Forged Scrips Void Ab Initio, Importers Can't Claim Innocence: CESTAT Rules Fraud Vitiates All

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that when the Scrips are forged they are void ab initio since fraud vitiates everything and the importers cannot be permitted to take plea that they were not involved in the fraud or forgery, even though the Scrips were forged.

The bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that the importer engaged a broker for clearance of the exported consignments and Sharafat Hussain, a “G‟ card holder of this customs broker, had cleared the goods. The confirmation of customs duty with interest upon Raja Ram and Company and imposition of penalty upon Jinender Jain is justified.

The appellant, Raja Ram and Company is engaged in the import and trading of paper and paper articles. Intelligence was gathered that some persons gained illegal access to the Electronic Data Interchange5 systems of the Indian Customs and tampered with details at the Inland Container Depot, Tughlakabad Port of Duty Free Scrips issued by the Directorate General of Foreign Trade.

These Duty Free Scrips were found to have been utilised for payment of import duties by certain importers for import of paper and paper articles. Investigation also revealed that these Scrips were used by various importers by using the services of one common customs broker namely, “M/s Kirti Cargo” for filing the Bills of Entry for clearance of the import consignments. It was also found that the customs clearance related work of this customs brokers was looked after by one Sharafat Hussain, a “G‟ card holder of the said customs broker company.

Sharafat Hussain engaged himself in sale/purchase of these Scrips through his companies/firms namely M/s Zealous Overseas Pvt Ltd., M/s Zealous International, M/s Fibertech and M/s Fiber Exim. Investigation also revealed that Sharafat Hussain got the Scrips particulars entered fraudulently in the EDI system through one Shri Vinod Kumar Pathror who posed himself as an employee of M/s Kirti Cargo and entered the user ID and password of the department officers to gain access to the EDI system.

It was also revealed that the said Vinod Kumar Pathror fraudulently entered the enhanced amount of value/duty exemption against the Scrips in the EDI system and also registered fictitious /non-existent Scrips in the EDI system.

M/s Raja Ram and Company has assailed the portion of the order passed by the Principal Commissioner of Customs, Import Commissionerate, Inland Container Depot, Tughlakabad, New Delhi that confirms the demand of Customs duty imposed upon Raja Ram and Company under section 28(4) of the Customs Act, 19623 with applicable interest and penalties under section 114A and 114AA of the Customs Act.

Jinender Kumar Jain4, partner of M/s Raja Ram and Company to assail that portion of the order dated 18.11.2019 passed by the Principal Commissioner that imposes a penalty upon Jinender Jain under section 112(b)(ii) of the Customs Act.

The CESTAT held that the confirmation of customs duty with interest upon Raja Ram and Company and imposition of penalty upon Jinender Jain is justified.

Case Details

Case Title: M/s Raja Ram And Company Versus Customs Principal Commissioner

Case No.: Customs Appeal No. 50242 of 2020

Date: 14.05.2025

Counsel For Appellant: Vijai Kumar

Counsel For Respondent: Nagendra Yadav

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