2017 (9) TMI 1137 - AT - Customs

Benefit of N/N. 39/96-Cus dated 23.07.1996 - duty paying invoices - The benefit was found to be claimed by submitting forged customs duty exemption certificates purpotedly issued by the GM, OEF, Kanpur - Held that - the appellant M/s. Anurag Trading Co. have imported goods covered by the five BOEs without payment of duty fraudulently claiming the benefit of notification no. 39/1996 on the basis of CDECs which have not been issued by the OEF Kanpur. The claim of the appellant that such CDECs were furnished to them by various officials of OEF have been disproved by the investigation carried out by Revenue. In fact, the investigation carried out by Revenue has brought out the fact that OEF Kanpur has not issued any CDECs authorizing duty free import. In view of the above discussion, we are of the view that the customs duty demands raised in show cause notice dated 08.07.2011 which have been upheld by the adjudicating authority needs to be sustained along with penalties imposed on M/s. Anurag Trading Co. along with interest under section 28 AB and section 28 AA of the customs act 1962. Demands raised under section 28B in respect of 39 BOE filed during the period August 1996 to January 2004 were issued vide the relevant show cause notice on 05.03.2013 - It has been argued that even though no time limit has been prescribed in the section 28B of the Customs Act it is settled position of law that the time limit applicable for demand of customs duty under section 28 ibid is also applicable to the recovery of amount under section 28B - Held that - By considering time limit of five years specified under section 28, we find that the entire demand raised under section 28B in show cause notice dated 05.03.2013 becomes hit by time bar. Consequently, entire demand confirmed by the adjudicating authority with reference to show cause notice dated 06.03.2013 are hit by time bar and hence is to be set aside. Consequently, there will also be no justification for imposition of any penalties. The levy on penalty in terms of show cause notice dated 08.07.2011 has been challenged by the CHA on the ground that they had filed the documents before the Customs authorities for clearance of goods on behalf of the importer M/s. Anurag Trading Co. only on the basis of documents given to them by the importer - there is nothing on record to show that CHA, M/s. Trinetra Impex Pvt. Ltd. had any role to play in forging of the certificates or in mis-leading the customs authorities. Consequently, we are of the view that imposition of penalty on Shri Kailash Gupta, the Director of M/s. Trinetra Impex Pvt. Ltd. is without justification and is required to be set aside. Appeal allowed - decided partly in favor of appellants.

Issues Involved:
1. Legitimacy of customs duty exemption certificates (CDECs) used by M/s. Anurag Trading Co.
2. Demand for customs duty amounting to ?21,05,024/-.
3. Demand for ?2,19,52,108/- under section 28B of the Customs Act.
4. Penalty imposition on M/s. Trinetra Impex Pvt. Ltd., CHA.

Detailed Analysis:

1. Legitimacy of Customs Duty Exemption Certificates (CDECs):

The customs department received information that M/s. Anurag Trading Co. imported goods without paying customs duty by using forged CDECs purportedly issued by the General Manager, Ordnance Equipment Factory (OEF), Kanpur. During the investigation, the GM, OEF, confirmed that no such CDECs were issued. M/s. Anurag Trading Co. admitted to clearing goods without payment of duty based on these certificates. The appellant argued that they were not provided copies of the alleged forged CDECs and that cross-examination of OEF officials was denied.

2. Demand for Customs Duty Amounting to ?21,05,024/-:

The demand for customs duty was based on five Bills of Entry (BOEs) where M/s. Anurag Trading Co. claimed exemption using forged CDECs. The appellant contested this demand, arguing that they were not provided copies of the forged certificates relevant to the BOEs in question. However, the investigation confirmed that OEF did not issue any such certificates, and the appellant admitted to importing goods without payment of duty. The tribunal upheld the demand of ?21,05,024/- along with interest and penalties under sections 28AB and 28AA of the Customs Act.

3. Demand for ?2,19,52,108/- under Section 28B of the Customs Act:

The demand under section 28B was for amounts allegedly collected by M/s. Anurag Trading Co. from OEF as customs duty, despite the goods being imported duty-free using forged CDECs. The appellant argued that the demand was time-barred, citing case laws that suggest the time limit for demands under section 28B should align with section 28 of the Customs Act. The tribunal agreed, noting that the demand raised in the show cause notice dated 06.03.2013 was beyond the permissible time limit and thus set aside the entire demand and related penalties.

4. Penalty Imposition on M/s. Trinetra Impex Pvt. Ltd., CHA:

M/s. Trinetra Impex Pvt. Ltd. challenged the penalties imposed on them, arguing that they filed documents based on what was provided by the importer, M/s. Anurag Trading Co., and had no role in forging the certificates. The tribunal found no evidence that the CHA was involved in the forgery or misled customs authorities. Consequently, the penalties imposed on M/s. Trinetra Impex Pvt. Ltd. were set aside.

Order:

1. The demand of ?21,05,024/- along with interest and penalties on M/s. Anurag Trading Co. was upheld.
2. The demand of ?2,19,52,108/- under section 28B along with penalties was set aside.
3. Penalties imposed on M/s. Trinetra Impex Pvt. Ltd. were set aside.
4. Appeals were partially allowed.

Conclusion:

The tribunal upheld the customs duty demand of ?21,05,024/- against M/s. Anurag Trading Co. but set aside the larger demand of ?2,19,52,108/- under section 28B due to being time-barred. Penalties on M/s. Trinetra Impex Pvt. Ltd. were also set aside, concluding that they were not complicit in the fraud. The order was pronounced in the open court on 10.08.2017.

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