Order Date – 02 August 2022

Facts – 

• The Appellant, DHARMESH R GATHANI DIRECTOR OF M/s PADMAVATI AGENCIES PVT LTD, the said company are engaged in the business of trading of various import export incentive licences such as DEPB, VKGUY, FMS,DFIA etc. issued by the Directorate General of Foreign Trade. 
• During the period 2008-09 the Appellant's company had purchased 700 Licences from Shri Kalpesh Daftary of M/s Sankalp Creations Pvt. Ltd. and sold the same to M/s Hindalco Industries Ltd. Shri Kalpesh Daftary is a broker/trader dealing in sale and purchase of the duty free licences. 
• On investigation by the DRI, 93 Licences out of 700 Licenses purchased by M/s Padmavti Agencies Pvt. Ltd. from M/s Sankalp Creations Pvt. Ltd. in turn were sold to M/s Hindalco were found to be forged. The investigation conducted by DRI brought out that forged Duty Entitlement Pass Book (DEPB) / Vishesh Krishi and Gram Udyog Yojana (VKGUY) licences were used by M/s. Hindalco Industries Ltd. towards payment of Customs Duty at the time of importation.
• The show cause notice was adjudicated by the Commissioner vide impugned order, who imposed a penalty of Rs. 3,40,00,000/- under Section 112(a) and Rs. 1,45,00,000/- under Section 114AA of the Customs Act, 1962 on the Appellant. 
• The Appellant inter-alia contended that Ld. Commissioner has grossly erred in not permitting cross examination of the two persons whose statements are the sole premise of this case. 
• Aggrieved the appellant filed an appeal.

Issue – 

• Whether that imposition of penalty on the Appellant is justified?

Order – 

• The Tribunal observed that there is no evidence on record to show that it is the present appellant who had either himself forged the said licences or he was aware of the forgery of the licences. Ld. Commissioner in the impugned order itself held that licences were, in fact, forged by Shri Niyaz Ahmed at Kanpur using the photocopies of the corresponding genuine licences provided by Shri Kalpessh Dafttary. 
• The Tribunal did not find any independent evidence which could establish that appellant was aware of forgery of licenses. Only because the disputed licences were sold by Shri Kalpesh Daftary through the Appellant to M/s Hindalco, it cannot be concluded that Appellant was aware of fraudulent forgery of licences.
• Further, the impugned order-in-original does not record a finding that, any of the conditions specified under Sections 138B(1) of the Act of 1962 stands satisfied thereby such statements without cross examination of such witness became absolutely irrelevant. In such circumstances, the impugned order-in-original stands vitiated by breach of principles of natural justice. 
• Hence, the impugned order imposing penalties on appellant held to be unsustainable and liable to be set aside.