The CESTAT allowed the appeal, holding that the department...

The CESTAT allowed the appeal, holding that the department failed to establish mis-declaration of exported gaskets with incontrovertible evidence. The tribunal emphasized the violation of natural justice due to denial of cross-examination and non-compliance with Section 138B of the Customs Act. It held that once a drawback refund is sanctioned by a competent authority, it cannot be recovered without challenging the original assessment order. The extrapolation of findings from other exporters to the appellants was rejected as speculative. The impugned goods, having been examined and cleared by customs officers, were not liable for confiscation, fine, or penalty. The tribunal declined to interfere with the pending drawback claim of Rs. 7,98,000, leaving it to the competent authority's discretion. Consequently, the recovery proceedings and penalties were quashed, and the appeal was allowed.