2016 (2) TMI 999 - AT - Customs

Demand - Section 28(2) of the Customs Act, 1962 - bonafide belief - period of limitation - Held that - since the adjudicating authority has admitted in the impugned order that the appellant has paid amount of duty to concerned CHA, who has defaulted the Govt. exchequer without the knowledge of connivance of the respondent, it cannot be said that the respondent has committed any fraud. He further held that there was nothing available on record to suggest that the CHA has committed the fraud on the suggestion of the Director of the respondent - charges of fraud cannot be levelled against the respondent and thus extended period of limitation set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against dropped adjudged demand due to extended period not invocable.
- Allegations of fraud against importer and agents.
- Responsibility for payment of duty and penalty.

Analysis:
1. The appeal was filed by Revenue against an order dropping the adjudged demand, contending that the extended period should be invocable against the respondent. The Departmental Representative argued that the importer was involved in non-payment of duty due to collusion or wilful misstatement. It was highlighted that the DEPB scrips possessed by the importer were not legally acquired. The Show Cause Notice was issued under Section 28(2) of the Customs Act, 1962, alleging non-payment or short payment of duty due to collusion or suppression of facts.

2. The respondent's advocate countered by stating that no specific allegation was made against the respondent regarding the fraud, and the extended period of limitation should not apply. It was argued that any fraud was committed by the agents, not the respondent. The advocate emphasized that the Commissioner (Appeals) had exonerated the respondent from fraud charges, indicating no merit in Revenue's appeal.

3. The Commissioner (Appeals) observed that the respondent, like other parties, was unaware of the fictitious DEPB numbers used by the Customs House Agent (CHA) for duty payment. The adjudicating authority admitted that the respondent paid duty to the CHA without knowledge of any fraud. The Commissioner concluded that the respondent did not commit fraud, and there was no evidence to suggest the CHA acted on the respondent's direction. Consequently, confiscation of goods and penalty imposition were deemed unwarranted.

4. The Commissioner held the CHA responsible for the balance duty payment and penalty, absolving the respondent/importer of this liability. The decision was based on a thorough analysis of the facts, leading to the conclusion that the charges of fraud could not be substantiated against the respondent. As the Commissioner's order was detailed and well-reasoned, the Tribunal found no fault in it and dismissed Revenue's appeal.

5. The Tribunal's judgment upheld the Commissioner's findings, emphasizing that the respondent was not implicated in the fraud and should not bear the penalty burden. The decision was pronounced in open court, affirming the dismissal of Revenue's appeal.