DEPB license obtained based on fabricated documents – Penalty upheld

Gurmeet Singh Kohli Vs Commissioner of Customs (Export) (CESTAT Delhi)

The facts of the case are the appellant is a trader of automobile parts and met one Rajat Gulati of M/s Super Trading , Kashmiri gate and through him got into the business of trading in DEPB licences for a commission. The Marine and Preventive Wing of the Customs commenced investigation into DEPB licences and found that the DEPB licences sold by the appellant were based on fabricated documents showing export of goods to Bangladesh through the Land Customs Station. These fabricated licences were sold by the appellant to M/s. Whirlpool India which imported the goods against them.

It is undisputed that the appellant had sold these DEPB licences to M/s. Whirlpool India and these licences were obtained from DGFT by submitting forged documents. In his statement dated 7.1.2013, the appellant admitted to having sold these DEPB licences but said that he was not aware that they were obtained based on forged Bank Realisation Certificates. He also said that he kept no record of the licences which he sold and received commission in cash. In the subsequent statement dated 10.4.2014, he agreed that he had prepared/created forged Bank Realisation Certificates against exports and submitted them to DGFT and obtained DEPB licences and sold them.

For these reasons penalty of Rs.3,00,000/- was imposed on the appellant under section 114AA of the Customs Act, 1962 which was upheld by the impugned order.

Evidently, the appellant has, by his role discussed above, caused fraudulently obtained DEPB certificates to be used in the Bills of Entry filed by the importer which, in our considered view, falls squarely within the scope of Section 114AA.

In this case, the DEPB certificates obtained based on forged bank realization certificates were sold by the appellant to the importer and thereby caused the importer to make incorrect declarations in the Bills of Entry.

For all these reasons, CESTAT upheld order imposing penalty.

FULL TEXT OF THE CESTAT DELHI ORDER

This appeal is filed by Shri Gurmeet Singh Kohli to assail the Order-in-Appeal¹ dated 14.6.2019 passed by the Commissioner (Appeals) whereby he rejected the appellant’ s appeal and upheld the order of the Joint Commissioner. None appeared on behalf of the appellant. It is found that nobody has been appearing during the past few hearings also. On 28.2.2023, the following order was passed.

None appeared on behalf of the appellant. Learned authorized representative for the Revenue submits that the issue is covered by the precedent decisions of this Tribunal. List on March 23, 2023. As the matter has been listed on several dates the appellant does not appear, the matter may be decided on merits on the basis of the records.

2. Today, when the matter was called none appeared on behalf of the appellant. There is also no request for adjournment. We have heard learned authorised representative for the Revenue and perused the records. We find that there is no prayer in the appeal. There are Statements of Facts and Grounds of Appeal followed by However, at S.No. 24 of the Appeal Memorandum, against ^„Reliefs claimed in appeal^‟, the appellant mentioned as follows:

“i) To set aside the impugned Order-in-Appeal No. CC(A)/CUS/D-I/Exp/NCH 256/2019-20 dated 14.6.2019 with consequential relief.

ii) Any other order/relief in the facts and circumstances of the case may be passed.”

3. The facts of the case are the appellant is a trader of automobile parts and met one Rajat Gulati of M/s Super Trading , Kashmiri gate and through him got into the business of trading in DEPB licences for a commission. The Marine and Preventive Wing of the Customs commenced investigation into DEPB licences and found that the DEPB licences sold by the appellant were based on fabricated documents showing export of goods to Bangladesh through the Land Customs Station. These fabricated licences were sold by the appellant to M/s. Whirlpool India which imported the goods against them.

4. After completing investigation, a Show Cause Notice² dated 3.9.2015 was issued to M/s. Whirlpool India and to the appellant which culminated in the issue of an Order in Original dated 30.12.2016 by the Joint Commissioner the operative part of which is as follows:

“(1) I deny the benefit of DEPB License No. 0310687088 dated 20.03.2012 and confirm the Customs duty amounting to Rs. 3,05,997/- (Rupees Three Lakhs Five Thousand Nine Hundred Ninety Seven) under section 28 (1) of the Customs Act, 1962 for import made under bill of entry No. 6676015 dated 28.04.2012 by M/s Whirlpool of India Ltd. and interest, at appropriate rate, thereof under section 28AA of the said Act.

(2) I order for confiscation of the goods valued at Rs. 11,71,096/- imported under bill of entry No. 6676015 dated 28.04.2012 under Section 113 (d) of the Customs Act, 1962. However, I allow the said confiscated goods to be redeemed against payment of Redemption fine of Rs. 1,00,000/- (Rupees One Lakh only) in terms of the provisions of Section 125 of the Customs Act, 1962.

(3) I impose penalty of Rs. 1,00,000/- (Rupees One Lakh only) upon M/s Whirlpool of India Ltd. (the Importer) under Section 114AA of the Customs Act, 1962.

(4) I impose penalty of Rs. 3,00,000/- (Rupees Three Lakh only) upon M/s Super Trading Co. (the Exporter) under Section 114AA of the Customs Act, 1962.

(5) I impose penalty of Rs. 3,00,000/- (Rupees Three Lakh only) upon Shri Gurmeet Singh Kohli under Section 114AA of the Customs Act, 1962 for his acts of omissions & commissions.

(6) I impose penalty of Rs. 3,00,000/- (Rupees Three Lakh only) upon Shri Ramesh Gurbux Singh under Section 114AA of the Customs Act, 1962 for his acts of omissions & commissions.

5. The only part of the order relevant to this appellant is the imposition of a penalty of Rs. 3,00,000/- on him under section 114AA of the Act for his omissions and commissions. On appeal, the Commissioner has, by the impugned order, upheld this part of the order.

6. This appeal is filed on the following grounds:

a) The impugned order is ex-facie illegal and shows non application of mind and by ignoring specific grounds urged before him.

b) The Commissioner (Appeals) did not consider the ratio of the judgment of Gujarat High Court in CC versus Sanjay Agarwal³.

c) The Commissioner (Appeals) did not consider the judgment of the Tribunal in Fast Cargo Movers versus CC Jodhpur⁴.

d) The Commissioner (Appeals) referred to the statement of the appellant dated 10.4.2014 regarding preparing/ creating forged bank realization certificates but it did not pertain tot his case.

e) The Commissioner (Appeals) relied on three other cases involving the sale of various DEPB licences obtained from DGFT based on forged documents which is highly

7. Learned authorised representative for the Revenue submits that the impugned order is correct and calls for no interference and there is no force in the appeal. He also points out that since there is not even a prayer in this appeal nor has anyone appeared, the Tribunal cannot grant any relief.

8. We have considered the submissions and perused the records. It is undisputed that the appellant had sold these DEPB licences to M/s. Whirlpool India and these licences were obtained from DGFT by submitting forged documents. In his statement dated 7.1.2013, the appellant admitted to having sold these DEPB licences but said that he was not aware that they were obtained based on forged Bank Realisation Certificates. He also said that he kept no record of the licences which he sold and received commission in cash. In the subsequent statement dated 10.4.2014, he agreed that he had prepared/created forged Bank Realisation Certificates against exports and submitted them to DGFT and obtained DEPB licences and sold them. Based on the statements, the role of the appellant was recorded in paragraphs 8.2 and 8.3 of the order in original as follows:

“8.2 Thus it appeared that Shri Gurmeet Singh Kohli was deeply involved in creation of fake documents and seek authorizations to draw undue benefit there from and that the persons named by him are also involved in the said act. Shri Gurmeet Singh Kohli and Shri Ramesh Singh appear to have a syndicate interalia involving themselves in acts of :

i) Operating IEC codes taken from DGFT in the name of other person;

ii) Operating the said export firms and their bank accounts,

iii) Forging the export documents such as shipping bills etc. by using bogus rubber stamps and forged signature of Customs officers ;

iv) Preparing forged Bank Realisation Certificates by using bogus rubber stamps of the banks and forged signature of the bank officers though the amount is not realized;

v) Submitting these bogus and forged documents to the DGFT to obtain export incentive authorizations such as DEPB, Focus Market Scheme, etc.

vi) Selling such authorizations to the unsuspecting importers through market based brokers and commission agents;

vii) Enjoying the benefit of sale proceeds of such fraud.

8.3 The gist of the quantum of the Customs fraud committed by Mr. Gurmeet Singh Kohli and his accomplices/associates, detected by Marine and Preventive Wing, Mumbai is as below :

(Rs. In lakhs)

9. For these reasons penalty of Rs.3,00,000/- was imposed on the appellant under section 114AA of the Customs Act, 1962 which was upheld by the impugned order. Section 114 AA reads as follows:

Section 114AA. Penalty for use of false and incorrect material. –

If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods.

10. Evidently, the appellant has, by his role discussed above, caused fraudulently obtained DEPB certificates to be used in the Bills of Entry filed by the importer which, in our considered view, falls squarely within the scope of Section 114AA. The judgment of the Hon^‟ble High Court of Gujarat in Sanjay Agarwal relied upon by the appellant was in the context of penalty under section 112 and not under section 114AA. At the time the SCN was issued in that case (on 24.9.2001), section 114AA did not even exist. Section 114AA was introduced with effect from 13.7.2006. Therefore, this case law does not carry the case of the appellant any further.

11. The decision in Fast Cargo Movers relied upon by the appellant was on a completely different footing. In that case, the appellant was a Customs Broker which filed the Shipping Bills in good faith on the basis of the documents provided to it by the On examination by DRI, it was found that the containers had Red Sanders whose export is prohibited. An SCN was issued and after adjudication, penalty was imposed under Section 114AA on the Customs broker. The Tribunal found that the appellant had filed the Shipping Bills in good faith based on the documents provided to it and in such circumstances, set aside the penalty. In this case, the DEPB certificates obtained based on forged bank realization certificates were sold by the appellant to the importer and thereby caused the importer to make incorrect declarations in the Bills of Entry.

12. For all these reasons, we find that the impugned order is just and fair and calls for no interference. The impugned order is upheld and the appeal is dismissed.

(Order pronounced in open court on 11/04/2023)

Notes: 

1. Impugned order

2.SCN

3. 2011 (269) ELT 153(Guj)

4. 2018(362) ELT 184 (Tri-Del)