COMMNR. OF CUSTOMS (PREVENTIVE) versus M/S AAFLOAT TEXTILES (I) PVT.LTD. AND ORS.

Citation: [2009] 2 S.C.R. 490 · Decided: 16-02-2009 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2009] 2 S.C.R. 490 
A 
COMMNR. OF CUSTOMS (PREVENTIVE) 
V. 
M/S AAFLOAT TEXTILES (I) PVT.LTD. AND ORS. 
Civil Apepal No. 2447 of 2007 
B 
FEBRUARY 16, 2009 
(DR. ARIJIT PASAYAT AND DR. MUKUNDAKAM 
SHARMA, JJ.) 
~ 
Customs Act, 1962: 
.. 
c 
Ss.28, 28AB, 111(d) and (o), 114A- Notification No.1171 
94-cus. Dated 27.4.1997 - Special Import Licence (SIL) 
allegedly purchased by importer from brokers for clearance 
of gold and silver, found forged -
Not valid for the 
consignments - Exemption under the Notification denied -
D Duty demand and interest as well as penalty- Levy of- Upheld 
by Commissioner,... Cancelled by Tribunal- On appeal, Held: 
.._ 
SILs were not genuine and were forged - Fraud was involved 
•• 
and that was .sufficient to extend the period of limitation. 
The Commissioner of Customs confirmed the duty 
E demand on 9 consignments of gold and silver imported 
by the Respondent company along with interest. The 
benefit ()f exemption in terms of Notification dated 
27 .4.1997 was denied and liability to goods to confiscation 
was upheld. The case of the department that the Special 
,I.. 
F Import Licence (SIL) purchased by the importer from 
brokers for clearance of gold and silver was forged and 
therefore was not valid for the consignments in question. 
On appeal, the tribunal held that the appeal could be 
disposed of only on the ground of limitation withou_t going 
G into the meri1s of the matter. The Tribunal observed that there 
was no evidence to show that the importer had knowledge 
_i" 
about the Sil being non-genuine and that the period of 
limitation should not be reckoned from the date of discovery 
of the forging. Accordingly, the demands including the 
H 
490 
COMMNR. OF CUSTOMS (PREVENTIVE) V. MIS AAFLOAT 491 
TEXTILES (I) PVT.LTD. AND ORS. 
"t-
penalty imposed were cancelled by the Tribunal. Hence A 
the appeal by the Revenue. 
Allowing the appeal, the Court 
HELD: 1.1 "Fraud" means an intention to deceive; 
whether it is from any expectation of advantage to the 
B 
party himself or from the ill will towards the other is 
immaterial. The expression "fraud" involves two elements, 
-1 
deceit and injury to the person deceived. Injury is 
... 
something other than economic loss, that is, deprivation 
of property, whether movable or immovable or of money c 
and it will include and any harm whatever caused to any 
person in body, mind, reputation or such others. In short, 
it is a non-economic or non-pecuniary loss. A benefit or 
advantage to the deceiver, will almost always cause loss 
or detriment to the deceived. Even in those rare cases D 
.... 
where there is a benefit or advantage to the deceiver, but 
.;I 
no corresponding loss to the deceived, the second 
condition is satisfied. [Para 9) [ 496-H; 497-A, BJ 
1.2 A "fraud" is an act of deliberate deception with 
the design of securing something by taking unfair E 
advantage of another. It is a deception in order to gain by 
another's loss. It is a cheating intended to get an 
'i 
advantage. [Para 10] [497-0, E] 
~ 
1.3 Fraud and deception are synonymous. Although. 
in a given case a deception may not amount to fraud, F 
fraud is anathema to all equitable principles and any affair 
tainted with fraud cannot be perpetuated or saved by the 
application of any equitable doctrine including res 
judicata. [Para 11] [497-G, H; 498-A] 
- 1.4 It was for the buyer to establish that he had no G 
...... 
knowledge about the genuineness or otherwise of the SIL 
in question. [Para 19] [501-G, H] 
Dr. Vim/a v. Delhi Administration 1963 Supp. 2 SCR 
585; Indian Bank v. Satyam Febres (India) Pvt. Ltd. 1996 H 
492 
SUPREME COURT REPORTS 
[2009] 2 S.C.R. 
A 
(5) sec 550; S. p Changalvaraya Naidu V. Jagannath 
.... 
1994 (1) SCC 1; Ram Chandra Singh v. Savitri Devi and 
Ors. 2003 (8) SCC 319; Shrisht Dhawan (Smt.) v. Mis. 
Shaw Brothers, 1992 (1) SCC 534; Roshan Deen v. Preeti 
Lal 2002 (1) SCC 100; Ram Preeti Yadav v. UP Board 
B 
of High School and Intermediate Education 2003 (8) 
SCC 311 ; Ashok Leyland Ltd. v. State of TN. and Another 
2004 (3) SCC 1; Gowrishankar v. Joshi Amba Shankar 
t-
Family Trust 1996 (3) SCC 31 O; State of Andhra Pradesh 
.. 
and Anr. v. T Suryachandr Rao 2005 (5) SCALE 621 
" 
c 
and Bhaurao Oagdu Paralkar v. State of Maharashtra 
and Ors. 2005 (7) sec 605 - relied on. 
Derry and Ors. v. Peek (1886-90) All ER 1; Khawaja v. 
.. 
' 
-
. Secretary of State for Home Deptt. (1983) 1 All ER 765; 
Wallis v. Russell (1902) 21 R 585, 615;

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