Legal principle

Customs officers cannot declare DGFT-issued DEPB scrips or bank-issued BRCs ab initio void, and since 'export goods' under section 2(19) means only goods yet to be exported, goods already exported cannot be confiscated under section 113 or attract penalties under sections 112 and 114.

Court decision

All 21 appeals were allowed and the impugned order, insofar as it pertained to these appellants, was set aside with consequential relief: the DEPB scrips could not be declared void by DRI/Customs, the section 125(2) duty demand was without authority of law, the section 112 penalties on the importers and the section 114(i) penalties on the bank officers and the Chartered Accountant could not be sustained.

Facts

DRI intelligence indicated that exporters (Shri Pawan Kumar Sharma and Shri Ajay Sharma of M/s J. Minakshi International, M/s JAY ESS International and M/s J. Kanishka International) were misusing the duty drawback and DEPB export promotion schemes by filing false declarations under CBEC Circular No. 54/2001 to obtain higher All Industry Rate drawback, filing duplicate Currency Declaration Forms with banks, depositing foreign exchange in their own accounts and obtaining Bank Realization Certificates (BRCs) on such deposits. On this basis the ADG, DRI issued a show cause notice dated 31.03.2008 to 62 noticees, and the Commissioner of Customs, Air Cargo Complex (Export), New Delhi passed an order-in-original dated 18.10.2022 under section 122 confirming demand of duty under section 125(2) against importers who used DEPB scrips purchased from others, and imposing penalties under section 112(a) and (b) on the importers and section 114(i) on five Centurion Bank officers and a Chartered Accountant. Twenty-one of the noticees appealed to the CESTAT, Principal Bench, New Delhi.

Key provisions

• Section 122, Customs Act, 1962 — Adjudication of confiscations and penalties