Per S.S. Sekhon :

The appellants are regular exporters of goods and had filed 2 Shipping Bills both dated 6.3.2003 for export of 120 packages of fabrics declared as 100% polyester filament yarn/texturised yarn with or without embroidery under DEPB Scheme. The fabrics were wrapped around cardboard sheets rolled in the length of more than 20 yards per roll. The total FOB value declared was Rs. 75,65,471.29.

1.2 On 11.3.2003, through their Custom House Agent, they filed an application requesting the goods to be returned 'back to town'.

1.3 However, on 12.03.03 the goods were examined by the Customs authorities and it was alleged that the said goods were rags/chindis instead of fabrics as declared and they were grossly overvalued as per the FOB declaration. Enquiries were conducted and statements were recorded and a Show Cause Notice dated 13.7.2004 was issued calling upon the exporters to show cause:

(i) why the goods covered under the two Shipping Bills should not be confiscated under Section 113 (h) (ii) of the Customs Act, 1962;

(ii) A penalty under Section 114 of the Customs Act, 1962 should not be imposed;

(iii) Why the credit of DEPB benefit amounting to Rs. 8,32,200/- should not