AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 275
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....been exported and were not available for confiscation nor cleared under a bond, redemption fine in lieu of confiscation has not been imposed. The Principal Commissioner also ordered for recovery of the ineligible Focus Market Scrips from the appellant under section 28AAA of the Customs Act with applicable rate of interest. The amount of drawback under rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 has been dropped, but penalty has been imposed upon the appellant under section 114AA and section 114(iii) of the Customs Act. 2. Customs Appeal No. 52061 of 2019 has been filed by Vijay Kumar Maggu, Director of the appellant, to assail that part of the order dated 29.03.2019 passed by the Principal Commissioner of Customs that imposes penalties upon him under sections 114(iii) and 114AA of the Customs Act. 3. The appellant is engaged in the manufacture and export of Ready Made Garments. It entered into contracts for supplying Ready Made Garments the Goods with Royal Readymade Garment LLC, Lagcy Trading LLC and Lagoon Trading LLC based in U.A.E. To encourage exports to remote markets, the Government introduced the Focus Market Scheme FMS, designed to ....
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....to know that the Goods were actually not exported to Panama. The appellant enquired with the buyer regarding change in the country of destination. It was informed by the buyer that they had directed Imran Mirza, proprietor of the Freight Forwarder, to deliver the consignments to Dubai. 8. The appellant further claims that during investigation it could not be established that the appellant was involved in changing the country of destination, except the statement of Imran Mirza made under section 108 of the Customs Act that he himself amended the Shipping Bills at the direction of the exporter. 9. Vijay Kumar Maggu, Director of the appellant company in his statement dated March 11, 2017 stated that all export documents received by him mentioned the country of export as Panama and he did not instruct anybody to change the country of export. 10. A show cause notice dated June 21, 2017 was issued inter alia proposing to demand ineligible benefit availed under the FMS equivalent to Rs. 1,08,18,409/- under section 28AAA of the Customs Act with interest. It also proposed to impose penalties under section 114AA and section 114 (iii) of the Customs Act on the appellant. 11. The adjudicat....
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....ugh, the license has not been cancelled as yet. Even, otherwise, section 28AAA of the Customs Act would be applicable as the instrument was obtained by means of collusion or willful statement or suppression of facts; (ii) In any case, there is no requirement that unless the DGFT cancels the instrument, the customs officers will not have the jurisdiction to decide the matter; and (iii) The pre-requisite of DGFT cancelling the instrument is not warranted in a case where the issue of collusion, willful misstatement or suppression of facts exist and in the present case this fact has been proved beyond doubt. 14. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 15. The first issue that arises for consideration is whether jurisdiction under section 28AAA of the Customs Act could have been invoked without the DGFT having initiated process for cancellation of the license and whether adjudication could be done as the DGFT did not cancel the instrument. 16. This issue was examined by the Delhi High Court in M/s Amit Exports. The Delhi High Court held that it was not possible t....
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....s conferred by either Rules 8, 9 or 10 of the FTDR Rules. The customs authorities cannot be recognised to have the power or the authority to either question or go behind an instrument issued under the FTDR in law. 106. Taking any other view would result in us recognizing a parallel or a contemporaneous power inhering in two separate sets of authorities with respect to the same subject. That clearly is not the position which emerges from a reading of Section 28AAA. Quite apart from the deleterious effect which may ensue if such a position were countenanced, in our considered opinion, if the validity of an instrument issued under the FTDR Act were to be doubted on the basis of it having been obtained by collusion, wilful misstatement or concealment of facts, any action under Section 28AAA would have to be preceded 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 procedure for recovery of duties and interest would have to be preceded by the competent authority under the FTDR Act having so found and the power to recover duty being liable to be exercised only thereafter. 107. ....
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....ved in Titan Medical Systems (P) Ltd. Vs. Collector of Customs. 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." (emphasis supplied) 17. In this connection, it may also be important to refer to the TRU letter dated 01.06.2012 highlighting the budget changes on the eve of the enactment of the Finance Act, 2012. The relevant portion of the letter is....
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....red to either in section 9D of the Central Excise Act or in section 138B of the Customs Act. A bare perusal of sub-section (1) of these two sections makes it evident that the statement recorded before the concerned Officer during the course of any inquiry or proceeding shall be relevant for the purpose of proving the truth of the facts which it contains only when the person who made the statement is examined as a witness before the Court and such Court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence, in the interests of justice, except where the person who tendered the statement is dead or cannot be found. In view of the provisions of sub-section (2) of section 9D of the Central Excise Act or sub-section (2) of section 138B of the Customs Act, the provisions of sub-section (1) of these two Acts shall apply to any proceedings under the Central Excise Act or the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has to be first examined as a witness before the adjudicating authority and thereafter the adj....
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....stoms Act would not be relevant. 24. The learned authorized representative appearing for the department submitted that since fraud vitiates everything, the notice under section 28AAA of the Customs Act was validly issued for establishing fraud. To support the contention, learned authorized representative placed reliance upon the statement of Imran Mirza, which statement as noticed above made under section 108 of the Customs Act cannot be considered as evidence as Imran Mirza was not examined by the adjudicating authority nor was the statement admitted in evidence. 25. Learned counsel for the appellant submitted that the goods were exported on FOB and therefore, once the goods are put on board the vessel, the title of the goods is transferred to the buyer. Learned counsel also submitted that after the Let Export Order is issued, any amendment made by the Freight Forwarder cannot be attributed to the appellant as an exporter has no control over the goods and it is the responsibility of the Shipping Line to ship the goods to the foreign buyer. Learned counsel relied on the CBIC Circular dated 28.02.2015, the relevant portion of which is reproduced below: "6. In the case of clearan....