Upholding the decision of the High Court of Punjab and Haryana at Chandigarh, the Supreme Court of India held that “Fraud” vitiates everything and the delay in issue of Show Cause Notice (SCN) was condoned in case of proceedings against M/s. Munjal Showa Ltd. and M/s. Friends Trading Co. which involved Fraud as the TRAs and DEPB Licenses on the basis of which the TRAs were issued were found to be forged.
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 Licenses on the basis of which TRAs were issued, were not genuine. The TRAs were also found to be forged. Therefore, the appellant was required to deposit the duty with interest in lieu of DEPB benefit availed by it.
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.
The Commissioner of Customs held that DEPB Scripps were forged and thus void ab initio and, therefore, the exemption availed of was inadmissible; goods were liable to confiscation and the appellant was liable to interest and penalty. The Commissioner also observed that the appellant-importer who claimed the benefit on the basis of forged documents stood on par with the exporter who forged the documents. Both the Tribunal and the High Court concurred with the findings of the commissioner.
The Division Bench of the Supreme Court that heard the case, comprising Justice M R Shah and Justice Krishna Murari observed in concurrence with the High Court, Tribunal and the Commissioner of Customs that, “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.”
It was held by the Bench that, “there shall be a duty liability and the same has been rightly confirmed by the Department” and acknowledged the pendency of penalty proceedings at the adjudicating authority, as remanded by the Tribunal.
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