2025-VIL-1881-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs - Fraudulent use of duty credit scrips - The appellant imported goods using manipulated Focus Product Scheme (FPS) licence and registered it fraudulently. The duty demand was confirmed under Section 28(4) of the Customs Act for collusion, wilful misstatement, and suppression of facts - Duty demand by invoking the extended period of limitation and levy of penalty under Sections 114A and 114AA of the Customs Act, 1962 – HELD - the extended period of limitation under Section 28(4) of the Customs Act was rightly invoked as the appellant had used an ab-initio invalid and non-existent license to discharge duty liability, amounting to wilful misstatement and suppression of facts. Once the extended period was invoked under Section 28(4) due to fraud, the duty demand was justified. In cases of fraud, the knowledge of the buyer is irrelevant for the duty demand, and the duty liability cannot be waived - The Hon'ble Supreme Court in Munjal Showa Ltd. v. Comm'r of Customs has held that in cases of fraud, the inquiry into the knowledge of the appellant is not required for duty demand, but may be relevant for penalty. Further, The Tribunal in Mercedes Benz India Pvt. Ltd. v. Comm'r of Customs, held that the onus is on the importer to ascertain the genuineness of the licenses/scrips used, and failure to do so would render the imports liable for duty and penalties - The mandatory penalty under Section 114A is upheld as the ingredients for invoking the extended period and imposing penalty were identical. Additionally, the penalty under Section 114AA is also justified as the appellant had utilized the fraudulently registered scrips, rendering the declaration in the bill of entry as false - The appeal is dismissed
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