AI Drafter 
TaxTMI 
TaxTMI 
2026 (1) TMI 287
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....lant under section 114(iii) of the Customs Act and a penalty of Rs. 5 lakhs under section 114AA of the Customs Act. The Commissioner (Appeals) has upheld the order passed by the Additional Commissioner, except to the extent that the recovery of drawback has been set aside. 2. The appellant had filed two shipping bills for export of readymade garments claiming benefit of Focus Market Scheme. The shipping bills had declared the port of destination and the country of destination as Mogadishu and Somalia. The investigation revealed that the goods were diverted to Jebel Ai in UAE by fraudulently amending TR-1 and TR-2 copies of the shipping bills with the help of Nitin Gupta, Director of M/s Oak Shipping Services Pvt Ltd. It was also noticed that the change of destination country and port of discharge was done without due authentication by the Customs Superintendent. 3. A show cause notice dated 01.03.2017 was issued to the appellant calling upon the appellant as to why: (i) The goods exported vide 02 Shipping Bills as per Annexure "A" to this Notice having total FOB value of Rs. 74,77,846/- should not be confiscated under Section 113(d), (g) and (i) of the Customs Act, 1....
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....of Shipping Bills No. 8254817 and 8254819 both dated 18.03.2015, pertaining to the said Bill of Lading, available with them wherein the port of destination was amended and it was found that there were manual amendments in handwriting of some unknown person on the first page of each above said TR-1/TR-2 copies of Shipping Bills with regard to "Port of Discharge" and "Country of Destination"; that originally, Mogadisu was mentioned as "Port of Discharge" and Somalia was mentioned as "Country of Destination", which were found to be stricken out manually. Further, Jebel Ali against "Port of Discharge" and Dubai against "Country of Destination" were found to be endorsed by some sort of signature and a stamp of Superintendent of Customs, Export Shed, ICD, TKD." 7. Thereafter, the Additional Commissioner considered the statements of Nitin Gupta, Director of M/s Oak Shipping Services Pvt Ltd., Shri Prashant Kumar, Branch Manager of M/s Caravel Logistics Pvt Ltd, Jasjit Singh Chhabra, Proprietor of the appellant made under section 108 of the Customs Act and recorded the following findings: "22. I find that netiher Shri Nitin Gupta, Director of M/s Oak Shipping Services Pvt Ltd (....
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.... Noticee No. 1 in the respective Shipping Bills filed under Section 50 of the Customs Act, 1962. Therefore, the goods exported through 02 fraudulently amended Shipping Bills, are liable for confiscation under sub-section (i) of the Section 113 of the Customs Act, 1962. Further, the Let Export Order issued by the proper officer in respect of these 02 fraudulently amended Shipping Bills, was in relation to export of the goods to Mogadisu, Somalia, whereas the goods were actually exported to Jebel Ali, United Arab Emirates without permission of the proper officer under Section 51 ibid and hence, the said goods are also liable for confiscation under sub-section (g) of the Section 113 of the Customs Act, 1962. Moreover, the goods related to these 02 Shipping Bills had been exported to Jebel Ali by using fraudulently amended Shipping Bills whereas Rule 14 of Foreign Trade (Regulation) Rules, 1993 clearly prohibits for employing any corrupt or fraudulent practice for the purpose of exporting any goods or obtaining any license. Therefore, the said goods are also liable for confiscation in terms of Sub-Section (d) of Section 113 of the Customs Act, 1962. Thus, I hold that the export goods c....
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....lls." 13. The fourth issue framed by the Additional Commissioner is: (iv) Whether the Noticees are liable to penal action, as proposed in the impugned show cause notice? 14. The finding recorded is: "27. So far as the issue No. (iv) above i.e. whether the Noticees are liable to penal action, as proposed in the impugned show cause notice, is concerned, I have already held in the foregoing paras that the export goods covered under these 02 fraudulently amended Shipping Bills, having the total FOB value of Rs. 74,77,846/-, are liable for confiscation under sub-sections (d), (g) and (i) of Section 113 of the Customs Act, 1962 and that M/s Sartaj International (Noticee No.-1) have rendered themselves liable to penal action under Section 114(iii) of the Customs Act, 1962 for their acts of omission and commission xxxxxx. 28. The impugned show cause notice also proposes imposition of penalty under Section 114AA of the Customs Act, 1962 on Noticees Nos. 1 and 2. I find that it has been established on record that M/s. Sartaj International (Noticee No. 1) had tried to get the Focus Scrips in respect of the 02 fraudulently amended Shipping Bills by directing hi....
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....y destined for export to Mogadisu in Somalia but diverted to Jebel Ali which is not a notified country under the Focus Market Scheme to avail undue benefits of focus market scheme. This finding has been recorded merely on the basis of statements made by various persons under section 108 of the Customs Act. 18. The contention of the learned consultant for the appellant is that these statements cannot be considered as relevant as the procedure contemplated under section 138B of the Customs Act had not been followed. This contention deserves to be accepted. 19. 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 108 of the Customs Act enable the concerned Officers to summon any person whose attendance they consider necessary to give evidence in any inquiry which such Officers....
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....der 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 or compulsion and it is in order to neutralize this possibility that statements of the witnesses have to be recorded before the adjudicati....
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....ide intention to change the "Country of Destination". Imposition of penalty has also been confirmed on the basis of statements made by the appellant. These statements could not have been considered as relevant as the procedure contemplated under section 138B of the Customs Act had not been followed. 27. It needs to be also remembered that insofar as the transaction between the exporter and the overseas buyer is concerned, if the goods are sold on FOB basis, the title shifts to the buyer. It is also true that once the Let Export Order is issued, the exporter may not have control over the goods. However, it also needs to be noted that insofar 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 Ma....