2008 (5) TMI 270 - AT - Customs

Respondent purchased DEPB Scrips and availed exemption of customs duty - no allegation that Respondent has colluded with the exporter, who obtained the DEPB scrips by fraudulent means Respondent is a bonafide purchaser of the goods, therefore, extended period of limitation cannot be invoked - Adjudicating Authority not imposed penalty on the Respondent, which were not challenged by the Revenue therefore, demand on the basis of proviso to s.s. (1) of S.28 of Custom Act is not sustainable

Summary

Issues:
1. Fraudulent availing of duty exemption benefit based on forged shipping documents.
2. Confiscation of imported goods and imposition of penalties.
3. Applicability of extended period of limitation.
4. Interpretation of Section 28 of the Customs Act, 1962.
5. Imposition of penalty under Section 112 of the Customs Act, 1962.

Issue 1: The case involved the Respondent purchasing DEPB Scrips and availing customs duty exemption on imported goods using forged shipping documents. The DGFT Authority canceled the DEPB Scrips due to the submission of forged documents by M/s. Megna Impex. A show cause notice was issued proposing duty demand and penalties on all parties. The Adjudicating Authority confiscated the goods, imposed a redemption fine, and ordered duty recovery from the Respondent while refraining from penalizing them.

Issue 2: The Revenue contended that the Respondent, involved in fraud, should not benefit under the law, citing relevant court decisions. The Respondent's advocate reiterated the findings of the Commissioner (Appeals) and argued that the duty demand was time-barred. The Tribunal noted that the Respondent was a bonafide purchaser, and the extended limitation period could not apply, referencing legal precedents.

Issue 3: The Tribunal analyzed the absence of evidence showing the Respondent's involvement in fraudulent activities related to the DEPB Scrips. As per Section 28 of the Customs Act, duty demands based on collusion or misstatements are subject to a longer limitation period. Since no collusion or misstatement was proven against the importer, the demand of duty under the extended period was deemed unsustainable.

Issue 4: Referring to the decision of the Hon'ble Punjab & Haryana High Court, the Tribunal highlighted that the Commissioner (Appeals) had correctly followed legal precedents in dismissing the Revenue's appeal. The Tribunal emphasized that penalties were not applicable under Section 112 of the Customs Act in this case, and the duty demand was time-barred, leading to the rejection of the Revenue's appeal.

Issue 5: The Tribunal concluded that the demand of duty was not sustainable due to the absence of collusion or misstatements by the importer. The confiscation of goods and redemption fine were also deemed unjustified. Relying on legal interpretations and precedents, the Tribunal rejected the Revenue's appeal, affirming the Commissioner (Appeals) decision.

Overall, the Tribunal upheld the Commissioner (Appeals) decision, highlighting the lack of evidence implicating the Respondent in fraudulent activities and emphasizing the inapplicability of penalties and duty demands based on collusion or misstatements.