Penalty u/s 114AB of Customs Act not imposable in any instrument by fraud, collusion, wilful mis-statement or suppression of fact: CESTAT

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has clarified the scope of penalty under Section 114AB of the Customs Act. This section provides for a penalty on any person who obtains an instrument, such as a license or a duty credit scrip, by means of fraud, collusion, willful misstatement, or suppression of facts. The tribunal held that this penalty is not imposable in every case where such an instrument is used. It must be proven that the person who is being penalized was the one who actually obtained the instrument through fraudulent means. If a person has merely used an instrument that was obtained by someone else through fraud, without being a party to the initial fraud, they cannot be penalized under this specific section. This ruling provides an important distinction and protects bona fide users of such instruments from being penalized for the original sin of another party.