Custom, Excise & Service Tax Tribunal
Metricstream Infotech India Pvt Ltd vs Principal Commissioner Of Customs-New ... on 23 March, 2026
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. III
CUSTOMS APPEAL NO. 50201 of 2024
[Arising out of Order-in-Original No.09/2023-2024/S.J./Principal Commissioner
dated 04.08.2023 passed by the Principal Commissioner of Customs, Air
Cargo Complex (Import), New Customs House, New Delhi]
M/s.MetricStream Infotech (India)Pvt.Ltd. ...APPELLANT
23,24, AMR Tech Park-4B,
Hongasandra Village, Begur Hobli,
Bangalore-560 068.
Versus
Principal Commissioner of Customs, ...RESPONDENT
Air Cargo Complex (Import), New Customs House, Near IGI Airport, New Delhi-110 037.
AND CUSTOMS APPEAL NO. 50059 of 2024 [Arising out of Order-in-Original No.09/2023-2024/S.J./Principal Commissioner dated 04.08.2023 passed by the Principal Commissioner of Customs, Air Cargo Complex (Import),New Customs House, New Delhi] Shri Rajesh Shetty, Chief Financial Officer (CFO) ...APPELLANT M/s.MetricStrem Infotech (India)Pvt.Ltd.
23,24,AMR Tech Park-4B, Hongasandra Village, Begur Hobli, Bangalore-560 068.
Versus Principal Commissioner of Customs, ...RESPONDENT Air Cargo Complex (Import), New Customs House, Near IGI Airport, New Delhi-110 037.
APPEARANCE:
Shri V. Raghuraman, Senior Advocate, Shri Bhanumurthy I. and Ms. Sandhya Raghuraman, Advocates for the appellant. Shri M.K. Shukla, Authorised Representative for the Revenue.
CORAM:
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL) HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) FINAL ORDER NOs.50397-50398/2026 2 DATE OF HEARING:03.02.2026 DATE OF DECISION: 23.03.2026 BINU TAMTA:
1. Challenge in the present appeals is to the confirmation of the show cause notice issued under the provisions of Section 28AAA of the Customs Act, 1962 1 for having fraudulently obtained three Service Export from India Scrips2 by falsely declaring the services exported as „Management Consulting Services‟ under Central Product Classification3 86503 though in fact, the services rendered were „Information Technology and IT - Enabled Services‟ classifiable under Division 84 of the UN-CPC.
2. The factual matrix of the case is that the appellant is a wholly owned subsidiary of M/s. Metric Stream, Inc, USA and is engaged in the business of providing „Information Technology Software Services‟/‟IT Enabled Services‟ related to „Computer Programming‟, „Consultancy and related Services‟ in terms of the Master Service Agreement with its parent company. The appellant had filed an application under Service Export from Indian Scheme with respect to „Marketing Support Services‟ provided to the parent company. Based on the investigations by DRI, it appeared that the IT services provided by the appellant were not eligible for SEIS benefit in terms of Trade Notice No.4/2018. During the course of investigation, statement of Shri Rajesh Shetty, Chief Financial Officer of the appellant was recorded under Section 108 of the Act, wherein he admitted that they were not eligible for SEIS benefits in 1 The Act 2 SEIS 3 CPC 3 respect of „Marketing Support Services‟ provided by their company and accordingly, voluntarily made payment of SEIS duty vide challan dated July 11, 2019 along with applicable interest. As the scrips were freely transferable in terms of the Foreign Trade Policy read with sub-clause 2(5) of Notification No.25/2015-Cus dated April 8, 2015, the appellant had transferred the SEIS scrips issued to them through M/s. FTS India Pvt. Ltd., Mumbai to M/s. MMTC PAMP India Pvt. Ltd., Gurugram, Haryana, who utilized these SEIS scripts for payment of duties against imports made by them during the period 2015-2016, 2016-2017 and 2017-2018.
3. On the basis of the investigation, the Dy. Director General of Foreign Trade, DGFT, Bengaluru issued show cause notice dated August 11, 2020 to the appellant for cancellation of licences/scrips and penalty thereof. Vide order dated March 26, 2021, Addl. DGFT, Bengaluru cancelled 3 SEIS scrips issued to the appellant.
4. Subsequently, show cause notice dated December 9, 2021 was issued by DRI under the provisions of Section 28sAAA of the Act as the appellant had mis-declared their exported services in ANF-3B Form and fraudulently obtained SEIS scrips and subsequently transferred or sold the scrips to MMTC, who utilized the same for their imports. In view thereof, the duty amounting to Rs.2,05,06,646/- was demanded along with interest and penalty under Section 112(a), 114AB and 114AA. Also proposed confiscation of the goods under Section 111(m) and 111(o) of the Act. On adjudication, the ld. Commissioner held that the appellant deliberately and wilfully mis-represented the nature of the services rendered to their foreign parent company before DGFT and obtained 4 SEIS scrips, to which they were not entitled to and therefore, they were liable to pay duty equal to the amount of scrips utilized in terms of the provisions of Section 28AAA of the Act. The confiscation of the goods under Section 111(m) and (o) was upheld as the conditions of exemption notification were breached though no redemption fine was imposed since the goods were not available for seizure. Taking a lenient view as the appellant had voluntarily made the payment, the quantum of penalty imposed was of lesser amount under Section 114AB as well as Section 114AA and 112(a) of the Act on the appellant company and separately on Shri Rajesh Shetty, CFO. Being aggrieved, 2 separate appeals have been filed by the appellant company and their CFO respectively.
5. Heard Shri V. Raghuraman, Senior Advocate for the appellant and Shri M.K. Shukla, Authorised Representative for the respondent. We have perused the records of the case, the statutory provisions and the decisions cited by both the sides.
6. The submissions of the learned Counsel for the appellant is that they had correctly declared the services rendered by them as the „Marketing Support Services‟ provided by them to their parent company falling within the definition of „Marketing, Management and Consulting Services‟. The main challenge by the learned Counsel was to invocation of the provisions of Section 28AAA of the Act as the said provisions could be invoked only where the scrips are obtained by collusion, wilful mis-statement or suppression of facts. To elaborate his arguments, he has submitted that in terms of Section 9 of FT(DR)Act, 1992 read with Rule 10 of FT(R) Rules, 1993, scrips could be cancelled, (a) where such 5 scrips are obtained by fraud or suppression of facts or mis-
representation; (b) where there is breach of conditions of the scrips; (c) for tampering with the license; or (d) for contravention of provisions of Customs or FEMA. In the present case, it is clear from para-12 of the order of DGFT that the scrips have been cancelled for the reason that can be covered only under (b) above and not (a). Consequently, the provisions of Section 28AAA could not be invoked and hence the order of the respondent is required to be quashed.
7. Learned Counsel has challenged the proceedings as the same are based on the statements of CFO and in terms of Section 138B of the Act, the statement recorded during the investigation cannot be considered as evidence unless the procedure of examination in chief by the Adjudicating Authority is followed. He has challenged the confiscation of the goods as well as the levy of penalty. It is submitted that though the DGFT had cancelled the scrips, there is no finding that the scrips are obtained by way of fraud or wilful mis-statement, mis- representation of facts. On the same basis, no penalty can be imposed under the provisions of Section 114AA and 112(a) of the Act.
8. Learned Authorised Representative for the Department reiterated the findings of the Adjudicating Authority that in terms of Section 28AAA, the recovery is from the person to whom the instrument was issued, if such instrument is obtained by collusion, wilful mi-statement or suppression of facts. It was emphasized that the cancellation of the scrips ab initio by the DGFT is conclusive that the instrument was not valid and, therefore, the corresponding duty exemption under the notification automatically fails.
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9. Learned Authorised Representative argued that Section 138B governs the use of statements as a whole evidence of truth of facts, where the maker is not examined and in the present case, the statement was voluntarily recorded and is duly corroborated by documentary evidence. Since the scrips have been cancelled ab initio, the imports made using them seized to satisfy the conditions of the notification and, therefore, the goods were rightly held to be confiscated. Learned Authorised Representative justified the imposition of penalty under Section 114B, 114AA and 112(a) of the Act.
10. Before considering the issue on merits for initiating the proceedings under the provisions of Section 28AAA of the Act, we may take note of the background for issuance of SEIS scrips as recorded in the impugned order: -
"8.1 As per FTP 2015-2020, Service Providers of Notified Services, located in India, shall be rewarded under SEIS, subject to conditions as may be notified. Only Services rendered in the manner as per Para 9.51(i) and Para 9.51(ii) of the policy shall be eligible for SEIS benefit. The notified services and rates of rewards are listed in Appendix 3D. SEIS is a reward computed based on the 'net' free foreign exchange realized and the percentage of this reward is specified in Appendix 3D of the FTP 2015-20. Benefit allowed under this scheme is 3% to 7% (as amended from time to time) as per nature of services supplied and the Scrips can be used for the payment of Custom duties on imports, payment of excise on domestic procurement, including capital goods and payment of service tax. The duty Scrips are freely transferable. The SEIS entitlements were as per Public Notice No. 03 dated 01/04/2015 (as amended by DGFT) issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce on all the list of services as in Appendix 3D therein.
8.2 Further, DGFT vide Trade Notice No. 04/2018 dated 25.04.2018 has noted that "the Appendix 3D does not mention any service as IT/ITeS Service and only has a positive list of the Services, with a CPC Provisional code which has been made eligible for claiming benefit under 7 SEIS" and also clarified that "only the service categories which have been notified in Appendix 3D for SEIS are allowed for claim under SEIS" From the above trade notice, it is clear that the services provided by a company should be listed in Appendix 3D for them to be eligible for SEIS."
11. The fact that DGFT, Bengaluru had cancelled the SEIS scrips void ab-initio implies that exemption was never available to the appellant as they had wilfully mis-declared their services as „Management Consulting Services‟ in Annexure-3B submitted before the DGFT, whereas they were rendering „Information Technology‟ and „Software Service and Information Technology Enabled Services‟. Therefore, the issue of classification of the services requires no further consideration. Once the scrips stood cancelled, the appellant was not eligible to avail the benefit thereof.
12. To consider the applicability of Section 28AAA, the provisions thereof are set out below: -
"Section 28AAA (1) Where an instrument issued to a person has been obtained by him by means of-
(a) collusion; or
(b) wilful misstatement; or
(c) suppression of facts, for the purposes of this Act or the Foreign Trade (Development and Regulation) Act, 1992, Act of 22 of 1992. 2[or any other law, or any scheme of the Central Government, for the time being in force, by such person] or his agent or employee and such instrument is utilised under the provisions of this Act or the rules [or regulations] made or notifications issued thereunder, by a person other than the person to whom the instrument was issued, the duty relatable to such utilisation of instrument shall be deemed never to have been exempted or debited and such duty shall be recovered from the person to whom the said instrument was issued:
Provided that the action relating to recovery of duty under this section against the person to whom the instrument was issued shall 8 be without prejudice to an action against the importer under section
28.
Explanation 1.- For the purposes of this sub-section, "instrument" means any scrip or authorisation or licence or certificate or such other document, by whatever name called, issued under the Foreign Trade (Development and Regulation) Act, 1992, (22 of 1992) [or duty credit issued under section 51B, with respect to] a reward or incentive scheme or duty exemption scheme or duty remission scheme or such other scheme bestowing financial or fiscal benefits, which may be utilised under the provisions of this Act or the rules made or notifications issued thereunder.
Explanation 2. The provisions of this sub-section shall apply to any utilisation of instrument so obtained by the person referred to in this sub-section on or after the date on which the Finance Bill, 2012 receives the assent of the President, whether or not such instrument is issued to him prior to the date of the assent.
(2) Where the duty becomes recoverable in accordance with the provisions of sub-section (1), the person from whom such duty is to be recovered, shall, in addition to such duty, be liable to pay interest at the rate fixed by the Central Government under section 28 AA and the amount of such interest shall be calculated for the period beginning from the date of utilisation of the instrument till the date of recovery of such duty.
(3) For the purposes of recovery under sub-section (2), the proper officer shall serve notice on the person to whom the instrument was issued requiring him to show cause, within a period of thirty days from the date of receipt of the notice, as to why the amount specified in the notice (excluding the interest) should not be recovered from him, and after giving that person an opportunity of being heard, and after considering the representation, if any, made by such person, determine the amount of duty or interest or both to be recovered from such person, not being in excess of the amount specified in the notice, and pass order to recover the amount of duty or interest or both and the person to whom the instrument was issued shall repay the amount so specified in the notice within a period of thirty days from the date of receipt of the said order, along with the interest due on such amount, whether or not the amount of interest is specified separately.
(4) Where an order determining the duty has been passed under section 28, no order to recover that duty shall be passed under this section.
(5) Where the person referred to in sub-section (3) fails to repay the amount within the period of thirty days specified therein, it shall be recovered in the manner laid down in sub-section (1) of section
142.]"
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Section 28AAA is applicable in case:
i ) where an instrument has been obtained by a person by means of collusion, wilful misstatement or suppression of facts.
ii) where such instrument is utilised by a person other than the person to whom the instrument was issued.
Both the above conditions are satisfied and on the basis of the investigation of DRI, the DGFT had already cancelled the SEIS scrips, resultantly the appellant being the person whom the said instrument was issued is liable from whom such duty has to be recovered.
There seems to be no dispute that SEIS scrips were obtained by mis-declaration as to the nature of services in the application made by them before DGFT and the same were utilised by transferring the same to M/s MMTC who utilised the same for payment of customs duty in the import of goods. It is also an admitted position that DGFT Bengaluru had cancelled the SEIS scrips void ab-initio. The consequence of the above situation would be that the duty relatable to such utilisation of instrument shall be deemed never to have been exempted or debited, and shall be recovered from the person to whom the said instrument was issued. Considering the conditions requisite for applying the provisions of section 28AAA are satisfied and the consequences thereof follow, the provisions section 28AAA of the Act are squarely applicable."
13. The contention of the appellant that provisions of Section 28AAA could be invoked only where scrips are obtained by collusion, wilful misstatement, or suppression of facts is prima facie but DGFT has cancelled the scrips for the reason that the claim was not proper is basically wrong as DGFT had cancelled the scrips on the basis of detailed investigation by DRI that the appellant had mis-stated their export service in the application filed before DGFT and has fraudulently obtained SEIS scrips. The order of DGFT specifically records that the documents establish that the services provided actually fall under „Software Development‟ which are not listed in Appendix 3-D of FTP 2015-20 and hence the service was mis-stated as „Marketing and Management Consultancy‟ which do not support the eligibility to avail 10 the SEIS benefits. In that view, the scrips were deemed to have been cancelled and the demand for duty with interest was held to be confirmed. Thus the cancellation of Scrips void ab-initio by DGFT is conclusive that the instrument was never valid.
14. In support, we would like to refer the decision of the Ahmedabad Bench in Fashion Accessories, Anoop Thatai, Shri Jile Singh, Pradeep Arora Vs. Commissioner-Kandla4, where the factual matrix is identical to the present case. The allegation in the said case was that the appellant have transferred/sold the MEIS Credit scrips to other importers, who had imported the goods by utilising the said transfer MEIS duty credit scrips, which were fraudulently obtained by deliberate suppression of facts by the appellant and proceedings under Section 28AAA of the Act were initiated for recovery of ineligible or wrongly availed duty credit MEIS amount from the appellant therein. The Bench observed that the appellant had intentionally and wilfully stated false information in the shipping bills filed by them at the time of export, classified the goods and availed higher incentive by debiting the scrips which they fraudulently availed and, therefore, the duty amount was justified. In the circumstances, the confiscation of goods under Section 111(m) and (o) and the penalty imposed under Section 112(a)(b), 114AB and 114AA of the Act was affirmed.
15. The learned Single Judge of the Madras High Court in Jeena & Company versus Union of India 5 dealt with the applicability of Section 28AAA of the Act in the circumstances, where DGFT issued SEIS 4 2024 (3) TMI 293 (CESTAT-Ahmedabad) 5 (2024)15 Centax 55 (Mad.) 11 scrips to the appellant, who sold it to third parties and who utilised the same for payment of duties and the contention raised was that it is only the DGFT who have the jurisdiction to enquire into the eligibility and validity of SEIS scrips. The learned Judge referred to Circular No. 334/1/2012-TRU dated June 1, 2012, which provided that Customs Authorities can initiate action for recovery in terms of Section 28AAA of the Act, if the scrips were obtained by means of collusion or wilful statement or suppression of facts, however, action can be initiated for recovery of duty only after DGFT action for cancellation of an instrument, but the matter may be decided only after the instrument has been cancelled by DGFT. Since in that case, DGFT had not initiated any proceedings to cancel the license, it was concluded that the Customs Authorities cannot assume jurisdiction to issue notice under Section 28AAA of the Act. Keeping that in view, we find that in the present case, DGFT had already cancelled the SEIS scrips by a specific order pursuant to the investigation conducted by DRI and, therefore, the provisions of Section 28AAA have been rightly invoked to recover the customs duty.
16. The learned Counsel for the appellant has referred to the decision of the Apex Court in Titan Medical Systems Private Limited versus Collector of Customs, New Delhi6, however, we are afraid that the said decision is not applicable in the facts of the present case. The allegation in that case were limited to the extent that the value indicated by the appellant at the time of applying for license was very large than what was actually spent. Taking note of the fact that the 6 2003 (151) ELT 254 (SC) 12 licensing authority have not claimed that there was any misrepresentation nor any steps were taken to cancel the license, the Court quashed the show cause notice. Here the SEIS scrips issued to the appellant have already been cancelled by the DGFT and in such circumstances department was well within its power to initiate proceedings under section 28AAA to recover the Customs duty.
17. Similarly, reference to the decision of the Delhi High Court in M/s Amit Exports and M/s. Sharma International Vs. Union of India & Ors. 7 is of no relevance due to peculiar circumstance where DGFT had never questioned nor had taken any action against the MEIS certificate, which were wrongly obtained. In the context, the High Court observed that any action under Section 28AAA would have to be preceeded by the Competent Authority under the FTDR Act having come to the conclusion that the instrument had come to be incorrectly issued or illegally obtained. The observations of the Court reads as follows:-
"107. Section 28AAA would thus have to be interpreted as contemplating a prior determination on the issue of collusion, wilful misstatement or suppression of facts tainting an instrument issued under the FTDR Act before action relating to recovery of duty could be possibly initiated. A harmonious interpretation of the two statutes, namely, the Customs and the FTDR Acts leads us to the inescapable conclusion that the law neither envisages nor sanctions a duality of authority inhering in a separate set of officers and agents simultaneously evaluating and adjudging the validity of an instrument which owes its origin to the FTDR Act alone. It is these factors, as well as the role assigned to the DGFT which perhaps weighed upon courts to acknowledge its position of primacy when it come to the interpretation of policy measures referable to the FTDR Act as well as issues of classification emanating therefrom."
18. Following the views expressed by the Gujarat, Allahabad and the Bombay High Court, the Delhi High Court observed:- 7
2024 (11) TMI 1150-Delhi High Court 13 "108................................... We are thus of the firm opinion that it would be impermissible for the customs authorities to either doubt the validity of an instrument issued under the FTDR Act or go behind benefits availed pursuant thereto absent any adjudication having been undertaken by the DGFT. An action for recovery of benefits claimed and availed would have to necessarily be preceded by the competent authority under the FTDR Act having found that the certificate or scrip had been illegally obtained. We have already held that the reference to a proper officer in Section 28AAA is for the limited purpose of ensuring that a certificate wrongly obtained under the Customs Act could also be evaluated on parameters specified in that provision. However, the said stipulation cannot be construed as conferring authority on the proper officer to question the validity of a certificate or scrip referable to the FTDR Act."
19. The Division Bench very aptly emphasised the distinguishing feature in the concluding paragraph that in the absence of DGFT having ruled upon the issue of classification or having expressed any doubt with respect to the eligibility of the petitioners to claim benefits under the MEIS, it would be wholly impermissible for the respondent to take action against the petitioners. All the other subsequent judgements have relied on this decision of the Delhi High Court to say that where DGFT has neither cancelled the instrument nor even initiated proceedings for cancellation of the instrument, the Customs Authorities will not have any jurisdiction to proceed in terms of Section 28AAA. We are, therefore of the opinion that these decisions are of no benefit to the appellant as here the scrips have already been cancelled by specific order dated March 26, 2021 passed by DGFT and which remains unchallenged.
20. The learned Counsel for the appellant has also emphasised on the principle that merely claiming a different classification does not amount 14 to suppression of facts and has referred to the decision of the Apex court in Densons Pultretaknik vs. Commissioner of Central Excise8, however, the said decision and the principle laid therein do not apply in the facts of the present case. Here, by virtue of the nature of the services as „Management Consulting Services‟ mentioned by the appellant in Form ANF-3B seeking SEIS scrips, they became entitled to avail the benefit of the customs duty exemption but had they mentioned the correct nature of services, i.e. IT/ITES, they would not have been entitled to obtain the SEIS scrips. This points to wilful mis-statement and suppression of facts with intent to obtain the SEIS benefits.
21. The contention of the learned counsel that in terms of section 138B of the Act, the statement recorded under Section 108 cannot be considered as evidence unless the procedure of examination in chief by the Adjudicating Authority is followed, is devoid of merits. The statement recorded has not been retracted by Siri Rajesh Shetty rather pursuant to the said statement, the Customs duty along with interest was voluntarily paid. Moreover, the appellant has not substantiated as to what prejudice has been caused by not granting the opportunity of examination in chief. The law is well settled that there is no absolute right to claim examination in chief, especially in view of the wordings used in Clause (2) of Section 138B that the provisions of sub-section (1) shall so far as may be apply in relation to any proceedings under this Act. The Supreme Court in Kanungo & Company 9 considered the complaint made by the appellant that all those persons from whom enquiries were made by the authorities should have been produced to 8 2003 -TIOL-46-SC-CX 9 1973(2) SCC 438 15 enable him to cross-examine them, was turned down and it was observed that the principles of natural justice do not require that in matters like this, the person who have given information should be examined in their presence and should be allowed to be cross-examined by them on the statement made before the Customs Authorities. The same principle was enunciated by the Apex Court in Surjit Singh Chhabra Vs. Union of India 10 holding that since the petitioner had confessed the offence of smuggling, failure to provide an opportunity to cross examine the witness is not violative of the principles of natural justice. The Court categorically observed that the confession, though retracted, is an admission and binds the petitioner, so there is no need to call Panch witnesses for examination and cross examination by the petitioner. In fact, it was clarified that once an admission has been made by the petitioner, the denial of right to cross examine the witnesses is justified as no prejudice can be pleaded by such a party. Reference is also invited to the principle reiterated by the Supreme Court in M/s Telstar Travels (P) Ltd. versus Enforcement Directorate11.
22. Now coming to the confiscation of the goods under Section 111
(m) and (o) and imposition of penalty under the various provisions, we find that in case of fraudulently obtaining of scrips and utilising the same for the import availing duty exemption, the appellant tried to evade customs duty has been considered by the Tribunal in the case of Fashion Accessories and it has been concluded that the goods are liable for confiscation under the said provisions. On the same analogy, 10 1997 (1) SCC 508 11 2013(9) SCC 549 16 the penalty imposed under Section 112(a)(b), 114AB and 114AA of the Act were held to be correctly imposed. In the present case, the appellant had misrepresented the facts before DGFT while filing the application for obtaining the scrips which were intended for sale or transfer to importers for availment of the customs duty benefit. We also find that the Adjudicating Authority have taken a lenient view considering the fact that the appellant had deposited the duty amount along with interest during the course of investigation. Considering the enormous amount of duty demand amounting to Rs.2, 05,06,646/-, the quantum of penalty amount being Rs.15,00,000/- under Section 114AB, Rs.5,00,000/- under Section 114AA and Rs.5,00,000/- under Section 112(a) of the Act is absolutely justifiable and no interference is called for.
23. The decision relied upon by the appellant in the case of Northern Plastic Ltd versus Collector of Customs & Central Excise 12, the Apex Court held that the appellant had not mis-declared the imported goods either by making a wrong declaration as regards the classification of the goods or by claiming benefit of the exemption notifications, which have been found to be not applicable to the imported goods and, therefore, there was no misrepresentation as contemplated by Section 111(m) of the Act for the reason that the appellant had given full and correct particulars as regards the nature and size of the goods. Similarly, in the case of Kirti Sales Corporation versus Commissioner of Customs, Faridabad13, the question considered by the Tribunal was whether the appellant had intentionally and 12 1998 (101) ELT 549 (SC) 13 2008(232) ELT 151 (Tri.-Del.) 17 deliberately mis-declared the goods as non-texturised fabric rather than texturised fabric. The Bench noticed that mis-declaration cannot be understood as wrong declaration, of course, made bonafide and in that view accepted the case that the declaration was made on the basis of document supplied by the foreign supplier and there was no intentional or deliberate wrong declaration or mis-declaration on their part so as to attract the mischief of Section 111(m) of the Act. The various decisions cited by the learned Counsel challenging the imposition of penalties under Section 112(a) and 114AA are basically on the peculiar facts of those cases and cannot be relied on. We, therefore, do not find any reason to interefere with the penalties imposed on the appellant company.
Customs Appeal No.50059/2024
24. Shri Rajesh Shetty, Chief Financial Officer of the Company has challenged the levy of penalty under the provision of Section 114AA and Section 112(a) of the Act. The Adjudicating Authority has justified this imposition of penalty on Shri Rajesh Shetty on the ground that he has knowingly and intentionally signed the Form ANF-3B and that he was responsible for wrongful availment of export benefits under SEIS by the appellant. He has abetted the availment of undue benefits and thereby rendered the goods liable for confiscation. No doubt that the Adjudicating Authority had taken a lenient view in so far as the quantum of penalty is concerned, however, we are of the opinion that in his statement recorded on July 4, 2019, he very fairly admitted that they were not eligible for SEIS benefits in respect of Marketing Support Services provided by the company and thereby voluntarily made 18 payment of SEIS duty on July 11, 2019, along with applicable interest. Considering the fact that Shri Rajesh Shetty was an employee of the company as a Chief Financial Officer was bound to function as per the dictates of the company. Moreover, since the necessary penalties under the various provisions have been imposed on the Company, we do not find any justifiable reason to impose the disputed penalty on Shri Rajesh Shetty. We, therefore set aside the penalty imposed on Shri Rajesh Shetty under the provisions of section 112(a) and section 114AA of the Act.
25. We do not find any reason to interfere with the impugned order in so far as the appellant company is concerned. Accordingly, the Customs Appeal No.50201 of 2024 filed by the Company is dismissed. The impugned order in so far as it imposes the penalty on Shri Rajesh Shetty, Chief Financial Officer is set aside. The Customs Appeal No.50059 of 2024 filed by Shri Rajesh Shetty, CFO is, accordingly allowed.
[Order pronounced on 23rd March, 2026] (BINU TAMTA ) MEMBER ( JUDICIAL ) (HEMAMBIKA R.PRIYA) MEMBER( TECHNICAL ) Ckp.