M/s. Munjal Showa Ltd Versus Commissioner of Customs and Central Excise (Delhi – IV)

M/s. Munjal Showa Ltd Versus Commissioner of Customs and Central Excise (Delhi – IV)  Case

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले



REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2576 OF 2010
M/s. Munjal Showa Ltd. …Appellant(s)
Versus
Commissioner of Customs
and Central Excise (Delhi – IV) …Respondent(s)
WITH
CIVIL APPEAL NO. 5608 OF 2011
M/s. Friends Trading Co. …Appellant(s)
Versus
Union of India and Ors. …Respondent(s)
J U D G M E N T
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 01.09.2008 passed by the High Court of Punjab and
Haryana at Chandigarh in C.U.S.A.P. No. 27 of 2008 by which the High
Court has dismissed the said appeal preferred by the appellant –
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assessee – M/s. Munjal Showa Ltd. filed under Section 130 of the
Customs Act and has confirmed the order passed by the Customs,
Excise and Service Tax Appellate Tribunal (hereinafter referred to as the
“Tribunal”) confirming the demand of Customs Duty with interest, the
original assessee - M/s. Munjal Showa Ltd. has preferred the present
Civil Appeal No. 2576 of 2010.
1.1 Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 02.02.2011 passed by the High Court of Punjab and
Haryana at Chandigarh in CUSAP No. 1 of 2011 by which the Division
Bench of the High Court has dismissed the said appeal and has
confirmed the judgment and order passed by the Tribunal in Custom
Appeal No. 576 of 2006 by which the Tribunal has confirmed the
demand of Customs Duty with interest, the original assessee – M/s.
Friends Trading Co. has filed the present Civil Appeal No. 5608 of 2011.
Civil Appeal No. 2576 of 2010
2. That the appellant herein – M/s. Munjal Showa Ltd. imported
consignments through ICD, Ballabgarh using Transfer Release Advices
(hereinafter referred to as “TRAs”) issued by the Bombay Custom
House. On verification, it was found that the DEPB Licensees on the
basis of which TRAs were issued, were not genuine. The goods were
cleared in May/June, 2003 and by letter dated 05.08.2003, the Assistant
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Commissioner, ICD, Faridabad informed the appellant that TRAs issued
against the DEPB Scripps were forged and that the DEPB were also
forged and, therefore, the appellant was required to deposit the duty with
interest in lieu of DEPB benefit availed by it.
2.1 The appellant by letter dated 07.08.2003 informed the Department
that it was surprised to learn about the forgery and was taking steps to
lodge F.I.R. against the transferor and sought time to make payment.
The appellant deposited the amount of duty on 12.08.2003 under
protest. After completion of investigation, show cause notice dated
03.10.2006 was issued to the appellant alleging evasion of duty by
seeking exemption against debits in releasing the advices, which were
forged and which were not genuinely issued by the competent authority.
The appellant challenged the show-cause notice on the ground of
limitation as well as on the ground that though the DEPB Scripps were
forged but there was no intention to evade Customs Duty.
2.2 The Commissioner of Customs passed order dated 17.10.2007
holding that DEPB Scripps were forged and thus void ab initio and,
therefore, the exemption availed of was inadmissible; goods were liable
to confiscation and appellant was liable to interest and penalty. The
Commissioner observed and held that the importer (the appellant), who
claimed benefit on the basis of forged DEPB Scripps stood at par with
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his predecessor and, therefore, cannot get the benefit of forged
documents. The order passed by the Commissioner of Customs was
the subject matter of appeal before the Tribunal. The Tribunal rejected
the plea of the appellant on the issue of liability of duty but remanded the
matter to the original authority on the issue of penalty. It is reported that
the 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 by the
Tribunal, the appellant preferred appeal before the High Court under
Section 130 of the Customs Act. Before the High Court, it was mainly
contended on behalf of the appellant that the show-cause notice issued
was beyond the period of limitation and in the facts and circumstances of
the case and when the ingredients of “fraud” and “with intent to evade
payment of duty” are absent, the extended period of limitation could not
have been invoked by the Department.
2.4 By the impugned judgment and order, the High Court has
dismissed the said appeal confirming the order passed by the Tribunal
confirming the demand of duty on the ground that “fraud” vitiates
everything and therefore, the Department was justified in invoking the
extended period of limitation. The impugned judgment and order passed
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by 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 dated
24.11.2000. It availed exemption from payment of Customs Duty under
Notification dated 07.04.1997 under Section 25 of the Customs Act,
1962 against DEPB Scrip dated 14.11.2000. Finding that the said DEPB
Scrip was procured fraudulently by the predecessor, the Scrip obtained
by the appellant was held to be void ab initio. Accordingly, demand of
duty was raised against the appellant vide Order-in-Original dated
04.10.2005. The said order was affirmed in appeal and was further
affirmed by the Tribunal. The further appeal preferred before the High
Court has been dismissed by the impugned judgment and order.
3.1 At the outset, it is required to be noted that while dismissing the
appeal, the High Court has relied upon its earlier decision in CUSAP No.
27 of 2008 in the case of M/s. Munjal Showa Limited Vs.
Commissioner of Customs and Central excise (Delhi (IV)
Faridabad).
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4. We have heard the learned counsel appearing on behalf of the
appellant(s) and Shri Vikramjit Banerji, learned ASG appearing on behalf
of the respondent.
5. It was/is the case on behalf of the assessee that in the facts and
circumstances of the case, the Department was not justified in invoking
the extended period of limitation.
5.1 Relying upon the decision of this Court in the case of
Commissioner of Customs (Preventive) Vs. Aafloat Textiles India
Private Limited and Ors., (2009) 11 SCC 18, it is submitted that as
observed and held by this Court even in the case of a fraud, an inquiry
was required to be made whether the appellant(s) – buyer(s) had
knowledge 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 DEPB
licences/Scripps purchased by the appellant(s) of which the exemption
benefit was availed, are found to be forged and fake. It is submitted
that, therefore, the appellant(s) being beneficiaries of such forged and
fake DEPB licenses/Scripps were liable to pay the Customs Duty of
which the exemption benefit was availed against such DEPB
licenses/Scripps. It is submitted that as rightly observed by the High
Court as well as by the Tribunal that fraud vitiates everything and
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therefore, such forged/fake DEPB licenses/Scripps are void ab initio. It
is submitted that therefore, no error has been committed in confirming
the Customs Duty.
7. We have heard the learned counsel appearing on behalf of the
respective parties at length.
8. From the judgment and order passed by the Tribunal and even
from the findings recorded by the Department, it has been found that the
DEPB licenses/Scripps, on which the exemption benefit was availed of
by 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 exemption benefit was availed on such forged/fake DEPB
licenses/Scripps.
9. In that view of the matter and on the principle that fraud vitiates
everything and such forged/fake DEPB licenses/Scripps are void ab
initio, it cannot be said that the Department acted illegally in invoking the
extended period of limitation. In the facts and circumstances, the
Department was absolutely justified in invoking the extended period of
limitation.
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10. It is also required to be noted that the moment, the appellant(s)
was/were informed about the fake DEPB licenses, immediately they paid
the Customs Duty, may be under protest. The Customs Duty was paid
under protest to avoid any further coercive action. Be that as it may, the
fact remains that the DEPB licenses/Scripps on which the exemption
was availed by the appellant(s) was/were found to be forged one and,
therefore, there shall be a duty liability and the same has been rightly
confirmed by the Department, which has been rightly confirmed by 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 Aafloat
Textiles India Private Limited and Ors. (supra) is concerned, whether
the buyer(s) had a knowledge about the fraud or the forged / fake DEPB
licenses/Scripps and whether the appellant(s) – buyer(s) was/were to
take requisite precautions to find out about the genuineness of the
DEPB licenses/Scripps which they purchased, would have a bearing on
the imposition of the penalty, and has nothing to do with the duty liability.
It is to be noted that in the present case so far as the penalty
proceedings are concerned, the matter is remanded by the Tribunal to
the adjudicating authority, which is reported to be pending.
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12. In view of the above and for the reasons stated above, both the
appeals fail and are accordingly dismissed. As the penalty proceedings
are reported to be pending pursuant to the remand order passed by the
Tribunal, we direct the adjudicating authority to complete the penalty
proceedings on remand, at the earliest preferably within a period of six
months from today.
With this, both the appeals are dismissed. No costs.
………………………………….J.
 [M.R. SHAH]
NEW DELHI; ………………………………….J.
SEPTEMBER 23, 2022. [KRISHNA MURARI]
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