Judgment:
1. The appeal has been filed by the sole proprietor of M/s. Jaina International, Shri Om Prakash, challenging the order of the Commissioner, by which a penalty of Rs. Four lakh was imposed on M/s.
Jaina International, under Section 114 of the Customs Act, 1962, and a penalty of Rs. One lakh was imposed under the same provision on Shri Om Prakash Jain, the sole proprietor of the said concern.
2. There is no dispute over the fact that benefits were taken by fraudulently obtained DEPB scrips amounting to Rs. 17,11,609/-, on the basis of forged Bank Realization Certificates and only the question of liability to pay the penalty arises in this appeal.
3. The evidence on record establishes that the appellant in the name of M/s. Jaina International, which earlier was a partnership firm and, after 1.2.2000, became the sole proprietory concern of the appellant, had fraudulently obtained DEPB scrips amounting to Rs. 17,11,609/-, on the strength of forged bank realization certificates. The appellant, Shri Om Prakash Jain, who was the managing partner of the firm and later on became sole proprietor, admitted and confessed that he had forged the Bank Realization Certificates and availed DEPB scrips on the basis of these forged certificates. M/s. Jaina International had exported the goods in violation of the provisions of Section 18(1)(a) of the Foreign Exchange Regulation Act, 1973, read with Notification issued thereunder on 1.1.1974. As per the said provision and the notification issued thereunder, exports, otherwise than by post, of all goods, either directly or indirectly to any place outside India, other than to Nepal and Bhutan were prohibited, unless the exporter furnished to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified, which was required to be true in all material particulars. The restrictions imposed were deemed to have been imposed under Section 11 of the Customs Act, 1962 by virtue of Section 67 of FERA, 1973. Since the exporter submitted forged bank certificate of export and realizations, showing foreign exchange realizations although they had not been received at the time of forging and submitting of the bank realization certificates and obtaining DEPB scrips and the remittances were received after they obtained transferred DEPB scrips, it has been rightly held that there was contravention of the prohibition imposed under Section 18(1)(a) of the FERA, 1973 read with Notification No. GSR 78 dated 1.1.74 issued thereunder. In case of Shipping bill Nos.
1067244 dated 28.9.99, 1066560 dated 23.9.99, 1076094 dated 14.12.99 and 1764 dated 21.7.99, the foreign exchange was not realized within six months, as required by Rule 8 of the Foreign Exchange Regulation Rules, 1974 and as undertaken by the exporter in the GR declaration forms. Under Rule 14 of the Foreign Trade (Regulation) Rules, 1993, it was provided that no person shall make, sign or use or cause to be made signed or used any declaration, statement or document for the purposes of obtaining a licence or importing any goods knowing or having reason to believe that such declaration, statement or document is false in any material particular. It was also provided that no person shall employ any corrupt or fraudulent practice for the purposes of obtaining any licence or importing or exporting any goods. The appellants had knowingly made, signed and used the forged Bank Realization Certificates for obtaining DEPB licence from the office of Joint Director General of Foreign Trade, Ludhiana, knowing that these are false in material particulars, and had employed fraudulent means to obtain the DEPB licence from the adjudicating authority. The goods were, therefore, clearly liable to confiscation as rightly held by the Commissioner and, therefore, the exporter M/s. Jaina International was liable to penal action. There is, therefore, no warrant to interfere with the impugned order imposing penalty on the exporter, M/s. Jaina International. In view of the fact that the appellant, as the managing partner had admittedly indulged in the act of forging Bank Realisation Certificates for obtaining DEPB scrips he was liable to pay the penalty imposed on the exporter firm M/s. Jaina International, of which he had become the sole proprietor from January, 2001 taking over all liabilities relating to the governmental dues. The appellant, Shri Om Prakash Jain was, therefore, liable to pay penalty of Rs. 4,00,000/-, imposed on M/s. Jaina International as its erstwhile partner. In view of the liability of the appellant to pay the said amount of Rs. four lakhs as the partner of the exporter, M/s. Jain International, which was a partnership firm at the relevant time, while upholding the penalty imposed on the exporter, M/s. Jaina International, which is now a proprietory concern of the appellant, the separate penalty of Rs. One lakh imposed on the appellant is set aside while confirming the penalty of Rs. 4 lakhs imposed on the appellant, M/s. Jaina International for which he is liable as the former partner of the said exporter firm.