Document Fragment View

Matching Fragments

8. A show cause notice dated 24.01.2020 was issued inter alia proposing to confiscate the goods and demanding ineligible benefit availed under the FMS equivalent to Rs. 4,14,06,583/- under section 28AAA of the Customs Act with interest. It also proposed to impose penalty under section 114AA, section 114(iii) and section 114AB of the Customs Act on the appellant.

9. The adjudicating authority passed the impugned order :

(a) Holding the Goods liable for confiscation under section 113(d), (g) and (i) of the Customs Act, but refrained from imposing any redemption fine;
(i) The show cause notice issued under section 28AAA of the Customs Act is without jurisdiction. This is for the reason that a demand under this section can be made only after the Directorate General of Foreign Trade7, which is the concerned regional authority, initiates action for cancellation of the instrument but adjudication can take place only after the instrument has been cancelled by DGFT. In the present case, the DGFT has not cancelled the instrument. In fact, even steps had not been initiated by the DGFT for cancellation of the instrument. In support of this contention, learned counsel place reliance upon the judgment of the Delhi High Court in M/s Amit Exports vs. Union of India & ors;8
106. Taking any other view would result in us recognizing a parallel or a contemporaneous power inhering in two separate sets of authorities with respect to the same subject. That clearly is not the position which emerges from a reading of C/55675/2023 Section 28AAA. Quite apart from the deleterious effect which may ensue if such a position were countenanced, in our considered opinion, if the validity of an instrument issued under the FTDR Act were to be doubted on the basis of it having been obtained by collusion, wilful misstatement or concealment of facts, any action under Section 28AAA would have to be preceded by the competent authority under the FTDR Act having come to the conclusion that the instrument had come to be incorrectly issued or illegally obtained. The procedure for recovery of duties and interest would have to be preceded by the competent authority under the FTDR Act having so found and the power to recover duty being liable to be exercised only thereafter.

(emphasis supplied)

15. In this connection, it may also be important to refer to the TRU letter dated 01.06.2012 highlighting the budget changes on the eve of the enactment of the Finance Act, 2012. The relevant portion of the letter is reproduced below:

"11.2 Recovery of duty in case of instrument issued under Foreign Trade (Development and Regulation) Act: 
 Section 28AAA       has     been    inserted    in   the
                Customs Act          through    Section    122     of the