2026-VIL-38-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs – Diversion of goods exported under Focus Market Scheme, Confiscation of goods, statements under Section 108 – Appellant filed shipping bills for export of readymade garments claiming benefit of the Focus Market Scheme. The investigation revealed that the goods were diverted to Jebel Ali in the UAE by fraudulently amending the TR-1 and TR-2 copies of the shipping bills. The authorities issued a show cause notice proposing confiscation of the goods under Section 113(d), (g) and (i) of the Customs Act, recovery of drawback, and imposition of penalties under Sections 114(iii) and 114AA of the Customs Act - Whether the statements recorded under Section 108 of the Customs Act can be considered as relevant evidence - HELD - The statements recorded under Section 108 cannot be considered as relevant evidence as the procedure prescribed under Section 138B of the Customs Act was not followed. The provisions of Section 138B are mandatory, and failure to comply with the procedure would mean that no reliance can be placed on the statements recorded under Section 108 – The Section 113 of the Customs Act deals with confiscation of goods attempted to be improperly exported, whereas in the instant case, the goods had already been exported on the basis of Let Export Orders, and the investigation was started later. Therefore, Section 113 would not be applicable - Since the goods are not liable to confiscation under Section 113, penalty under Section 114(iii) could not be imposed. Similarly, the penalty under Section 114AA could not be imposed as the statements recorded under Section 108 cannot be relied upon as evidence - The impugned order is set aside and the appeal is allowed
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