Appeals dismissed for forged TRAs and manipulated import registrations; appellants failed due diligence, extended limitation denied

CESTAT held that appeals were dismissed where import licences/registrations were manipulated and TRAs were forged; the appellants' plea of ignorance was rejected because they failed to obtain TRAs from the port of registration or verify their authenticity, thus not exhibiting required due diligence. The issue was treated as covered by an earlier division bench decision, and invocation of the extended limitation period was not permitted.

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Issues: (i) Whether demand of duty could be confirmed by invoking the extended period of limitation under Section 28(4) of the Customs Act, 1962 in view of fraudulent/forged registration and use of scrips; (ii) Whether penalty under Section 114A and Section 114AA of the Customs Act, 1962 could be imposed on the importer for use of fraudulently registered scrips.

Issue (i): Whether demand of duty could be confirmed by invoking the extended period of limitation under Section 28(4) of the Customs Act, 1962 in view of fraudulent/forged registration and use of scrips.

Analysis: The Tribunal examined the timeline for computing the five-year period using Explanation 1(a) to Section 28 and found the relevant date as the out-of-charge/clearance date. The record showed forged/fraudulently registered scrips were used by the importer and the allegation of fraudulent registration was uncontested. Reliance was placed on authority holding that forged/void-ab-initio licenses/scrips permit invocation of extended limitation and that buyers lack of knowledge does not negate duty liability though it may bear on penalty. The Tribunal also considered the importers failure to demonstrate due diligence regarding TRAs and registration veracity.

Conclusion: The extended period of limitation under Section 28(4) is invocable and the demand of duty is confirmed against the importer; conclusion is against the appellant and in favour of the Revenue.

Issue (ii): Whether penalty under Section 114A and Section 114AA of the Customs Act, 1962 could be imposed on the importer for use of fraudulently registered scrips.

Analysis: Section 114A prescribes penalty where duty is not levied or short-levied by reason of collusion, wilful mis-statement or suppression of facts; Section 114AA applies where declarations in the bill of entry are false/incorrect. The Tribunal found that use of invalid/non-existent scrips and deliberate mis-notation of scrip number indicated mis-statement and suppression, and cited authority that mandatory penalty under Section 114A cannot be reduced and that Section 114AA applies where documents are falsified with conscious knowledge.

Conclusion: Penalties under Section 114A and Section 114AA are rightly imposed; conclusion is against the appellant and in favour of the Revenue.

Final Conclusion: The appeal is without merit and is dismissed; the extended limitation period was rightly invoked, duty demand confirmed, and penalties under Sections 114A and 114AA lawfully imposed.

Ratio Decidendi: Where scrips/licenses are forged or void ab initio and duty has not been levied by reason of collusion, wilful mis-statement or suppression of facts, the extended period under Section 28(4) is invocable and mandatory penalties under Sections 114A and 114AA follow.

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