P.G. Chacko, J. - (1.)AFTER examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. Accordingly, we proceed to deal with the appeal.
(2.)THE appellants imported certain chemicals and filed a Bill of Entry for its clearance duty -free under the DEEC scheme. The import was under a licence issued by the competent authority to M/s. Hameed Leather Finishers. The appellants procured the licence from a broker Shri Prithivraj Kawad. The Bill of Entry was assessed provisionally, but without execution of bond by the assessee. The original authority finalised the assessment and confirmed demand of duty of Rs. 29,374/ - against the assessee under the proviso to Section 28(1) of the Customs Act, denying the benefit of duty exemption under the DEEC scheme to the party. As the assessee had already paid duty, the original authority demanded interest thereon under Section 28AB of the Customs Act to the extent of Rs. 29,374/ -. The goods which were valued at Rs. 77,676/ - were confiscated under Section 111(o) and (m) of the Act with an option for redemption on payment of a fine of Rs. 15,000/ -. The first appellate authority upheld the decision of the original authority. Hence the present appeal.
(3.)AFTER hearing both sides and considering their submissions, we find that, admittedly, the DEEC licence under which the subject goods were imported was a fake one. Thus, the appellants were not entitled to the benefit of DEEC scheme and consequently they were liable to pay duty on the goods, which they paid prior to the issuance of the show cause notice. Ld. Counsel has made an endeavour to bank on a finding of the original authority, which is to the effect that the appellants had played no role in the manipulation of the licence. On this basis, it has been argued that the goods imported under the licence were not to be confiscated. We are unable to accept this argument inasmuch as it has been held by the apex court time and again that fraud nullifies everything done pursuant thereto. In the instant case, the licence on the strength of which the goods were imported was a product of fraud. The mere fact that the appellants had no role in such fraud does not obliterate the offending character of the goods, which were imported by the party under a licence, which was fraudulently created. Hence, apart from the importer's liability to pay duty on the goods, they must also be made liable to pay fine in lieu of confiscation of the goods. Ld. Counsel has resisted the confiscation by submitting that, as no bond was requisitioned by the Customs authorities at the time of clearance of the goods and the goods had already been consumed, it was not open to them to confiscate the goods. The argument is that, where the goods are not available for confiscation, there shall be no confiscation. Ld. SDR has endeavoured to counter this point by relying on the Supreme Court's judgment in Weston Components Ltd. v. Commissioner of Customs, New Delhi . Ld. Counsel has, on the other hand, relied on the Tribunal's decision in Sansui India Ltd. v. Commissioner of Customs, Jaipur wherein, on account of non -availability of the offending goods, confiscation was set aside. After considering the case law placed before us, we find that, in the case of Sansui (supra), the confiscation ordered by the lower authority was based on a finding that the value of the imported goods had been misdeclared by the importer. This is not the case here. Here is a case where the goods were imported fraudulently. The apex court ruling, which we have already referred to, must squarely apply to this case. Hence we hold that the goods imported under the fraudulently created licence were only to be confiscated. It has been stated before us that no bond was required to be executed at the time of provisional release of the goods. But this fact does not reduce the gravity of the offence attached to the goods. The Commissioner has fixed a Redemption Fine of Rs. 15,000/ -. Having regard to the value of the goods (Rs. 77,676/ -), we are of the view that a fine of Rs. 10,000/ - would be reasonable in this case. Accordingly, we reduce the quantum of fine to Rs. 10,000/ -. As regards the Commissioner's direction to levy interest on the duty amount under Section 28AB of the Customs Act, we find that, as rightly pointed out by ld. Counsel, the said provision was not on the statute book when the import was made. The liability to pay interest is coextensive with the liability to pay duty. The latter liability arose upon clearance of the goods. Hence the law prevailing on the date of clearance of the goods will govern the question whether any interest is leviable on the duty paid by the assessee. As the above provision was not in force at that time, we hold that no interest was leviable on the duty under Section 28AB. In the result, the order for levy of interest is set aside. The impugned order will stand modified accordingly.
The appeal is disposed of in the above terms.