TaxTMI 
TaxTMI 
2025 (6) TMI 369
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....toms 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 penalties have been imposed upon the Proprietor of the appellant under section 114(iii) and section 114AA of the Customs Act. 2. 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 Lagoon Trading LLC and Lagcy Trading LLC based in U.A.E. To encourage exports to remote markets, the Government introduced the Focus Market Scheme FMS, designed to offset higher freight costs borne by buyers. Under the FMS, exporters often offer reduced prices to customers in designated countries like Panama. This approach ensures competitiveness by partially absorbing the elevated freight costs, aligning with the objectives of the FMS. As per the contracts, the appellant was required to supply the goods on the prices stated in the agreement on FOB terms and to a place notified by the buyer. In terms of the contract, Concorde Shipping & Logistics India the Freight Forwarder was solely responsible for undertaking shipping as per t....
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....5 Imran Mirza stated that his employee Monu Dixit, at his instructions, changed the Port of Discharge and Country of Destination manually to Jabel Ali and Dubai respectively. In his subsequent statements dated August 14, 2015 and April 27, 2017 Imran Mirza deviated from his earlier statement and stated that he himself amended the Shipping Bills at the direction of the exporters. 8. Rajan Kumar, Proprietor of the appellant company in his statement dated April 16, 2018 stated that all export documents received by him mentioned the country of export as Panama or Netherlands and he did not instruct anybody to change the final country of export. 9. A show cause notice dated May 24, 2017 was issued inter alia proposing to demand ineligible benefit availed under the FMS equivalent to Rs. 1,57,55,340/- under section 28AAA of the Customs Act with interest. It also proposed to impose penalty Rs. 75 lakhs under section 114AA of the Customs Act on the appellant. 10. The adjudicating authority passed the impugned order : (a) Holding the Goods liable for confiscation under section 113(d), (g) and (i) of the Customs Act, but refrained from imposing any redemption fine; (b) Confirmed recove....
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....ancelled 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. 13. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 14. 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. 15. This issue was examined by the Delhi High Court in M/s Amit Exports. The Delhi High Court held that it was not possible to recognize a right that may be....
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....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. Section 28AAA would thus have t....
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....) 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 ) 16. 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 reproduced below: "11.2 Re....
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....ietor of M/s Ganpati Hosiery Mills who had directed Shri Imran Mirza to issue the bogus/manipulated House Bills of Lading showing the transportation of the containers to the "Country of Destination" as originally mentioned in the Customs cleared Shipping Bills; it was the Noticee No.1 who had submitted the said bogus/manipulated documents to the DGFT to avail the benefit of the Focus Market Scheme and obtained the ineligible 15 Focus licences and ultimately it is the Noticee No.1 who had availed the benefit the Focus Market Scheme." 19. The issue that arises for consideration is whether the statement of Imran Mirza recorded under section 108 of the Customs Act could be considered as evidence under section 138B of the Customs Act. 20. In this connection, reference can be made to the decision of the Tribunal in M/s Surya Wires Pvt. Ltd. vs. Principal Commissioner, CGST, Raipur Excise Appeal No. 51148 of 2020 decided on 01.04.2025. The Tribunal examined the provisions of sections 108 and 138B of the Customs Act as also the provisions of sections 14 and 9D of the Central Excise Act, 1944 and observed as follows: "21. It would be seen section 14 of the Central Excise Act and section....
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.... the Customs Act contemplate that when the provisions of clause (a) of these two sections are not applicable, then the statements made under section 14 of the Central Excise Act or under section 108 of the Customs Act during the course of an inquiry under the Acts shall be relevant for the purpose of proving the truth of the facts contained in them only when such persons are examined as witnesses before the adjudicating authority and the adjudicating authority forms an opinion that the statements should be admitted in evidence. It is thereafter that an opportunity has to be provided for cross- examination of such persons. The provisions of section 9D of the Central Excise Act and section 138B(1)(b) of the Customs Act have been held to be mandatory and failure to comply with the procedure would mean that no reliance can be placed on the statements recorded either under section 14D of the Central Excise Act or under section 108 of the Customs Act. The Courts have also explained the rationale behind the precautions contained in the two sections. It has been observed that the statements recorded during inquiry/investigation by officers has every chance of being recorded under coercion ....
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....nsofar as the scrips under the Focus Market Scheme are concerned, the exporter will be entitled to these scrips if and only if the goods reach the destination market and not otherwise. The only beneficiary under this Scheme is the exporter. It is not the overseas buyer or the freight forwarder or the Shipping Line. Paragraph 3.20.3 of the Handbook of Procedures specifically requires the exporter who applies for scrips under the FMS to submit, inter alia, one of the following documents as a proof of landing of export consignment in specified Focus Market: (i) A self-attested copy of import bill of entry filed by importer in specified market, or (ii) Delivery order issued by port authorities, or (iii) Arrival notice issued by goods carrier, or (iv) Tracking report from the goods carrier duly certified by them, evidencing arrival of export cargo to destination Focus Market, or (v) Lorry receipts for transportation of goods from Port into the Focus Market, or (vi) For Land locked Focus Market, Lorry receipts of transportation of goods from Port to Land locked Focus Market, or (vii) Any other documents that may have satisfactorily prove to RA concerned that goods have land....