TaxTMI 
TaxTMI 
2026 (5) TMI 1389
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....astic raw materials under the Advance Authorisation ("AA") and Duty-Free Import Authorisation ("DFIA") schemes of the FTP. During 2009-2012, the Appellant obtained 29 authorisations from DGFT, Kolkata - 15 under Notifications No. 93/2004-Cus dated 10.09.2004 and 96/2009-Cus dated 11.09.2009 (AA), and 14 under Notifications No. 40/2006-Cus dated 01.05.2006 and 98/2009-Cus dated 11.09.2009 (DFIA) - declaring M/s. Kalpena Industries Limited ("KIL") as the supporting manufacturer in each application. 3.1 Under these authorisations, the Appellant imported polymer raw materials with total CIF value of Rs. 67,51,85,463/- and duty foregone of Rs.14,97,51,922/- (Rs.9,84,42,093/- under AA and Rs. 5,13,09,829/- under DFIA). The transaction architecture was: (i) merchant-exporter (Appellant) tied with named supporting manufacturer (KIL); (ii) high-seas purchase of consignments sold by KIL to the Appellant under registered HSS agreements; (iii) discharge of export obligation by way of deemed exports to THPL, a 100% EOU under Chapter 7/8 of the FTP. This structure is expressly permitted by Para 4.1.3 read with Para 4.1.7 of FTP 2009-14, Para 4.04 of HoP (AA to me....
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....hereon (three of which were the subject of appeals before this Hon'ble Tribunal), proceeded on the express footing that THPL actually received inputs from suppliers including the Appellant, manufactured goods therefrom, and cleared those goods. These contemporaneous departmental records from a sister CBIC authority are in direct contradiction to the DRI's theory that no goods ever moved from the Appellant to THPL. 3.6 The Ld. Commissioner of Customs (Port), Kolkata, adjudicated the SCN by the impugned OIO dated 31.12.2018, confirming the full demand along with interest and penalty, and additionally recording at Paragraph 46 that the ingredients of Section 135 stand attracted. The Appellant filed WPA 5060 of 2019 before the Hon'ble Calcutta High Court on 01.03.2019, and the Hon'ble Court vide order dated 12.07.2019 granted protection against coercive action, extended from time to time till leave was granted on 21.04.2026 to file the present statutory appeal. 4. The ld. Counsel for the appellant-assessee, submits that the EODC issued by DGFT is conclusive of fulfilment of export obligation; Customs cannot sit in appeal over DGFT. 4.1 He further submits that a....
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....wing decisions : * Titan Medical Systems Pvt. Ltd. v. Collector of Customs, New Delhi, 2003 (151) ELT 254 (SC); * Autolite (India) Ltd. v. UOI, 2003 (157) ELT 13 (Bom.); * Skipper Ltd. v. CC (Port), Kolkata, 2025 (27) Centax 246 (Tri.-Cal); * Aditya Birla Nuvo Ltd. v. CC, Bangalore, 2010 (249) ELT 273 (Tri.-Bang.), affirmed in 2021 (378) ELT 42 (Kar.); * Vedanta Ltd. v. CC, CESTAT Chennai, Final Order dated 23.01.2026; * SvamToyal Packaging Industries Pvt. Ltd. v. Pr. CC (Import), ICD Tughlakabad, CESTAT New Delhi, Final Order dated 21.02.2025; * Hindustan Lever Ltd. v. CC (EP), Mumbai, 2012 (281) ELT 241 (Tri.-Mum.); * Goldfinch Hotels Pvt. Ltd. v. CC (ACC & Exports), Mumbai, 2015 (328) ELT 282 (Tri.-Mum.) (applying Vadilal Chemicals Ltd. v. State of A.P., 2005 (192) ELT 33 (SC)); * Interglobe Enterprises Ltd. v. CC, New Delhi, Final Order No. 51777/2025 dated 20.11.2025; * Bestech Hospitalities Pvt. Ltd. v. CC (Preventive), New Delhi, Final Order Nos. 51143-51145/2025 dated 05.08.2025. 4.6 He further submits that the Commissioner of Central Excise, Kolkata-V issued five separate SCNs to T....
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....ustoms authority cannot, by a side-wind years later, sit in review over gazetted Central Excise attestations and discard the entire deemed export architecture of the FTP. 4.12 It is further submitted that the Ld. Commissioner has heavily relied on statements recorded under Section 108 of vehicle owners, transporters, drivers, CHA representatives and other persons. Despite specific written requests, cross-examination was denied on the reasoning (at Para 50.1) that the diversion is "well established" and that Section 138B is "not applicable". 4.13 He further submits that this reasoning is fundamentally erroneous. The right to cross-examine flows from natural justice and is independent of Section 138B. When statements under Section 108 form the bedrock of an adverse adjudication, denial of cross-examination is a per se violation of natural justice and vitiates the proceedings. Reliance: Andaman Timber Industries v. CCE, 2015 (324) ELT 641 (SC); CCE, Hyderabad-IV v. Venkateswara Silk Mills, 2024 (25) Centax 403 (Telangana). 4.14 He further submits that this is all the more so because the very transporter Shri Dinesh Singh, whose statement is relied upon, admits at OIO Para 12.....
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....he open market. The allegation rests on inference alone. 4.20 It is further submitted that the cash of Rs.17,22,72,185/- seized from M/s. Jaqua Industries has not been forensically traced to any sale proceeds of the Appellant's polymer consignments. This Hon'ble Tribunal, in M/s. Jaqua Industries & Sales Co. Pvt. Ltd. v. CC (Port), Kolkata, Customs Appeal No.75792/2017 dated 29.08.2017, has already held that the ingredients of Section 121 of the Customs Act stand unfulfilled qua that very cash - no sale was established and the identity of buyer and seller was not established. The cash seizure thus furnishes no nexus to the Appellant. 4.21 It is submitted that Section 28(4) can be invoked only on proof of collusion, wilfulmis-statement or suppression of facts with intent to evade duty. The OIO records no positive act on the part of the Appellant evidencing any of these - the demand has been confirmed by extended period invocation without any specific finding of mens rea. 4.22 It is further submitted that every fact relevant to the alleged "evasion" was before two arms of Government throughout: all 29 authorisations were issued by DGFT after scrutiny; all imports ....
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....on as it stood at the time of the alleged offence must alone be applied; no retrospective invocation of enhanced penal consequences is permissible in view of Article 20(1) of the Constitution. The OIO does not arithmetically demonstrate, qua each authorisation, whether the duty allegedly evaded crosses the applicable threshold; lumping is impermissible for the purpose of attracting Section 135. 4.27 It is submitted that the findings attributing knowledge rest almost entirely on statements under Section 108 - without following Section 138B (examination-in-chief and cross-examination), without allowing the cross-examination sought, and without the Section 138C certificate for electronic records. 4.28 He further contended that Section 28(4) (a fiscal recovery provision) and Section 135 (a penal provision entailing imprisonment up to 7 years) operate on different planes and require different standards of proof. A Section 28(4) finding cannot, by itself, serve as a springboard for Section 135. This is all the more so where the alleged "evasion" arises from a contested interpretation of post-importation conditions of exemption notifications - a bona fide disagreement on scheme inte....
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.... (ii) Whether the demand can be sustained when the Central Excise Department, in five contemporaneous SCNs to THPL, has itself proceeded on the footing that goods were received by THPL - squarely contradicting the DRI's hypothesis of no-movement? (iii) Whether the impugned OIO can stand when cross-examination of the very witnesses on whose statements the OIO is built has been denied to the Appellant despite specific requests? (iv) Whether a duty demand on 100% of the consignments under 29 authorisations can be sustained by extrapolation from a vehicle enquiry that admittedly covered at best one-third of the consignments and was inconclusive in the bulk of that subset? (v) Whether extended period under Section 28(4) of the Customs Act, 1962 is invokable in the absence of any positive act of fraud, collusion, wilful misstatement or suppression? (vi) Whether the recommendation under Section 135 at Paragraph 46 of the OIO can survive once the foundation of the adjudication falls? (vii) Whether the facts and circumstances of the case, the goods are held to be confiscated and redemption fine can be imposed or not ? Issue (i) Whether....
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.....2009 and 10.06.2010 have been cancelled by the Customs albeit after passing of the impugned order; since these bonds stand cancelled, we are of the view that no demand could be enforced under Section 143(3) of the Customs Act, 1962. On this ground as well, the demand so confirmed in the impugned order does not survive. When the demand for duty does not survive, there is no question of levy of any interest or penalty upon the Appellant and therefore, there is no question of confiscation in absence of there being any violation of the provisions of Customs Act, 1962 and / or the Notifications issued thereunder." 10. Further, in the case of Interglobe Enterprises Limited Vs. Commissioner of Customs, New Delhi vide Final Order No.51777/2025 dated 2011.2025, against this Tribunal has observed as under : "18. In the instant case, the holding of the EODCs was determinative of completing their export obligations towards the import of the three cars. We note that copies of logbooks of all the 3 vehicles were submitted to the departmental authorities establishing the use of the said three vehicles for transporting guests and used in other tourism related activities. The Departmen....
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....nts the OIO is built has been denied to the Appellant despite specific requests? Whether a duty demand on 100% of the consignments under 29 authorisations can be sustained by extrapolation from a vehicle enquiry that admittedly covered at best one-third of the consignments and was inconclusive in the bulk of that subset? 12. We find that in this case, no cross examination of the transporter whose statements have been relied upon by the adjudicating authority to the appellant. Therefore, it is gross violation of principle of natural justice. To rely the statement of the witness, the witness is to be examined in Chief and thereafter to be offered cross-examination to the accused, which the Revenue has failed to do so. In that circumstances, the statement of the transporters cannot be relied upon to allege the diversion of the goods in the domestic market as held by the Hon'ble High Court of Punjab & Haryana in the case of Jindal Drugs Pvt. Ltd. Vs. Union of India reported in 2016 (340) ELT 67 (P & H), wherein the Hon'ble Punjab & Haryana High Court has observed as under : "6. The present proceedings essentially emanated from Show Cause Notice No. C.No.V(33)84/HQ/Adj/CE....
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....ore the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. 10. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. v. CCE, 2009 (242) E.L.T. 189 (Del.). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 11. As already noticed hereinabove, sub-section (1) of Section 9D sets out the circumstances in which a statement, made and signed before a gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a Gazett....
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....ers in SLP (C) No. 2183/1994, dated 3-1-1995 wherein it was held that the order passed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challenge by the assessee, if aggrieved thereby. 16. If none of the circumstances contemplated by clause (a) of Section 9D(1) exists, clause (b) of Section 9D(1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), viz. (i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and (ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. 17. There is no justification for jett....
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....cation proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 20. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede re-examination. 21. It is only, therefore, - (i) after the person whose statement has already been recorded before a Gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination, can arise. 22. Clearly, if this procedure, which is statutorily prescribed by plenary Parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed fr....
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....s to rely in adjudication proceedings, takes place, and a copy thereof is made available to the assessee, it would be open to the assessee to seek permission to cross-examine the persons who have made the said statements, should it choose to do so. In case any such request is made by the assessee, it would be incumbent on the adjudicating authority, i.e., on Respondent No. 2 to allow the said request, as it is trite and well-settled position in law that statements recorded behind the back of an assessee cannot be relied upon, in adjudication proceedings, without allowing the assessee an opportunity to test the said evidence by cross-examining the makers of the said statements. If at all authority is required for this proposition, reference may be made to the decisions of the Hon'ble Supreme Court in Arya Abhushan Bhandar v. U.O.I., 2002 (143) E.L.T. 25 (S.C.) and Swadeshi Polytex v. Collector, 2000 (122) E.L.T. 641 (S.C.)." Therefore, the Issue Nos.(iii) & (iv) are also answered in favour of the assesses. Issue No.(v) Whether extended period under Section 28(4) of the Customs Act, 1962 is invokable in the absence of any positive act of fraud, collusion, wilful misstatement....