
14. This aspect of? the matter has been considered by this Court in Roshan Deen v. Preeti Lal [2002 (1) SCC 100] Ram Preeti Yadav v. U.P. Board of High School and Intermediate Education [2003 (8) SCC 311], Ram Chandra Singhs case (supra) and Ashok Leyland Ltd. v. State of T.N. and Another [2004 (3) SCC 1].
15. Suppression of? a material document would also amount to a fraud on the court, (see Gowrishankar v. Joshi Amba Shankar Family Trust (1996 (3) SCC 310) and S.P. Chengalvaraya Naidus case (supra).
16. "Fraud" is a? conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. Although negligence is not fraud but it can be evidence on fraud; as observed in Ram Preeti Yadavs case (supra).
17. In? Lazarus Estate Ltd. v. Beasley (1956) 1 QB 702, Lord Denning observed at pages 712 & 713, No judgment of a Court, no order of a Minister can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. In the same judgment Lord Parker LJ observed that fraud vitiates all transactions known to the law of however high a degree of solemnity, (page 722).
18. These aspects? were highlighted in the State of Andhra Pradesh and Anr. v. T. Suryachandra Rao [2005 (5) SCALE 621] and Bhaurao Dagdu Paralkar v. State of Maharashtra and Ors. [2005 (7) SCC 605].
19. It was for the? buyer to establish that he had no knowledge about the genuineness or otherwise of the SIL in question.
20. The maxim? caveat emptor is clearly applicable to a case of this nature. As per Advanced Law Lexicon by P. Ramanatha Aiyar, 3rd Edn. 2005 at page 721: Caveat emptor means Let the purchaser beware. It is one of the settled maxims, applying to a purchaser who is bound by actual as well as constructive knowledge of any defect in the thing purchased, which is obvious, or which might have been known by proper diligence.
21. "Caveat emptor" does not mean either in law or in Latin that the buyer must take chances. It means that the buyer must take care. (See Wallis v. Russell (1902) 21 R 585, 615).
22.?"Caveat emptor" is the ordinary rule in contract. A vendor is under no duty to communicate the existence even of latent defects in his wares unless by act or implication he represents such defects not to exist. (See William R. Anson, Principles of the Law of Contract 245 (Arthur L. Corbin Ed. 3d. Am. ed.1919) Applying the maxim, it was held that it is the bounden duty of the purchaser to make all such necessary enquiries and to ascertain all the facts relating to the property to be purchased prior to committing in any manner.
23.?Caveat emptor, qui ignorare non debuit quod jus alienum emit. A maxim meaning Let a purchaser beware; who ought not to be ignorant that he is purchasing the rights of another. Hob. 99; Broom; Co., Litl. 102 a : 3 Taunt, 439.
24. As the maxim? applies, with certain specific restrictions, not only to the quality of, but also to the title to, land which is sold, the purchaser is generally bound to view the land and to enquire after and inspect the title-deeds; at his peril if he does not.
25. Upon a sale of? goods the general rule with regard to their nature or quality is caveat emptor, so that in the absence of fraud, the buyer has no remedy against the seller for any defect in the goods not covered by some condition or warranty, expressed or implied. It is beyond all doubt that, by the general rules of law there is no warranty of quality arising from the bare contract of sale of goods, and that where there has been no fraud, a buyer who has not obtained an express warranty, takes all risk of defect in the goods, unless there are circumstances beyond the mere fact of sale from which a warranty may be implied. {Bottomley v. Bannister, [1932] 1 KB 458 : Ward v. Hobbs, 4 App Cas 13}. (Latin for Lawyers)
26. No one ought? in ignorance to buy that which is the right of another. The buyer according to the maxim has to be cautious, as the risk is his and not that of the seller.
27. Whether the? buyer had made any enquiry as to the genuineness of the license within his special knowledge. He has to establish that he made enquiry and took requisite precautions to find out about the genuineness of the SIL which he was purchasing. If he has not done that consequences have to follow. These aspects do not appear to have been considered by the CESTAT in coming to the abrupt conclusion that even if one or all the respondents had knowledge that the SIL was forged or fake that was not sufficient to hold that there was no omission of commission on his part so as to render silver or gold liable for confiscation.
28. As noted? above, SILs were not genuine documents and were forged. Since fraud was involved, in the eye of law such documents had no existence. Since the documents have been established to be forged or fake, obviously fraud was involved and that was sufficient to extend the period of limitation."
The ratio of the above apex courts decision is squarely applicable to the present case. The Honble Apex court has clearly laid down and discussed the issue what is Fraud and Caveat Emptor and clearly held that buyer has no remedy against the seller and takes all risks of defect and clearly held that appellant, buyer of the licence has to establish that he made enquiry and took requisite precautions to find out the genuineness of the licence which he purchased and the apex court said that if he has not done so, the consequences had to follow. In the present case, we find that appellants have indulged in procuring the licence through licence broker Mr.Shankaran of M/s.R.Somanathan & Co. and appellant themselves admitted that they transacted the business over telephone whenever they required DEPB licence for clearance. It is evident that appellant has not taken any precaution about the bonafide of the licence. As already discussed in the second paragraph, the broker himself was aware of the forged licences and deliberately procured the said licence knowingly fully aware that these were all forged/fake that shows that appellants have failed to cause any enquiry and take requisite precautions before procuring these fake/forged licences obtained in a fraudulent manner from the broker. Appellants filing F.I.R after the fraud was detected by the Department is of no consequence and it is only an afterthought to save their lapses. Therefore the apex courts decision in Aafloat Textiles case is clearly applicable to the present case and the appellants contention that above Supreme Court judgement is per incurium is not acceptable.
13. Further, we find that Honble Supreme Court in a recent decision in the case of TISCO Vs CC Mumbai (supra) on identical issue of fraud committed by the original licence holder, the Apex Court upheld the Tribunals order confirming the demand on TISCO who is the transferee of such licence. The relevant paragraphs of the said judgement are reproduced as under :
"2.?In the facts of the present case, we find that the original licence holder, namely, Indian Card, Clothings Company Limited had deliberately suppressed the fact of having availed Modvat credit under Rule 57A of the Central Excise Rules, 1944, and made willfully wrong declaration to the licensing authority to obtain the endorsement of transferability of the same while transferring the licenses to the appellant herein. In view thereof, the extended period of limitation would be available to the authorities for the purpose of claiming the duty even against the appellant herein, who is the transferee of the licence in question.
3.?We, thus, find no merit in these appeals which are accordingly dismissed."
The ratio of the above Apex courts decisions is squarely applicable to the present case.
14. Therefore, by respectfully following the apex court judgement in the case of Afloat Textiles (India) Pvt. Ltd. (supra) and TISCO (supra) and the Tribunals decision in the case of Sharman Woollen Mills Ltd. Vs CC Amritsar (supra) we hold that the present case the gods were cleared by the appellant by forged/fake DEPB licences and forged TRAs and the demand of Rs. 95,29,591/- demanded from DCW Ltd. under Section 28 (1) of the Customs Act is liable to be upheld. As regards imposition of penalty of Rs.50,000/- on the appellant, taking into over all facts and circumstances of the case, we waive the penalty imposed on the appellant. Accordingly, the impugned order is upheld except for waiver of penalty. Appeal is dismissed but for waiver of penalty.
(Proceeding dictated and reasons of decision
pronounced in open court on 11.6.2015)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
gs
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