Custom, Excise & Service Tax Tribunal
M/S. Apar Ltd vs Commissioner Of Customs(Export), ... on 12 May, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.1
Appeal No. C/1405, 1406, 1407 & 1408/02-Mum
(Arising out of Order-in- Original No. 313/2002/CAC/CC/M.D. dtd.28.2.2002 passed by the Commissioner of Customs(Adj.) , Mumbai.1 )
For approval and signature:
Honble Mr. S. S. Kang, Vice President
Honble Mr. P.R.Chandrasekharan, Member(Technical)
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1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s. Apar Ltd.
Shri R. G. Avasthi
Shri K. N. Desai,
Shri C. Pinto
:
Appellants
VS
Commissioner of Customs(Export), Mumbai
Respondent
Appearance
Shri Aqeel Sheerazi, advocate for Appellants
Shri A.K.Prasad, Jt.CDR for Respondent
CORAM:
Mr. S. S. Kang, Vice President
Mr. P. R. Chandrasekharan, Member(Technical)
Date of hearing: 12.05.11
Date of decision 12.05.11
ORDER NO.
Per : S.S.Kang
Heard both sides.
2. These 4 appeals have been filed against a common adjudication order and, therefore, they are being taken up together for disposal.
3. The adjudicating authority vide the impugned order confirmed the demand of Rs. 72,25,465/- under Sec.28 of the Act alongwith interest on M/s. Apar Ltd., the appellant. The adjudicating authority also confiscated the seized imported goods valued at Rs. 1,42,56,626/- under Sec.111(d) and 111(o) of the Customs Act and allowed release of the same on payment of redemption fine of Rs. 20 lakhs. A penalty of Rs. 72, 25,465/- was also imposed on M/s. Apar Ltd under Sec. 114A of the Act. Penalty of Rs. 5 lakhs on Shri K.N.Desai, penalty of Rs. 3 lakhs on Shri R.G.Avasthi and penalty of Rs. 2 lakhs on Shri C.Pinto were imposed under Sec.112(a) of the Act.
4. The brief facts of the case are that, the appellant M/s. Apar Ltd. purchased 4 DEPB scrips through a broker namely Kirit V.Kamdar(now Dead). The appellant M/s. Apar Ltd. made import of goods under the DEPB scrips so purchased. The goods were assessed by giving benefit under the DEPB scrips. Thereafter, it was found that the DEPB scrips under which the duty benefit was claimed in respect of the imported goods were obtained by submitting forged documents such as bank realization certificate, shipping bills etc. The goods were seized and thereafter the adjudicating authority passed the impugned order confiscating the goods, demanding duty after denying the duty benefit and imposed the penalties.
5. The contention of the appellant is that the DEPB scrips were purchased from the market through a broker and the appellant company is a bona fide purchaser and the scrips were valid when the goods were imported and subsequent to the import of the goods, the same were cancelled. Hence demand of duty is not sustainable. It is submitted that the demand is confirmed by invoking the extended period of limitation on the ground of suppression and fraud whereas, the DEPB scrips were purchased from the market on a premium and there is no evidence on record to show the appellant firm has knowledge that the scrips were obtained by submitting forged documents. Hence the allegation on the basis of which the extended period is invoked is not sustainable and consequent demand is also not sustainable.
6. In respect of the confiscation, the appellant also submitted that, as the scrips were valid at the time of import of the goods and the goods were not prohibited hence not liable for confiscation. The appellant also submitted that this is not a fit case for imposition of penalties as the importer and the other appellants were not aware of the fact that the scrips were obtained by submitting forged documents.
7. The Revenue submitted that the issue whether the duty benefit is available on the basis of DEPB scrips which were obtained by submitting forged documents is settled by the tribunal in the case of Friends Trading Company vs. CC, Amritsar reported in 2006(202) E.L.T. 611 (Tri-Del.) and the appeal filed by the importer is dismissed by the Honble Punjab & Haryana as well as by the Honble Supreme Court. The Revenue has also submitted that in a subsequent decision in the case of Friends Trading Co. reported in 2011(267)E.L.T.57, the tribunal upheld the demand which was confirmed by invoking the extended period of limitation in respect of the import made under the DEPB scrips which were obtained by submitting forged documents and the appeal filed by the importer is dismissed by the Honble Punjab & Haryana High Court reported in 2011(267) E.L.T. 33 (P& H).
8. In respect of confiscation, the contention of the Revenue is that as the goods were imported under the DEPB scrips which were found to be obtained on the basis of forged documents, the goods were liable to confiscation and the appellants were also liable for penalties.
9. We find that the admitted facts of the case are that, 4 DEPB scrips were obtained by submitting forged documents. M/s. Apar Ltd made import of goods and claimed the benefit under these DEPB scrips. We find that the issue, whether the benefit of DEPB scrips which were obtained by submitting forged documents is to available to the importer, is now settled by the tribunal in the case of Friends Trading Company vs. CC, Amritsar reported in 2006(202)E.L.T. 611 (Tri-Del.) The importer filed appeal before the Honble Punjab & Haryana against the above decision and the same was dismissed reported as Friends Trading Co. vs. Union of India reported in 2010(254) E.L.T. 652( P & H). The Honble High Court has held as under:-
2 The asessee imported goods against DEPB Scrips without payment of duty. It was later found that DEPB Scrips were obtained by producing forged bank certificate of export and realization. The DEPB Scrips were cancelled by the competent authority. Accordingly, demand of duty was confirmed after notice. The assessee purchased DEPB Scrips from M/s. Vivek Impex Private Limited who purchased the same from M/s. Shyam International who had purchased the same from M/s. Parker Industries. The Commissioner of Customs held that any concession availed of on the basis of DEPB Scrips obtained by producing forged documents could not be retained. This view has been affirmed by the Tribunal.
3. We examined an identical issue in our recent order dated 1-9-2007 in CUSAP No. 27 of 2008 (M/s. Munjal Showa Limited v. Commissioner of Customs and Central Excise (Delhi (IV), Faridabad) [2009 (246) E.L.T. 18(P & H)]. After considering the observations of the Honble Supreme Court in East India Commercial Company limited v. Collector - 1983 (13) E.L.T. 1342 (S.C.) = AIR 1962 SC 1893, Collector of Customs, Bombay v. Sneha Sales Corporation - 2000 (121) E.L.T. 577, Sampat Raj Dugar - 1992 (58) E.L.T. 163 and Aban Loyd Chiles Offshore Ltd. and others v. Commissioner of Customs, Maharashtra - 2006 (200) E.L.T. 370 (S.C.) = (2006) 6 SCC 482, by the Bombay High Court in Taparia Overseas (P) Limited v. UOI - 2003 (161) E.L.T. 47 and K. Uttamlal (Exports) Pvt. Limited v. UOI - 1990 (46) E.L.T. 527 and by the Allahabad High Court in Coolade Beverages Limited v. Commissioner of Central Excise, Meerut - 2004 (172) E.L.T. 451 and H. Guru Investment (North India) Pvt. Limited v. CEGAT, New Delhi, 1998 (104) E.L.T. 8 and judgments of this Court in Commissioner of Customs, Amritsar v. Vallabh Design Products - 2007 (219) E.L.T. 73 and Commissioner of Customs v. Leader Valves Ltd. - 2007 (218) E.L.T. 349, it was held as under :-
12. We do not find any applicability of the above judgment to the facts of the present case. In the present case, DEPB Scrips were forged, which has been admitted even by the appellant before the Tribunal. Benefit of a forged document cannot be allowed to be retained. The judgment relied upon does not in any manner lay down that benefit of a forged document could be allowed to be retained. The principle laid down in the judgment relied upon which has been followed in other judgments cannot, thus, apply to the case of the present nature where benefit has been taken on the basis of a forged document.
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19. It is settled principle of common law that a purchaser steps into the shoes of the seller and does not acquire better title than the seller. This principle has also been recognized under Section 27 of the Sales of Goods Act, 1932.
20. The charge of duty is on the goods under Section 12 of the Act unless a case of exemption is made out, irrespective of intention of any person.
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24. For the purpose of duty, the Tribunal has clearly held that the documents being forged, the appellant could not be allowed to take advantage of exemption. The Tribunal noticed that the firm with whom the appellant entered into the transaction was not traceable. The appellant itself had come to the conclusion that the documents were forged. In these circumstances, if further opportunity has been given to the appellant on its own asking and for its own benefit, we do not find any error in the course adopted by the Tribunal so as to give rise to substantial question of law sought to be raised.
4.We also made a? reference to judgments of the Honble Supreme Court in S.P. Chengalvaraya Naidu v. Jagannath, AIR 1994 SC 853 and Commissioner of Customs v. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.) = (2004) 11 SCC 364 and judgments of this Court in Golden Tools International v. Joint DGFT, Ludhiana - 2006 (199) E.L.T. 213 and The Commissioner of Customs, Commissionerate, The Mall, Amritsar v. M/s. Parker Industries, Jalandhar - 2007 (207) E.L.T. 658.
5. In view of the above, we do not find any ground to interfere with the order upholding demand of duty on goods in respect of which exemption had been availed of on the basis of DEPB scrips obtained against forged documents.
10. Against the decision of the Honble Punjab & Haryana High Court , M/s. Friends Trading Co. filed appeal before the Honble Supreme Court and the same was dismissed as reported in 2010(258)E.L.T. A 72 (S.C.). Subsequently, a Review Petition was filed by M/s. Friends Trading Co. and the same was dismissed by the Honble Supreme Court vide order dated 20/01/2010 in Review Petition No. 2334/09 in SLP(C) No.10287/09. The Honble Supreme Court held as under:-
We have gone through the review petition and the relevant documents. There is delay in filing the review petition. In our opinion, no case for review of our order is made out both on the grounds of delay as well as on merits and accordingly the review petition is dismissed. In view of the above settled position, we find that the importer is not entitled for any benefit on the basis of DEPB scrips which were obtained by submitting forged documents.
11. In respect of the contention of the appellant that the demand is time barred, we find that the show-cause notice was issued within the normal period of limitation from the date of payment of duty and as the demand is within normal period of limitation as provided under Sec.114A of the Act. Further we find that in a subsequent decision the Punjab & Haryana High Court in the case Friends Trading Co. vs UOI reported as 2011(267) ELT 33 upheld the demand which was confirmed by invoking extended period of limitation where the import was made under DEPB scrips which was found to be obtained by submitting forged documents.
12. On the issue of confiscation of the goods, we find that the appellant claimed the benefit under the DEPB scrips. Goods were assessed by granting the benefit. Subsequently goods were seized and the claim in respect of benefit of DEPB scrips was found to be not valid. We find that in a subsequent decision in the case of Friends Trading Co. vs Union of India reported in 2011(267)E.L.T. 33 (P&H), the Honble High Court has held as under :-
We are unable to accept the submission. Finding recorded by the Tribunal, reproduced above, shows that action of the petitioner was not bona fide. In any case, the proviso is not limited to action of an importer who comes forward to take advantage on the basis of fraudulently obtained or forged DEPB, it also covers action of the predecessor of the importer. Importer who steps into the shoes of seller of forged document does not stand on better footing and cannot be allowed to retain benefit illegally obtained. Taint attaching to the document on the basis of which benefit is taken is not washed of. Fraud or suppression continues if document is not genuine. Any other interpretation will defeat the intendment of the proviso to Section 28 and will enable fraud to be perpetuated without any remedy. Even if case of criminal liability or penalty may stand on different footing, purchaser or successor of fraudulently obtained DEPB stands in the same position as his predecessor. If the extended period of limitation could be invoked against the original holder of fraudulent or forged DEPB, the same could be invoked against successor or purchaser. The judgments relied upon on behalf of the petitioner are distinguishable. The matter is covered by view taken by this court earlier which has been followed by the tribunal. Thus, we are unable to hold that any substantial question of law arises.
13. As we find that the benefit under tainted DEPB scrips was claimed hence the goods were liable for confiscation. The adjudicating authority imposed redemption fine of Rs. 20 lakhs on the goods valued at Rs. 1,42,56,626/-. Taking into account the facts and circumstances of the case, we reduce the redemption fine to 10% of the value of the confiscated goods.
14. In respect of the penalty on the importing firm ie. M/s. Apar Ltd., the penalty is imposed under Sec.114A of the Act which provides as under :-
114A. Penalty for short-levy or non levy of duty in certain cases. - Where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any willful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (2) of section 28, shall also be liable to pay a penalty equal to the duty or interest so determined.
15. As we noted that the Honble Punjab & Haryana High Court in the case of Friends Trading Co. vs. Union of India in para 9 as reproduced above, has held that Importer who steps into the shoes of seller of forged document does not stand on better footing and cannot be allowed to retain benefit illegally obtained. Taint attaching to the document on the basis of which benefit is taken is not washed of. Fraud or suppression continues if document is not genuine. As the appellant M/s. Apar Ltd. attempted to import goods under tainted documents, we uphold the adjudication order whereby penalty is imposed on M/s. Apar Ltd. The appeal filed by M/s. Apar Ltd is disposed of as indicated above.
16. Now we take up the issue in respect of penalties imposed on S/Shri R.G.Avasthi, K.N.Desai and C.Pinto. These 3 appellants are employees of M/s. Apar Ltd. The only finding against them is that as the scrips were purchased from the market at a less premium which was prevalent at the time, therefore, it is evident that they were aware that the scrips were not genuine. We find that this finding is only on presumption. Statements of these employees were recorded during the investigations. There is no admission on their part in regard to their knowledge in respect of the nature of the scrips nor there is any evidence in this regard is on record. Therefore, we set aside the penalties imposed on these three appellants and appeals filed by Shri R.G.Avasthi, Shri K.N.Desai and Shri C.Pinto are allowed.
17. Appeals are disposed of in the above terms.
(Dictated and pronounced in court) P.R.Chandrasekharan Member(Technical) S.S.Kang Vice President pv 13