M/S. MUNJAL SHOWA LTD versus COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE (DELHI – IV) on 23 September 2022

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 01.09.2008 passed by the High Court of Punjab andFHaryana at Chandigarh in C.U.S.A.P. No. 27 of 2008 by which theHigh Court has dismissed the said appeal preferred by the appellant –assessee – M/s. Munjal Showa Ltd. filed under Section 130 of theCustoms Act and has confirmed the order passed by the Customs, Exciseand Service Tax Appellate Tribunal (hereinafter referred to as theG“Tribunal”) confirming the demand of Customs Duty with interest, theoriginal assessee - M/s. Munjal Showa Ltd. has preferred the presentCivil Appeal No. 2576 of 2010.

1.1 Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 02.02.2011 passed by the High Court of Punjab andHaryana at Chandigarh in CUSAP No. 1 of 2011 by which the DivisionH

Bench of the High Court has dismissed the said appeal and has confirmedthe judgment and order passed by the Tribunal in Custom Appeal No.576 of 2006 by which the Tribunal has confirmed the demand of CustomsDuty with interest, the original assessee – M/s. Friends Trading Co. hasfiled the present Civil Appeal No. 5608 of 2011.

Civil Appeal No. 2576 of 2010

2. That the appellant herein – M/s. Munjal Showa Ltd. importedconsignments through ICD, Ballabgarh using Transfer Release Advices(hereinafter referred to as “TRAs”) issued by the Bombay CustomHouse. On verification, it was found that the DEPB Licensees on thebasis of which TRAs were issued, were not genuine. The goods werecleared in May/June, 2003 and by letter dated 05.08.2003, the AssistantCommissioner, ICD, Faridabad informed the appellant that TRAs issuedagainst the DEPB Scripps were forged and that the DEPB were alsoforged and, therefore, the appellant was required to deposit the dutywith interest in lieu of DEPB benefit availed by it.

2.1 The appellant by letter dated 07.08.2003 informed theDepartment that it was surprised to learn about the forgery and wastaking steps to lodge F.I.R. against the transferor and sought time tomake payment. The appellant deposited the amount of duty on 12.08.2003under protest. After completion of investigation, show cause notice dated03.10.2006 was issued to the appellant alleging evasion of duty by seekingexemption against debits in releasing the advices, which were forgedand which were not genuinely issued by the competent authority. Theappellant challenged the show-cause notice on the ground of limitationas well as on the ground that though the DEPB Scripps were forged butthere was no intention to evade Customs Duty.

2.2 The Commissioner of Customs passed order dated 17.10.2007holding that DEPB Scripps were forged and thus void ab initio and,therefore, the exemption availed of was inadmissible; goods were liableto confiscation and appellant was liable to interest and penalty. TheCommissioner observed and held that the importer (the appellant), whoclaimed benefit on the basis of forged DEPB Scripps stood at par withhis predecessor and, therefore, cannot get the benefit of forgeddocuments. The order passed by the Commissioner of Customs was thesubject matter of appeal before the Tribunal. The Tribunal rejected theplea of the appellant on the issue of liability of duty but remanded the A

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Amatter to the original authority on the issue of penalty. It is reported thatthe issue with respect to penalty, on remand, is yet pending. However,the Tribunal confirmed the duty liability.

2.3 Feeling aggrieved and dissatisfied with the order passed bythe Tribunal, the appellant preferred appeal before the High Court underBSection 130 of the Customs Act. Before the High Court, it was mainlycontended on behalf of the appellant that the show-cause notice issuedwas beyond the period of limitation and in the facts and circumstancesof the case and when the ingredients of “fraud” and “with intent toevade payment of duty” are absent, the extended period of limitationcould not have been invoked by the Department.C

2.4 By the impugned judgment and order, the High Court hasdismissed the said appeal confirming the order passed by the Tribunalconfirming the demand of duty on the ground that “fraud” vitiateseverything and therefore, the Department was justified in invoking theextended period of limitation. The impugned judgment and order passedDby the High Court is the subject matter of the present Civil Appeal No.2576 of 2010.

Civil Appeal No. 5608 of 2011

3. That the appellant imported goods and filed Bill of Entry datedE24.11.2000. It availed exemption from payment of Customs Duty underNotification dated 07.04.1997 under Section 25 of the Customs Act,1962 against DEPB Scrip dated 14.11.2000. Finding that the said DEPBScrip was procured fraudulently by the predecessor, the Scrip obtainedby the appellant was held to be void ab initio. Accordingly, demand ofduty was raised against the appellant vide Order-in-Original datedF04.10.2005. The said order was affirmed in appeal and was furtheraffirmed by the Tribunal. The further appeal preferred before the HighCourt has been dismissed by the impugned judgment and order.

3.1 At the outset, it is required to be noted that while dismissingthe appeal, the High Court has relied upon its earlier decision in CUSAPGNo. 27 of 2008 in the case of M/s. Munjal Showa Limited Vs.Commissioner of Customs and Central excise (Delhi (IV)Faridabad).

4. We have heard the learned counsel appearing on behalf of theappellant(s) and Shri Vikramjit Banerji, learned ASG appearing on behalfHof the respondent.

5. It was/is the case on behalf of the assessee that in the factsand circumstances of the case, the Department was not justified ininvoking the extended period of limitation.

5.1 Relying upon the decision of this Court in the case ofCommissioner of Customs (Preventive) Vs. Aafloat Textiles IndiaPrivate Limited and Ors., (2009) 11 SCC 18, it is submitted that asobserved and held by this Court even in the case of a fraud, an inquirywas required to be made whether the appellant(s) – buyer(s) hadknowledge that DEPB Scripps were forged or fake.

6. While opposing the present appeal, Shri Vikramjit Banerji,learned ASG has submitted that in the present case, admittedly the DEPBlicences/Scripps purchased by the appellant(s) of which the exemptionbenefit was availed, are found to be forged and fake. It is submitted that,therefore, the appellant(s) being beneficiaries of such forged and fakeDEPB licenses/Scripps were liable to pay the Customs Duty of whichthe exemption benefit was availed against such DEPB licenses/Scripps.It is submitted that as rightly observed by the High Court as well as bythe Tribunal that fraud vitiates everything and therefore, such forged/fake DEPB licenses/Scripps are void ab initio. It is submitted thattherefore, no error has been committed in confirming the Customs Duty.

7. We have heard the learned counsel appearing on behalf of therespective parties at length.

8. From the judgment and order passed by the Tribunal and evenfrom the findings recorded by the Department, it has been found that theDEPB licenses/Scripps, on which the exemption benefit was availed ofby the appellant(s) (as buyers of the forged/ fake DEPB licenses/Scripps)were found to be forged one and it was found that the DEPB licenses/Scripps were not issued at all. A fraud was played and the exemptionbenefit was availed on such forged/fake DEPB licenses/Scripps.

9. In that view of the matter and on the principle that fraud vitiateseverything and such forged/fake DEPB licenses/Scripps are void abinitio, it cannot be said that the Department acted illegally in invoking theextended period of limitation. In the facts and circumstances, theDepartment was absolutely justified in invoking the extended period oflimitation.

10. It is also required to be noted that the moment, the appellant(s)was/were informed about the fake DEPB licenses, immediately they AB

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Apaid the Customs Duty, may be under protest. The Customs Duty waspaid under protest to avoid any further coercive action. Be that as itmay, the fact remains that the DEPB licenses/Scripps on which theexemption was availed by the appellant(s) was/were found to be forgedone and, therefore, there shall be a duty liability and the same has beenrightly confirmed by the Department, which has been rightly confirmedBby the Tribunal as well as the High Court.

11. Now, so far as the submission on behalf of the buyer(s) –appellant(s) relying upon the decision of this Court in the case of AafloatTextiles India Private Limited and Ors. (supra) is concerned,whether the buyer(s) had a knowledge about the fraud or the forged /Cfake DEPB licenses/Scripps and whether the appellant(s) – buyer(s)was/were to take requisite precautions to find out about the genuinenessof the DEPB licenses/Scripps which they purchased, would have abearing on the imposition of the penalty, and has nothing to do with theduty liability. It is to be noted that in the present case so far as theDpenalty proceedings are concerned, the matter is remanded by the Tribunalto the adjudicating authority, which is reported to be pending.

12. In view of the above and for the reasons stated above, boththe appeals fail and are accordingly dismissed. As the penalty proceedingsare reported to be pending pursuant to the remand order passed by theETribunal, we direct the adjudicating authority to complete the penaltyproceedings on remand, at the earliest preferably within a period of sixmonths from today.

With this, both the appeals are dismissed. No costs.

FDivya Pandey(Assisted by : Deepak Panwar, LCRA)

Appeals dismissed.

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