Custom, Excise & Service Tax Tribunal
M/S Indian Acrylics Ltd vs Commissioner Of Customs, Kandla on 22 April, 2015
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No.C/296,298,691,692/2007; C/12315/2013
[Arising out of OIO-KDL/COMMR/14/2007, dt.27.03.2007, passed by Commissioner of Customs, Kandla]
1. M/s Indian Acrylics Ltd,
2. Shri D.R. Ahuja,
3. Shri Gurkirpal Singh,
4. M/s Supreme Castings,
5. Shri Quimti Lal Sharma Appellants
Vs
Commissioner of Customs, Kandla Respondent
Represented by:
For Appellant: Shri Rakesh Jain, Advocate For Respondent: Shri Jitendra Nair, Authorised Representative For approval and signature:
Honble Mr. P.K. Das, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL) Date of Hearing/Decision:22.04.2015 Order No. A/10349-10353/2015, dt.22.04.2015 Per: P.K. Das
1. These appeals are arising out of a common order and therefore, all are taken up together for disposal.
2. Shri Rakesh Jain, learned Advocate is appearing on behalf of M/s Indian Acrylics Ltd, (in short the importer) and Shri D.R. Ahuja, Superintendent of Central Excise. None appears on behalf of the other Appellants. There is no application for adjournment. Hence, we proceed to decide all the appeals.
3. The relevant facts of the case, in brief, are that the importer purchased transferable DEPB scrips on 25.08.2000 from open market, which was originally issued to M/s. Supreme Castings Limited (in short the exporter) against their export. The importer imported Chemicals through Kandla Port on the basis of the said DEPB scrips, without payment of duty. In 2004, it was found that the exporter obtained the transferable DEPB scrips fraudulently by ante-dating the shipping Bill No. 2216 dated 30.03.2000, pertaining to cargo against shipping bill, which was received in CFS on 04.04.2000, when the value applicable cab to grant of DEPB for export was reduced. The said DEPB scrip was cancelled by DGFT authority.
4. A Show Cause Notice dt.18.04.2005 was issued by the Commissioner of Customs, Kandla to proposing demand of Customs duty of Rs.12,35,362.00 alongwith interest and to impose penalty under the Customs Act, 1962 on the importer. It has also proposed to confiscate the goods under Section 125 of the said Act. It has further proposed to impose penalties on the other Appellants. By the impugned Adjudication order, the Commissioner of Customs, Kandla confirmed the demand of duty of Rs.12,35,362.00 alongwith interest and imposed penalty of equal amount of duty on the importer. It has imposed penalty of Rs. 12,35,362.00 and Rs. 5,00,000.00 on the exporter (M/s. Supreme Casting Limited) and its Director Shri Gurkirpal Singh respectively, and penalty of Rs.25,000.00 each on M/s IAL Shipping Agency, Shri D.R. Ahuja (Superintendent of Central Excise), Shri M.P. Singh (Inspector of Central Excise) and Shri Vijay Madaam and Shri Quimti Lal Sharma (Custom House Agents).
5. The learned Advocate on behalf of the importer submits that the entire demand of duty on the importer is barred by limitation under Section 28(1) of the said Act. He submits that they are bonafide purchaser of the DEPB scrips from the open market, as per the provisions of the Policy and payment was made by cheques. There is no material available of fraud, collusion etc against the Importer and therefore, the extended period of limitation cannot be invoked. He relied upon the various decisions as under:
a) Commissioner of Customs, Bombay Vs M/s Sneha Sales Corporation - 2000 (121) ELT 577 (SC)
b) Commissioner of Customs, Amritsar Vs M/s Patiala Castings Pvt. Ltd. - 2012 (283) ELT 269 (Tri-Del.) C) Commissioner of Cusoms Vs M/s Leader Valves Ltd 2007 (218) ELT 349 (P&H) upheld by Honble Supreme Court on merit 2008 (227) ELT A 29 (SC).
6. He further submits that no penalty should be imposed on the Shri D.R. Ahuja under Section 112 (a) of the Act. It is submitted that there is no evidence that the Appellant was involved in forging of the export documents. In this context, the learned Advocate drew the attention of the Bench to the relevant portion of the Adjudication Order. He submits that on the identical issue, in the Appellants own case, the Tribunal set aside the penalty as reported in 2010 (250) ELT 386 (Tri-Del.) (D.R. Ahuja Vs Commissioner of Customs, Amritsar). He also relied upon the various decisions as under:-
a) P.N. Ram Vs Commissioner of C.Ex., Kanpur 2008 (225) ELT 294 (Tri-Del)
b) Khem Singh Lalas Vs Commissioner of Customs, Kandla 2014 (307) ELT 718 (Tri-Ahmd)
7. The learned Authorised Representative for the Revenue strongly relied upon the decision of Honble Calcutta High Court in the case of ICI India Ltd Vs Commissioner of Customs (Port), Kolkata 2005 (184) ELT 329 (Cal.). It is submitted that once it is established that the export documents are forged and the DEPB lincence was cancelled, the entire transaction is treated as void. It is immaterial as to whether the Appellants were involved in the fraud and therefore, the extended period of limitation would be invoked. Regarding the imposition of penalty on Shri D.R. Ahuja, he submits that the Appellant countersigned the documents without any verification and the penalty under Section 112(a) of the said Act is rightly imposed. He further submits that the penalty imposed on the exporter and its Director are justified. It is established from the records that the exporter and its Director had deliberately manipulated the date of export to avail extra benefit under DEPB scrips. It is also submitted that the CHA has not taken the reasonably steps and the penalty is rightly imposed.
8. After hearing both the sides and on perusal of the records, we find that there is no dispute on the fact that the Importer purchased the DEPB scrips from the open market on 25.08.2000. The Importer imported the Chemicals from Kandla Port without payment of duty in September 2000. It is contended by the Importer before the Adjudicating authority that they purchased the DEPB scrips from the exporter through M/s. Saab Impex, Ludhiana and issued cheque No. 377199 dated 01.9.2000 in favour of M/s. Saab Impex. The importer utilized DEPB scrips to discharge duty liability on goods imported by them at Kandla Port against the Release Advice issued by the Deputy Commissioner, CFS (OWPL), Ludhiana.
9. During investigation, it was found that the exporter M/s Supreme Castings Limited had manipulated the export documents to facilitate the extra benefit under the DEPB scheme. Accordingly, the DGFT authorities cancelled that licence in November 2004. Thereafter, the Customs authorities issued a Show Cause Notice dt.18.04.2005 proposing demand of duty alongwith interest and to impose penalty on the Importer and to impose penalties on other Appellants. The main contention of the learned Advocate is that the demand is barred by limitation. Sub-section (1) of Section 28 of the Act, 1962 provides that where any duty has not been levied or has been short-levied or erroneously refunded, or any interest payable has not been paid, for any reason other than the reasons of collusion or any wilful mis-statement or suppression of facts, the proper officer shall, within one year from the relevant date, serve notice on the person chargeable with the duty or interest. Sub-section (4) of the Section 28 of the Act provides that where any duty has not been levied or has been short-levied or erroneously refunded, or interest payable has not been paid by reason of, collusion; or any wilful mis-statement; or suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been levied so.
10. In the present case, we find that the Adjudicating authority had not given any finding that the importer had not paid the duty by reason of collusion or any willful mis-statement or suppression of facts. The Adjudicating authority following the decision of the Hon'ble Calcutta High Court in the case of M/s. ICI India Limited vs. Commissioner of Customs (Port), Calcutta (supra) observed that while one may be not held liable for collusion or fraud and exposed to other penalty but could be liable to pay the duty and interest and other statutory consequences which cannot avoid and the demand of duty for the extended period of limitation was confirmed. In the present case, at the time of importation of the goods, the DEPB licence was valid, which was cancelled after about 4 years. The Tribunal in the case of M/s Patiala Castings Pvt. Ltd (supra), in the identical situation, dismissed the appeal filed by the Revenue. It has been observed that there is neither any allegation nor any evidence to show that the Appellant had knowledge about the fraudulent mis-representation of the exporter in obtaining DEPB scrips and duty cannot be recovered from transferee. The Honble Punjab & Haryana High Court in the case of Commissioner of Customs Vs M/s Leader Valves Ltd - 2007 (218) ELT 349 (P&H) also dismissed the appeal filed by the Revenue. It has been held that the Assessee was not a party to fraud and had purchased DEPB from open market in the bonafide belief of its being genuine. The assessee had paid full price and availed the benefit and merely because at a later stage, DEPB found to be fabricated and taken on the basis of BCER, the assessee could not be deprived of benefit which are legitimately available to them. The decision of Honble Punjab & Haryana High Court was upheld by the Honble Supreme Court as reported in 2008 (227) ELT A 29 (S.C.)
11. The Revenue strongly relied upon the decision of Honble Calcutta High Court in the case of ICI Limited (Supra). In that case, it has been held that the credit available on the strength of a valid DEPB only and if the same is forged, it is non-est, therefore, there is no valid DEPB. In the present case, there is no dispute that, the appellant availed credit on the basis of said DEPB scrip, which was issued by the Customs authorities. Thus, at the time of import of goods, the DEPB scrips were not found forged. It is the case of the Department that exporter manipulated the export document to avail the extra benefit and on this ground, the DGFT cancelled the DEPB scrips in 2004. The Honble Gujarat High Court in the case of M/s Prayagraj Dyeing & Printing Mills Pvt. Ltd. Vs UoI - 2013 (290) ELT 61 (Guj.), had distinguished the document void and voidable. The relevant portion of the said decision is reproduced below:-
10. In this connection, we find substance in the contention of Mr. Parikh, the learned senior advocate appearing on behalf of the appellants, that there is a marked distinction between a forged document and a document issued by practising fraud. If it appears that a document is a forged one or a manufactured one, it is concocted or a created one in the eye of law and it is in the eye of law a non-existent document. On the other hand, a document issued in the context of a fraud or misrepresentation, is by itself a genuine document and according to settled law, such document is, at the most, voidable and is valid till it is set aside. A transaction that takes place on the basis of such document is good one and can even give a good title to the holder in due course for valuable consideration. At this juncture, we may profitably refer to the observations of the Supreme Court made in the case of CCE v. Decent Dyeing Co., reported in 1990 (45) E.L.T. 201 = (1990) 1 SCC 180 wherein, the Supreme Court held that it would be intolerable if the purchasers were required to ascertain whether excise duty had already been paid as they had no means of knowing it. It was further pointed out that duty of excise is primarily a duty levied on a manufacturer or purchaser in respect of a commodity manufactured or produced. As pointed out by a Division Bench of this Court in the case of Commissioner of Central Excise v. D.P. Singh reported in 2011 (270) E.L.T. 321, the judgment of the Supreme Court in the case of New India Assurance Company (supra), was distinguished, being one relating to a forged document which renders a document null and void, and as such, has no application to this type of cases. Similarly, reliance over the judgment of the Supreme Court in the case of Commissioner of Customs (Preventive) v. Aafloat Textiles (I) P. Ltd. reported in 2009 (235) E.L.T. 587, cannot be supported as Afloat case is one pertaining to a forged document but not in respect to a document otherwise genuine, issued by practising fraud. The facts stated in the case of Afloat indicated that the same was a case of a forged invoice and thus, the principles laid down therein cannot have any application to an invoice which is, otherwise, genuinely issued by a manufacturer registered with the Revenue. Justice Arijit Pasayat who delivered the judgment of the Supreme Court in the case of Afloat (supra), in a subsequent case of Commissioner of Customs v. Ajay Kumar & Company, reported in 2009 (238) E.L.T. 387, clearly indicated that the same being not a case of forged document but one of issue of license by practising fraud, the Tribunal was right in holding that the transferee of the license should not be made liable. It may not be out of place to mention here that the Tribunal, in its judgment, reported in 2006 (205) E.L.T. 747 indicated in paragraph-7 as follows :
if that be so, the concept that a fraud vitiates everything would not be applicable to cases where a transaction of transfer of license is for value consideration without notice, arising out of mercantile transactions, governed by common law and not provisions of any statute. .... .... .... .... .... ....
14.7.1?In the case before us, we have already pointed out that the Revenue has not alleged that the appellants had any role in the fraud, and if any fraud has been practiced by the person registered with the Revenue, the Revenue cannot get the benefit of extended period of limitation when the appellant is not party to the fraud. In the absence of any collusion between the appellants and such registered licencees, we find that the principles laid down in the aforesaid decision cannot have any application to the facts of the present case. In the present case, there is no dispute that the Importer imported the goods on the basis of the documents, which were valid at the time of importation and therefore, such document is valid, till it is not set-aside, extended period cannot be invoked. The demand of duty along with interest is not sustainable as barred by limitation. As the demand of duty is not sustainable, imposition of penalty is also not warranted.
12. Regarding the appeal filed by Shri D.R. Ahuja, we find from the Adjudication Order that the Adjudicating authority observed that the Appellant had stated before the Adjudicating authority that he had countersigned the examination and let export orders, as a bonafide act. He has also emphasized about the rush of work on 31.03.2000. On perusal of the Adjudication order, we find that the Appellant had failed to discharge his duty. There is no material available that the appellant abetted the exporter for their gain and therefore, it would not come within the ambit of imposition of penalty under Section 112 (a) of the Act. There is no evidence that the Appellant was involved in any manner in respect of manipulation of the export documents. We also find that on the identical situation, in the Appellants own case, the Tribunal set aside the penalty and allowed the appeal filed by the Appellant. The relevant portion of the said decision D.R. Ahuja (supra) is reproduced below:-
6.? It appears from the statement of the appellant No. l that he has denied ante-dating of the examination report or out of charge report in respect of S/Bill No. 2277 dated 31-3-2000. The finding of the Commissioner is without any material. It was pointed out by the appellant No. l that he has no intention to give any undue benefit to the exporter. Hence, it may be a case of negligence of duty. The Division Bench of the Tribunal in the case of A.P. Sales v. CC, Hyderabad (supra) held that Superintendent and Inspector of Customs and Central Excise charged to have involved themselves in fraudulent export and there is no proof of extraneous consideration for their action and for imposition of penalty under Section 114 ibid is set aside. It has been held that the case may be dereliction of duty on the part of the Superintendent of customs, on which penalty cannot be imposed under Section 114 of the Act. In the case of P.N. Ram v. CCE, Kanpur (supra), the Division Bench of the Tribunal held that penalty under Section 114 of the Act is not leviable on Customs Officer for negligence and dereliction of duty without any consideration. In the present case, there is no evidence that the appellants had connived or colluded with the exporter and, therefore, imposition of penalty under Section 114 of the Act is not justified.
13. In that case, the penalty was imposed under Section 114 of the Act, which was set aside by the Tribunal. In the present case, the penalty was imposed under Section 112 (a) of the Act, in connection of the export and therefore, the said decision would apply in the present case. The imposition of penalty on the Appellant is not justified.
14. The imposition of penalty on Shri Quimti Lal Sharma, we find that the Tribunal in the case of D.R. Ahuja Vs Commissioner of Customs, Amritsar (supra) set aside the penalty on Shri Quimti Lal Sharma in the identical situation. In view of that, the penalty on Shri Quimti Lal Sharma is not warranted.
15. The Adjudicating authority imposed penalty on the exporter and its Director, who had committed the offence. It is seen from the Adjudication order that exporter and its Director had not submitted the reply to Show Cause Notice and also not appeared in the personal hearing. The exporter and its Director had committed the fraudulent activities by manipulating the let export order and Bill of Lading and they are the actual beneficiary. So, the imposition of penalty on the Exporter and its Director are justified, legal and proper.
16. In view of the above discussion, we set aside the demand of duty along with interest and penalty on the Appellant M/s Indian Acrylics Limited, as barred by limitation. The penalty on Shri D.R. Ahuja and Shri Quimti Lal Sharma are also set aside. The penalty on M/s Supreme Castings Ltd and its Director Shri Gurkirpal Singh are upheld.
(Dictated & Pronounced in Court)
(H.K. Thakur) (P.K. Das)
Member (Technical) Member (Judicial)
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