2026-VIL-321-CESTAT-AHM-CU
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CUSTOMS CESTAT Cases

Customs - Duty demand and penalties under Sec 28AAA of Customs Act, 1962 for obtaining Focus Market Scheme (FPS) Scrips by misclassification of goods - DRI issued show-cause notice under Section 28AAA of the Customs Act, 1962 alleging that they had mis-classified the goods under Customs Tariff Heading (CTH) 2501 00 90 meant for 'industrial salt' to avail the benefit of duty credit at 2% under the Focus Market Scheme (FPS), whereas the correct classification should have been CTH 2501 0010 for 'common salt' for which no such benefit was available - Whether the Customs duty demand and penalties imposed by the lower authorities under Section 28AAA of the Customs Act, 1962 are valid and sustainable – HELD - The actions taken by the lower authorities in issuing the demand show-cause notice and adjudicating the same are premature and contrary to the Board's Circular No. 334/1/2012-TRU dated 01.06.2012. The Circular clearly states that the recovery of duty can be initiated under Section 28AAA only after the DGFT/concerned regional Authority initiates action for cancellation of the instrument (FPS scrips), and the matter may be decided only after the instrument has been cancelled by DGFT. In the present case, it is a matter of record that the DGFT has not initiated any action for cancellation of the FPS scrips. Hence, the action taken by the lower authorities is not in line with the Board's instructions – Since the DGFT had not cancelled the scrips, the department cannot re-adjudge the classification and sit over the decision of the DGFT authorities - The penalties, redemption fine, and the duty demand imposed by the lower authorities are not sustainable and set aside – The appeals filed by the appellants are allowed
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