2026-VIL-520-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs – Mis-declaration of service under Service Export from India Scrips – SCN issued alleging that appellant falsely declared the services exported as “Management Consulting Services? though the services rendered were “Information Technology and IT-Enabled Services? - These scrips were subsequently transferred to third parties who utilized them for duty-free imports before the licensing authority cancelled the scrips ab-initio based on the mis-declaration - Appellant challenge the confiscation of the goods as well as the levy of penalty – HELD - The fact that DGFT, Bengaluru had cancelled the SEIS scrips void ab-initio implies that exemption was never available to the appellant as they had wilfully mis-declared their services as “Management Consulting Services? in Annexure-3B submitted before the DGFT, whereas they were rendering “Information Technology? and “Software Service and Information Technology Enabled Services?. Therefore, the issue of classification of the services requires no further consideration. Once the scrips stood cancelled, the appellant was not eligible to avail the benefit thereof - The appeal filed by the Company is dismissed. The impugned order in so far as it imposes the penalty on employee is set aside – The appeals are partly allowed - Whether the Customs authorities could validly invoke Section 28AAA to recover duty from the original scrip holder – HELD – The SEIS scrips were obtained by mis-declaration as to the nature of services and the same were utilised by transferring the same to M/s MMTC who utilised the same for payment of customs duty in the import of goods. It is also an admitted position that DGFT Bengaluru had cancelled the SEIS scrips void ab-initio – Consequently, the duty relatable to such utilisation of instrument shall be deemed never to have been exempted or debited, and shall be recovered from the person to whom the said instrument was issued. Considering the conditions requisite for applying the provisions of section 28AAA are satisfied and the consequences thereof follow, the provisions section 28AAA of the Act are squarely applicable - Admissibility of Evidence – Statements recorded during Investigation –Whether a voluntary, unretracted statement recorded during an investigation under Section 108 is admissible as evidence without undergoing the procedure specified in Section 138B – HELD - Since the officer's statement was voluntary, never retracted, and was further corroborated by the fact that the company had already voluntarily deposited the disputed duty and interest, no prejudice was caused by the lack of formal corss-examination. The admissions or confessions made before Customs officers are binding, and the principles of natural justice do not mandate cross-examination when the party has already admitted to the facts - Contention regarding inadmissibility of statements rejected - Imposition of penalty under the various provisions – HELD - The Tribunal set aside the personal penalty, noting that the officer was an employee who functioned according to the dictates and requirements of the company. The officer had been cooperative and fair during the investigation by admitting the ineligibility once confronted. Given that substantial penalties had already been upheld against the company under various sections of the Act, there was no justifiable reason to penalize the individual employee separately for actions taken in his professional capacity - Penalty on the officer set aside.
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