2024 (3) TMI 364 - AT - Customs

Extended Period of limitation u/s 28 - Demand duty - confiscation - penalty - ab initio cancellation of the scrip - Forged Shipping Bills - DEPB Scrips issued to exporters as an incentive by the DGFT - goods claiming exemption no. 97/2009 - home consumption - HELD THAT - We find that the position of law is that extended period of limitation u/s 28 can only be invoked only if the non-payment or short payment of duty is on account of collusion, wilful misstatement or suppression of facts by the importer. None of these aggravating factors which will make extended period of limitation invokable in the case were alleged, let alone, established against the importer either in the SCN or in the order in original or the impugned order. Therefore, extended period of limitation could not have been invoked in this case and the demand itself is hit by limitation. It cannot therefore be sustained. Since the demand is not sustainable on limitation itself, it is not necessary for us to examine the demand on merits. The demand needs to be set aside along with the consequential order holding the imported goods liable to confiscation and the penalty imposed on the appellant. Thus, the appeal is allowed and the impugned order is set aside insofar as it pertains to the appellant herein.

Issues involved:
The issues involved in the case are the denial of benefit of DEPB license, confirmation of customs duty, confiscation of goods, imposition of penalties, validity of DEPB Scrips, ab initio cancellation of the scrips, extended period of limitation, and the question of collusion, wilful misstatement, or suppression of facts by the importer.

Summary of Judgment:

Denial of Benefit of DEPB License and Confiscation of Goods:
The appellant appealed against the Order-in-Appeal upholding the Order in Original confirming customs duty and imposing penalties. The appellant purchased DEPB Scrips from M/s. Super Trading Co. and used them to clear goods. However, it was later discovered that the Shipping Bills used to obtain the scrips were forged, leading to the cancellation of the scrips ab initio. The Customs issued a Show Cause Notice to the appellant, which resulted in the impugned order. The appellant argued that the scrip was valid at the time of import and should not be held against them. The Tribunal considered the submissions and found that the demand was hit by limitation, thus setting aside the order holding the goods liable to confiscation and penalties.

Validity of DEPB Scrips and Ab Initio Cancellation:
DEPB Scrips are issued to exporters as an incentive, and in this case, the scrips were sold to the appellant by M/s. Super Trading Co. The appellant used the scrips to clear goods, but their validity was later questioned due to forged Shipping Bills. The Tribunal noted that the cancellation of the scrips ab initio had consequences for the appellant, as they could not claim exemption based on invalidated scrips obtained through fraud.

Extended Period of Limitation and Allegations of Collusion:
The Customs invoked the extended period of limitation under section 28, alleging collusion and wilful misstatement by the exporter. The appellant contested this, arguing that the extended period could only be invoked if the importer was involved in malafide acts. The Tribunal found that none of the aggravating factors justifying the extended period were alleged or established against the importer. Therefore, the demand was hit by limitation and could not be sustained.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order in favor of the appellant due to the demand being unsustainable on limitation grounds. The order holding the imported goods liable to confiscation and the penalties imposed were also set aside.

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