The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, upheld the customs demand, interest and penalties for using a fraudulently registered Focus Product Scheme (FPS) licence, since forged licences/ Telegraphic Release Advice (TRA) render imports void ab initio and due diligence is not exercised.

Reference was made to Section 114A of the Customs Act, which provides for a penalty for short levy or non-levy of duties in certain cases. Since, in the instant case, it is not in dispute that the impugned order has confirmed the demand of duty for the reason that it was not paid, the Tribunal held that the penalty under section 114A of the Customs Act was correctly imposed.

The Division Bench comprising Rachna Gupta (Judicial Member) and P V Subba Rao (Technical Member) observed that after the purchase of a license, the importers did not apply for the issue of Telegraphic Release Advice (TRA) from the port of Registration (POR), as was required to obtain the TRAs from the brokers. Not only that, they also failed to ascertain the veracity of such TRAs from the Port of Registration. Thus, the due diligence that was required to be exhibited by the importer was not carried out.

It clearly transpires from the decision of Mercedes-Benz India Private Limited vs. Commissioner of Customs [Customs Appeal No. 52009 of 2018], that, though a contention had been raised that the appellants are not aware that TRAs are manipulated or forged, this contention was not accepted.

In the said case, it was also held that since the appellants had not applied for the issue of TRAs from the port of registration, as was required to be done, and they also failed to ascertain the veracity of such TRAs from the port of registration, due diligence was not exhibited.

Briefly, the Appellant, an importer of household goods and other related items, had imported goods using a Focus Product Scheme Licence issued by DGFT, which was manipulated and registered at ICD Patparganj. When the manipulation was discovered during the investigation, the Appellant did not dispute the position but claimed that they did not know about the manipulation. Later on, the Joint Commissioner confirmed the demand for duty and recovery of interest under section 28AA of the Customs Act, 1962 and penalty under section 114A of the Customs Act.

Appearances:

Advocates Vishal Nath and S C Jain, for the Appellant/ Taxpayer

M K Shukla, for the Respondent/ Revenue