COMMISSIONER OF CUSTOMS Vs. RAJNARAYAN JWALAPRASAD

JUDGEMENT

(1.) THIS appeal arises from the common order dated 24th March, 2006 passed by the Customs, Excise and Service Tax Appellate Tribunal in seven appeals. However, the appellant has filed a consolidated appeal against the common order, instead of filing seven different appeals. In the circumstances, this appeal is treated as an appeal filed in respect of the first respondent M/s. Rajnarayan Jwalaprasad only. In this appeal under Section 130 of the Customs Act, 1962 (the Act), the appellant - Commissioner of Customs, Kandla has challenged order dated 24th March, 2006 passed by the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal) by proposing the following questions: -

(2.) THE facts of the case stated briefly are that intelligence was gathered by the Directorate of Revenue Intelligence (DRI) that the respondent M/s. Rajnarayan Jwalaprasad, a partnership firm had allegedly inflated the net weight of consignments while exporting plastic articles made of High Density Polyethylene (HDPE), namely casseroles, to get un -entitled benefit under DEEC Scheme. Investigations revealed that in respect of two advance licences, forged documents were filed to get the licences endorsed as transferable. The present appeal relates to Advance Licence No. P/K. 2073568, dated 5th January, 1995. Pursuant to the investigation carried out by the DRI, a show cause notice came to be issued to the respondents which culminated into an order made by the adjudicating authority whereby duty demand of Rs. 19,27,404/ - came to be confirmed against the respondent M/s. Rajnarayan Jwalaprasad in terms of Section 28 of the Act together with interest at the rate of 24% per annum in terms of Para. 128A(iii)(a) of the Export -Import Policy 1992 -97. It was held that the goods being 132.3 metric tonnes of HDPE with CIF value of Rs. 29,77,027/ - were liable to confiscation under Section 111(o) and 111(m) of the Act. Personal penalties under Section 112(a) of the Act came to imposed on the respondent and six other co -notices as follows: rupees twenty -five lakhs on the respondent M/s. Rajnarayan Jwalaprasad, rupees twenty -five lakhs on Shri Sailesh Agarwal, rupees five lakhs on Shri Prakash Agarwal, rupees five lakhs on Shri Brijesh Agarwal, rupees two lakhs each on M/s. Kuppi Utpadan, Shri Balkishan Devidayal and M/s. ACT Shipping Ltd. Being aggrieved, the respondent and other co -notices preferred appeals before the Tribunal which came to be allowed by a common order whereby the Tribunal set aside the duty demand on the respondent as well as the penalties imposed on the respondent and other co -notices, which has given rise to the present appeal.

(3.) ON the other hand, Mr. Mihir Joshi, Senior Advocate, learned counsel appearing on behalf of the respondent invited the attention of the Court to the decision of the Supreme Court in the case of Collector of Customs, Bombay v. Sneha Sales Corporation,, 2000 (121) E.L.T. 577 (S.C.) wherein the Supreme Court in view of the law laid down in its earlier decision in the case of East India Commercial Company Ltd. v. Collector of Customs, Calcutta, : 1983 (13) E.LT 1342 (S.C.) held that where the licence is obtained by misrepresentation or fraud it is not rendered non est as a result of its cancellation so as to result in the goods that were imported on the basis of the said licences and being treated as goods imported without a licence in contravention of the order passed under Section 3 of the Import and Export Act that fraud or misrepresentation only renders a licence voidable and it becomes inoperative before it is cancelled. It was submitted that in the facts of the present case, though it is the case of the revenue that the endorsement on the advance licences has been obtained by submitting fraudulent documents, the licensing authority, namely, the Director General of Foreign Trade has not taken any steps for cancellation of the licence. The licence bore the endorsement of transferability made by the licensing authority and had been validly transferred in terms of the Exim Policy. The goods imported under the said licence were, therefore, imported under a valid licence and hence, the demand of duty was not justified. Inviting attention to the impugned order of the Tribunal, it was submitted that the Tribunal was justified in holding that the respondent herein cannot be held liable to import duty since no goods were imported by it. Reliance was also placed upon a decision of the Supreme Court in the case of Titan Medical Systems Pvt. Ltd. v. Collector of Customs, New Delhi, : 2003 (151) E.L.T. 254 (S.C.) for the proposition that once an advance licence is issued and not questioned by the licensing authority, the customs authority cannot refuse exemption on an allegation that there was any misrepresentation. It was submitted that the said decision would be applicable in the facts of the present case inasmuch as the licence issued by the licensing authority was a valid licence and that in absence of such licence having been cancelled by the licensing authority, the customs authorities were not entitled to go behind the said licence and hold that the import had been wrongly made.