Mis-declaration to DGFT does not fall within the purview of S. 114AA of the Customs Act: CESTAT [Read Order]
CESTAT held that the alleged misdeclaration by the appellant to DGFT was not a declaration in a proceeding under the Customs Act but instead under the Foreign Trade Policy
![Mis-declaration to DGFT does not fall within the purview of S. 114AA of the Customs Act: CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/01/Mis-declaration-to-DGFT-DGFT-114AA-of-the-Customs-Act-CESTAT-Customs-Customs-Excise-and-Service-Tax-Appellate-Tribunal-In-a-recent-ruling-Delhi-Bench-of-CESTAT-SCN-Taxscan.jpg "Mis-declaration to DGFT does not fall within the purview of S. 114AA of the Customs Act: CESTAT [Read Order]")
In a recent ruling, the Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the alleged misdeclaration by the appellant to the Directorate General of Foreign Trade ( DGFT ) did not fall within the purview of Section 114AA of the Customs Act, 1962. In the year 2011, show cause notices (SCN) were issued to multiple manufacturers, including the...
In a recent ruling, the Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the alleged misdeclaration by the appellant to the Directorate General of Foreign Trade ( DGFT ) did not fall within the purview of Section 114AA of the Customs Act, 1962.
In the year 2011, show cause notices (SCN) were issued to multiple manufacturers, including the appellant, M/s. Nimbark Textile Mills, and their proprietors.
Become PF & ESIC Pro: Basic to Advance Course - Enroll Today
The SCN contained the allegations of misdeclaration of the year of manufacture of machinery in applications for licenses under the Export Promotion Capital Goods (EPCG) scheme, governed by the Foreign Trade (Development & Regulation) Act, 1992, and the associated Foreign Trade Policy (2009–2014). The EPCG scheme allows for duty-free or concessional duty imports of capital goods, provided that the importer meets specific export obligations.
The Commissioner of Customs observed that the misdeclaration in applications to DGFT invalidated the licenses obtained under the EPCG scheme. Consequently, duties were demanded along with interest, redemption fines were imposed, and personal penalties under Section 114AA were levied against the individuals, including S.B. Agarwal.
Become PF & ESIC Pro: Basic to Advance Course - Enroll Today
On appeal, the Tribunal had initially remanded the matter to the Commissioner, awaiting clarity on the jurisdictional issue raised in related Supreme Court proceedings. After jurisdiction was clarified by the apex court, the matter was heard and decided afresh.
The CESTAT observed that Section 114AA of the Customs Act, 1962 penalizes false declarations made knowingly or intentionally in proceedings under the Customs Act. It held that the alleged misdeclaration by the appellant to DGFT was not a declaration in a proceeding under the Customs Act but instead under the Foreign Trade Policy and thus, the the section was inapplicable.
Become PF & ESIC Pro: Basic to Advance Course - Enroll Today
The tribunal further observed that “the Commissioner also did not exercise his discretion to decide if penalty should be imposed or not on the appellant even if he wrongly concluded that the appellant was liable to penalty under Section 114AA of the Customs Act.”
The bench, comprising of Justice Dalip Gupta (President) and P V subba Rao alloweed the appeal filed by the assessee.
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
