CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL CHENNAI REGIONAL BENCH – COURT No. III Customs Appeal No. 41618 of 2014 (Arising out of Order-in-Original No. 24494/2014 dated 26.03.2014 passed by Commissioner of Customs, No. 60, Custom House, Rajaji Salai, Chennai – 600 001)

Commissioner of Customs ... Appellant Chennai II Commissionerate, No. 60, Custom House, Rajaji Salai, Chennai – 600 001.

Versus M/s. Minerva Tex Fab ... Respondent House No. 2556, Pani Ni Bhit, Near Chowk Bazar, Surat, Gujarat – 395 002.

And Customs Appeal No. 41673 of 2014 (Arising out of Order-in-Original No. 24497/2014 dated 27.03.2014 passed by Commissioner of Customs, No. 60, Custom House, Rajaji Salai, Chennai – 600 001)

Commissioner of Customs ... Appellant Chennai II Commissionerate, No. 60, Custom House, Rajaji Salai, Chennai – 600 001.

Versus M/s. N.S. Textiles ... Respondent

11/670-71-72, B-2, Rahat Appt., Sindhiwad, Chowk Bazar, Surat, Gujarat – 395 003.

APPEARANCE:

For the Appellant : Mr. Sanjay Kakkar, Authorised Representative For the Respondents : None CORAM:

HON’BLE MR. P. DINESHA, MEMBER (JUDICIAL)

HON’BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)

FINAL ORDER Nos. 40260-40261 / 2026 DATE OF HEARING : 09.10.2025 DATE OF DECISION : 19.02.2026 Per Mr. VASA SESHAGIRI RAO The Appeals Nos. C/41618/2014 and C/41673/2014 have been filed by the Commissioner of Customs, Export Commissionerate, Chennai (hereinafter referred to as the Appellant), challenging Orders-in-Original Nos. 24494 & 24497/2014 dated 26.03.2014 and 27.03.2014 passed by the Commissioner of Customs (Seaport-Export) in the case of Importers viz., M/s. N.S. Textile, Surat and M/S. Minerva Tec Fab (hereinafter referred to as the Respondents) respectively, whereby the penalty proposed under Section 114A of the Customs Act, 1962 was not imposed, while confirming penalty under Section 112(a)

of the Customs Act, 1962.

2. As the issue involved in both the appeals being the same, they are being heard together and are being disposed of by this common order.

3. Briefly stated, the facts of the present appeal are that the Respondents imported "mulberry raw silk" for use in the manufacture and export of 100% Natural Silk Fabrics, made-ups, sarees, and garments under the Advance Licence Scheme, by availing the benefit of Notification No. 93/2004- Cus dated 10.09.2004. The imports were effected under advance licences through High Sea Sellers (HSS). The total customs duty foregone in respect of the said imports amounted to Rs.2,08,38,473/- and Rs.2,29,44,706/-

respectively.

4. Based on specific intelligence alleging that the importer had diverted duty- free mulberry raw silk yarn imported under the Advance Authorisation/Licence Scheme into the local market, and had also made false declarations regarding its factory and supporting manufacturers, who allegedly did not possess any manufacturing facilities to process the impugned goods, the Directorate of Revenue Intelligence (DRI) initiated an investigation and intercepted the consignments imported by the Respondent. In continuation of the investigation, searches were conducted at various premises, which allegedly revealed that the Respondent had acted as an importer only on paper and had facilitated the High Sea Sellers in evading the appropriate customs duties.

5. On completion of the investigation, Show Cause Notices in F.No. DRI/SRU/INV-7/2010 dated 30.08.2012 and F.No. DRI/SRU/INV-6/2010 dated 30.08.2012, were issued by the Additional Director General, DRI, Ahmedabad, respectively calling upon the Respondents to show cause as to why the benefit of Notification No. 93/2004-Cus dated 10.09.2004 should not be denied and why the imported goods, should not be confiscated under Sections 111(d) and 111(0) of the Customs Act, 1962. Consequent thereto, the notices proposed to demand customs duty under Section 28(1) (now Section 28(4)) of the Customs Act, 1962, along with applicable interest under Section 28AA (erstwhile Section 28AB), and further proposed to impo