The Supreme Court ruled that the fraud vitiates everything and forged Duty Entitlement Passbook Scheme DEPB Licenses are void ab initio.
The appellant – M/s. Munjal Showa Ltd. imported consignments through ICD, Ballabgarh using Transfer Release Advices 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, the Assistant 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.
Vikramjit Banerji, ASG submitted that in the case, admittedly the DEPB licences/Scripps purchased by the appellant of which the exemption benefit was availed, are found to be forged and fake.
He contended that, therefore, the appellant 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.
He argued that as rightly observed by the High Court as well as by the Tribunal that fraud vitiates everything and therefore, such forged/fake DEPB licenses/Scripps are void ab initio.
The division bench of Justice M.R. Shah and Justice Krishna Murari 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” the court said.
The bench observed that in 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.
The bench noted that the moment the appellant was/were informed about the fake DEPB licenses, immediately they paid the Customs Duty, may be under protest.
It was further noted that the Customs Duty was paid under protest to avoid any further coercive action.
The court observed that be that as it may, the fact remains that the DEPB licenses/Scripps on which the exemption was availed by the appellant 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.
As the penalty proceedings are reported to be pending pursuant to the remand order passed by the Tribunal, the court directed the adjudicating authority to complete the penalty proceedings on remand, at the earliest preferably within a period of six months.
Case title: M/s. Munjal Showa Ltd. v/s Commissioner of Customs and Central Excise
Citation: Civil appeal no. 2576 of 2010