Misclassifying Goods and Fraudulently Availing benefit of License: CESTAT imposes Penalty u/s 114 AA of Customs Act [Read Order]

The Ahmedabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) imposed a penalty under Section 114AA of the Customs Act, 1962, for misclassifying goods and fraudulently availing benefits of a license.

M / s Fashion Accessories obtained the MEIS scrips fraudulently by way of mis-classification of their goods at the time of export in order to avail higher amounts of incentive. The scrips so obtained were further sold/transferred to others and utilized by them by debiting such scrips at the time of import

The excess MEIS benefit as alleged to be claimed was immediately and voluntarily deposited along with due interest. The Appellant has paid the differential amount immediately on raising objection by DRI on its own before issuance of SCN along with interest as it has absolute respect for the process of law and to avoid litigation. This validates their intentions of good faith and respect for the law of the nation.

Moreover, a penalty was imposed by the DGFT for the same cause of action, against which an appeal was filed before Additional Director General of Foreign Trade on 26.06.2023 and is pending for adjudication. However, the Commissioner, Customs has mentioned in the Order that the Appellant has not filed any appeal for the penalty imposed by DGFT. At the stage of hearing it was mentioned that appeal against order of Additional DGFT has been allowed

The Reliance was also placed on the judgment of M / s Vedika Metals Pvt. Ltd. passed by the CESTAT, wherein it was held that the penalties cannot be levied on the Appellant and its Directors separately for the same offense where DOPT has already initiated action and imposed a penalty for the same offense.

The bench found the order was maintainable as far as the penalty of M/s. FASHION ACCESSORIES are concerned. The role of Jile Singh Manager Export and Pardeep Arora Manager Shipping has been found to be not showing any knowledge and connivance, so as to warrant penalty under Section 114 (iii), 112 or 114 AA of the Customs Act, 1962.

The two member bench of the tribunal comprising Raju ( Technical member ) and Somesh Arora ( Judicial member ) observed that no further reduction in penalty as far as M/s. FASHION ACCESSORIES are concerned. The tribunal considered that in the instant case, the deliberate conduct is writ large on the face of factual matrix.

However, since penalty has been imposed on firms, and  do not consider it justified to impose separate penalty on the partner, therefore against the partner Mr. Anoop Thatia was dispensed with in the facts and circumstances of this matter. Ordered accordingly. Penalty on the form was maintained. Appeals of individuals are allowed.

To Read the full text of the Order CLICK HERE

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