By TIOL News Service

MUMBAI, DEC 02, 2017: ENQUIRY into the duty free import made by one Mudra Industrial Textiles revealed that the appellant, Proprietor of M/s Great India Exports Imports, Mumbai was seller of the said scrip to the importer which was ab initio void being fraudulently obtained by the appellant from Jt. DGFT by filing false endorsed copy of shipping bill, other false documents as well as false bank realization certificate never issued by HDFC Bank, Mumbai.

Sale of such scrip was made by the appellant thorough his agents and the sale proceeds of the offending scrip had gone to the bank account of the proprietary concern of the appellant.

The offending scrip was cancelled by the DGFT and resultantly the appellant faced a penalty of Rs. 9.40 lakhs in the adjudication proceeding.

An appeal was filed before the CESTAT against the penalty imposition.

The order passed by the CESTAT in the matter of the Stay application was reported by us as 2015-TIOL-2127-CESTAT-MUM.

The appeal was heard recently.

The Bench observed –

"6. Impugned DEPBscrips were obtained by appellant fraudulently from Jt. DGFT and that was sold by him. He was actively and consciously involved in defrauding revenue for which Customs interest was prejudiced. Appellant was not at all a stranger to the commission of the offence alleged by investigation. Having pre-determined mind to deceive the exchequer, he perpetuated fraud against Revenue. Accordingly, he was liable to the penal consequence enacted under section 112(a) of the Customs Act, 1962.

7. Evidence Act does not insist on absolute proof for the simple reason that perfect proof in this imperfect world is seldom to be found. That is why under Section 3 of the Evidence Act, a fact is said to be proved when, after considering the matters before it, the Court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, acts upon the supposition that it exists. This definition of proof does not draw any distinction between circumstantial and other evidence. Preponderance of probability comes to rescue of Revenue and Revenue is not required to prove its case by mathematical precision. Thus, if circumstances establish that there is high degree of probability that a prudent man ought to act on the supposition that there was design to obtain DEPBscrips without any export and such scrips sold for duty free import in contravention of the law or abetting to achieve such ill object, such act against public Revenue calls for penal consequence to curb such mischief."

Citing the ratios laid down in a plethora of decisions by the Apex Court in the context of the manner in which fraud was viewed in the eyes of law, the CESTAT concluded thus –

"9. Penal provisions are enacted to suppress the evils of defrauding Revenue which is an anti-social activity adversely affecting the public revenue, earning of foreign exchange, economic and financial stability of the economy. Therefore such provisions are construed in a manner to suppress the mischief and to promote the object of the statute, preventing evasion, foiling artful circumvention thereof. Thus construed, the term fraud within the meaning of these penal provisions is wide enough to take into its fold any one or series of acts committed. Such act or acts when demonstrate to be reasonably proximate to the clearance of imports duty free on the basis of the DEPBscrips fraudulently obtained against false documents filed before DGFT, a trader of such scrips has to face adverse consequence of law."

The penalty was upheld and the appeal was dismissed.

A similar order came to be passed in the case of another appellant which is reported as - 2017-TIOL-4236-CESTAT-MUM.

(See 2017-TIOL-4237-CESTAT-MUM)