The tribunal clarified the procedural requirements for admissibility of statements made under section 108 of the Customs Act, establishing that improper evidence leads to invalidation of confiscation and penalties.

JUSTICE DILIP GUPTA:

M/s Sartaj International, the appellant has filed this appeal for setting aside the order dated 06.04.2022 passed by the Commissioner of Customs (Appeals), the Commissioner (Appeals). The appeal was filed against the order dated 31.03.2019 passed by the Additional Commissioner of Customs holding that the goods exported through two shipping bills are liable to confiscation under section 113(d),(g) and (i) of the Customs Act, 1962 , the Customs Act. The Additional Commissioner confirmed the recovery of drawback in respect of the two shipping bills and also imposed a penalty of Rs. 5 lakhs upon the appellant 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, 1962 ;

(ii) The drawback of Rs. 5,30,928/-availed by the Exporter in respect of 02 Shipping Bills as per Annexure "A" to this Notice should not be recovered from them under Rule 16 of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995;

(iii) Interest in respect of ineligible drawback of Rs. 5,30,928/- availed by the exporter should not be recovered from them under Section 75A of the Customs Act, 1962 ;

(iv) Penalty under Section 114 of the Custom Act, 1962 should not be imposed upon them for their act of omission and commission as discussed herein above;

(v) Penalty under Section 114AA of the Customs Act, 1962 should not be imposed upon them for their act of omission and commission as discussed herein above; and (vi) The amount of Rs.56,100/- deposited vide TR-6 challan No. 34453 dated 17.12.2015 as penalty should not be appropriated against the said demand of penalty as proposed above.

4. The appellant filed a detailed reply and denied the allegations made therein. The appellant contented that a duty drawback had been correctly availed as there was no bar and that the goods could not have been confiscated under section 113 of the Customs Act or penalty imposed under section 114(iii) and 114AA of the Customs Act.

5. The Additional Commissioner, however passed the order dated 13.03.2019. The first issue that was framed for adjudication by the Additional Commissioner is:

(i) Whether M/s Sartaj International (Noticee No. 1) fraudulently diverted their export consignments covered under 02 Shipping Bills (as detailed in Annexure-A to the show cause notice) originally destined for export to Mogadishu, Somalia, a country notified under Focus Market Scheme(FMS)/Merchandise Export from India Scheme (MEIS), to the changed "Country of Destination" i.e. Jebel Ali (United Arab Emirates), which was not a notified country under Focus Market Scheme(FMS)/Me