Custom, Excise & Service Tax Tribunal
M/S. Kedia Overseas Ltd vs Cc&Ce, Visakhapatnam-Ii on 14 July, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench Division Bench Court I Appeal No.C/604-605/2008 (Arising out of Order-in-original No.33/2008(PNR) dt. 30/05/2008 passed by CCE&C, Visakhapatnam-II) For approval and signature: Honble Ms. Sulekha Beevi, Member(Judicial) Honble Mr. Madhu Mohan Damodhar, Member(Technical) 1. Whether Press Reporters may be allowed to see 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 Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Kedia Overseas Ltd. Shri Jitender Kumar Kedia ..Appellant(s) Vs. CC&CE, Visakhapatnam-II ..Respondent(s)
Appearance Shri T. Ramesh, Advocate for the appellants.
Shri s.P. Rao, Asst. Commissioner(AR) for the respondent.
Coram:
Honble Ms. Sulekha Beevi, Member(Judicial) Honble Mr. Madhu Mohan Damodhar, Member(Technical) Date of Hearing:17/05/2016 Date of decision:..
FINAL ORDER No._______________________ [Order per: Madhu Mohan Damodhar] The facts of the case are that the appellants produced DEPB licences/ scrips for clearance of crude imported crude Palmolien through 9 Exbond Bills of Entry through Kakinada Port. From the investigations caused by Customs authorities, it emerged that the DEPB scrips and TRAs are forged. Department therefore took the view that the said documents being ab- initio void , they were not valid for discharge of duty liability in terms of Notification No.45/2002-Cus dated 22.04.2002. Proceedings were initiated by Department vide SCN dated 11.12.2003 proposing recovery of duty of Rs.1,98,78,418/ and interest thereto along with imposition of penalty. The resultant adjudication order No.05/2004 dated 27-02-2004, which confirmed the SCN proposals, in the first round of appeal, was remanded to the Commissioner for de novo consideration on the grounds of violation of principles of natural justice.
2. In de novo adjudication, lower authority once again confirmed demand of Rs.1,98,78,418/ and interest thereto along with imposition of penalty. Hence this appeal.
3. The argument advanced by the Ld. counsel appearing for appellant Sri. T. Ramesh can be summarized as under:
a. DEPBs are openly available in the market and transactions of sales and purchases are legally allowed; that the Department has not provided any mechanism to verify the genuineness of the DEPB and TRA; that the only mode available is to present these documents to customs for clearance of goods and once same is accepted by the customs and goods stand cleared, the importer makes the payment to the seller of the scrips considering these documents as genuine and that normally these scrips are traded through the broker.
b. The adjudicating authority has not followed the directions of the Tribunal in the earlier order dated 02.11.2004 by not providing them documents and permitting cross examination of witnesses. The Revenue cannot allege that DEPBs being forged by them. The DEPBs were first checked and accepted been genuine and the said DEPBs were also endorsed as accepted and once again checked and verified by another authority at Customs Office at Kakinada without any dispute. Now revenue cannot allege that DEPBs were forged.
c. CBI investigation has not implicated them in fabrication /forgery of DEPB scrips or the TRA. Therefore the order passed by adjudicating authority demanding differential duty ,the interest and imposition of penalty not only on the appellant but also on Sri. Jitendar Kumar Kedia, their Executive Director.
d. Their final assessment in their case was done only on 19.03.2004. Therefore prior issue of show cause notice on 11.12.2003 is not in accordance with Section 28 of the Customs Act, 1962 and will result in the entire proceedings getting vitiated.
4. The submissions made by the Ld. AR Sri. S.P. Rao is as under:
a. The de novo adjudicating authority had given sufficient opportunities to the appellant for attending hearings, giving oral /written submissions and for cross examination. In fact the adjudicating authority had requested the appellant to submit list of persons for cross examination. However the same was not submitted by appellant who instead took repeated adjournments.
b. The judgment of Honble Supreme Court in the case of Commissioner of Custom ( Preventive ) Vs. Aafloat Textiles decided on 16.02.2009 supports the case of department. In the said judgment the Apex Court held that it was for the buyer to establish that he had no knowledge about the genuineness or otherwise of the SIL in question. The maxim caveat emptor is clearly applicable to a case of this nature.
5. We have heard both sides
6. Admittedly the DEPB scrips and TRAs are forged. We also hold that the view propounded by the Honble Supreme Court in the Aafloat Textiles case (supra, viz, that it was for the buyer to establish that he had no knowledge about the genuineness or otherwise of the SIL in question. will doubtless apply to this case also. However, it is not disputed that the CBI had investigated the matter and the report, as per the adjudicating authoritys own mention in para 25 of the order, does not vindicate the importers role in fabrication/forgery of the DPEPB scrips or the TRAs. Viewed in this context, the appellant have definitely established that they had no knowledge about the non-genuineness of the documents, and more importantly CBI have not implicated them in the forgery. The appellants therefore pass the test laid down by the Supreme Court in the above discussed case.
7. Once it is established that the appellants had no role in fabrication or forgery of the impugned documents, there is no ground for imposition of penalty either on the appellant or on the Executive Director. We therefore hold that this part of the impugned order imposing penalties on the appellant and also on Sri Jitender Kumar Kedia cannot survive and will have to be set aside.
8. Coming to the demand of differential Customs duty, it is not disputed that the duty liability of Rs.1,98,78,418/ otherwise payable by the appellant on the imported crude Palmolein was discharged only through adjustment /debit on the forged DEPB scrips. Thus, admittedly, the appellant has benefitted to that extent, and moreover, such benefit is not permissible in law since the said forged DEPB scrips were void ab initio. In the event, the department is correct in demanding the said differential duty not paid by the appellant. The plea of the appellant that issue of show cause notice before finalization of assessment vitiates the demand is not acceptable. This is a case of duty not paid/short paid on account of forged DEPB scrips per se, of which there is no dispute. This being so, we are of the considered opinion that there is no estoppel, bar or impediment which can preclude the department from demand and recovery, at the earliest, of the wrongful benefit which accrued to the appellant on account of the impugned documents. We therefore conclude that the demand in the impugned order of customs duty of Rs.1,98,78,418/- and interest thereon even before finalization of assessment is legal and proper.
9. From the fore going discussions, we order as follows:-
a. The demand of Customs duty of Rs.1,98,78,418/- along with interest payable thereon confirmed in the impugned order is sustained.
b. The penalties imposed on both the appellants, M/s Kedia Overses Ltd. and on Sri Jitender Kumar Kedia are set aside.
(Pronounced in open court on ..) (MADHU MOHAN DAMODHAR) MEMBER(TECHNICAL) ( SULEKHA BEEVI, C.S.) MEMBER(JUDICIAL) Raja..6