2025-VIL-957-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs – Sections 28AAA, 108 and 138B of Customs Act, 1962 – Export of goods – Recovery of scrips – Absence of jurisdiction – Appellant is engaged in manufacture and export of Ready Made Garments – To encourage exports to remote markets, Government introduced Focus Market Scheme (FMS), designed to offset higher freight costs borne by buyers – Appellant claimed benefits on goods exported through shipping bills – Department issued show cause notice to Appellant by proposing to demand ineligible benefit availed under FMS – Additional Commissioner ordered for recovery of ineligible Focus Market Scrips from Appellant under Section 28AAA of the Act – Commissioner (Appeals) dismissed appeals filed by Appellant – Whether jurisdiction under Section 28AAA of the Act could have been invoked without Directorate General of Foreign Trade (DGFT) having initiated process for cancellation of license – HELD – Demand under Section 28AAA of the Act can be made only after DGFT, which is the concerned regional authority, initiates action for cancellation of instrument – It would be impermissible for customs authorities to either doubt the validity of an instrument issued under FTDR Act or go behind benefits availed pursuant thereto absent any adjudication having been undertaken by DGFT – Action for recovery of benefits claimed and availed would have to necessarily be preceded by competent authority under FTDR Act having found that certificate or scrip had been illegally obtained – Impugned order is without jurisdiction, as DGFT has neither cancelled the instrument nor even initiated proceedings for cancellation of instrument – Appeals allowed - Recording of statement – Admissibility – Whether statement of proprietor of Freight Forwarder recorded under Section 108 of the Act could be considered as evidence under Section 138B of the Act – HELD – Impugned order has placed reliance upon statement of proprietor of Freight Forwarder made under Section 108 of Act, in which Appellant has been implicated – Partner of Appellant company in his statement stated that all export documents received by him mentioned the country of export as Panama and he did not instruct anybody to change country of export – Provisions of Section 138B(1)(b) of the Act have been held to be mandatory and failure to comply with procedure would mean that no reliance can be placed on statements recorded under Section 108 of the Act – Statement of proprietor of Freight Forwarder made under Section 108 of the Act cannot be considered as evidence, as he was not examined by adjudicating authority – It is not possible to sustain order passed by Commissioner (Appeals) and hence, it is set aside.
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