The Commissioner Of Customs (Export) vs M/S. G.D. Manglam Exim Pvt. Ltd. (Now Known As M/S. Welldone Exim Pvt. Ltd.)

$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 17.09.2026
Judgment pronounced on: 04.11.2026
Judgment uploaded on: 04.11.2026
# CNR No. DLHC010429822025
+ CUSAA 92/2025, CM APPL. 40907/2025
THE COMMISSIONER OF CUSTOMS (EXPORT)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S. G.D. MANGLAM EXIM PVT. LTD. (NOW KNOWN
AS M/S. WELLDONE EXIM PVT. LTD.) .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010441552025
+ CUSAA 93/2025, CM APPL. 41065/2025
THE COMMISSIONER OF CUSTOMS (EXPORT)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S. YOGMAYA TRADERS PVT. LTD .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.


Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 1 of 88

# CNR No. DLHC010445192025
+ CUSAA 94/2025, CM APPL. 41756/2025
THE COMISSIONER OF CUSTOMS (EXPORT) .....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S SIDH DESINER PVT. LTD. .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010449862025
+ CUSAA 95/2025, CM APPL. 42066/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S KONARK EXIM PVT. LTD. .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010460432025
+ CUSAA 96/2025, CM APPL. 42585/2025
THE COMMISSIONER OF CUSTOMS (EXPORT)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 2 of 88

versus
M/S. SAHDEV GUPTA .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010466882025
+ CUSAA 97/2025, CM APPL. 42764/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S NITIN GUPTA .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010477272025
+ CUSAA 98/2025, CM APPL. 43566/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S SAHDEV GUPTA .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 3 of 88

Khaitan, Advs.

# CNR No. DLHC010494712025
+ CUSAA 99/2025, CM APPL. 44857/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S NITIN GUPTA .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010499542025
+ CUSAA 100/2025, CM APPL. 45290/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S PAVAN KUMAR .....Respondent
Through: None.

# CNR No. DLHC010509862025
+ CUSAA 101/2025, CM APPL. 45974/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S. YOGESH MITTAL .....Respondent
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 4 of 88

Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010509872025
+ CUSAA 102/2025, CM APPL. 46028/2025, CM APPL.
43776/2026
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S SANJEEV JAIN .....Respondent
Through: Mr. Jasdeep Singh Dhillon, Mr.
Aditya Bajaj, Mr. Rajpal Singh
and Mr. Inder Singh Mahara,
Advs.

# CNR No. DLHC010556672025
+ CUSAA 106/2025, CM APPL. 49003/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.

versus

GOPAL SHARMA .....Respondent
Through: Mr. Jasdeep Singh Dhillon, Mr.
Aditya Bajaj, Mr. Rajpal Singh
and Mr. Inder Singh Mahara,
Advs.


Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 5 of 88

# CNR No. DLHC010556682025
+ CUSAA 107/2025, CM APPL. 49156/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S GAURAV BHARDWAJ .....Respondent
Through: None.

# CNR No. DLHC010562952025
+ CUSAA 109/2025, CM APPL. 49264/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S G D MANGLAM EXIM PVT. LTD. .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010561952025
+ CUSAA 112/2025, CM APPL. 49278/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S PUNJAB NATIONAL BANK IBB .....Respondent
Through: Mr. Vibhor Sharma and Ms.
Alisha Gaba, Advs.
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 6 of 88

# CNR No. DLHC010562792025
+ CUSAA 113/2025, CM APPL. 49470/2025
THE COMMISSIONER OF CUSTOMS (EXPORT)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S YOGMAYA TRADERS PVT. LTD. .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malaika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010570192025
+ CUSAA 115/2025, CM APPL. 49755/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S SIDH DESIGNER PVT. LTD. .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010620282025
+ CUSAA 122/2025, CM APPL. 53826/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 7 of 88

Mr. Aditya Chaudhary, Advs.
versus
M/S DSM INTERNATIONAL .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010620292025
+ CUSAA 123/2025, CM APPL. 53835/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.

versus

M/S TARUN GUPTA .....Respondent

Through: None.

# CNR No. DLHC010620542025
+ CUSAA 124/2025, CM APPL. 53861/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S TARUN KUMAR KAVRA .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 8 of 88

# CNR No. DLHC010623502025
+ CUSAA 125/2025, CM APPL. 54183/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S KONARK EXIM PVT. LTD. .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

# CNR No. DLHC010623522025
+ CUSAA 127/2025, CM APPL. 54362/2025
THE COMMISSIONER OF CUSTOMS (EXPORTS)
.....Appellant
Through: Mr. Anurag Ojha, SSC along
with Mr. Dipak Raj, Mr.
Aryaman Singh Chouhan and
Mr. Aditya Chaudhary, Advs.
versus
M/S DSM INTERNATIONAL .....Respondent
Through: Mr. Tarun Gulati, Sr. Adv.
along with Dr. G. K. Sarkar,
Ms. Malabika Sarkar, Mr.
Prashant Srivastav, Ms. Shruti
Kulkarni and Mr. Karan
Khaitan, Advs.

CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MS. JUSTICE SHAIL JAIN


Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 9 of 88

J U D G M E N T
ANIL KSHETARPAL, J.:
1. The present batch of 22 Appeals under Section 130 of the
Customs Act, 1962 [hereinafter referred to as “the Customs Act”]
raises common questions arising from the Final Order Nos. 59488-
59509/2024 dated 25.11.2024 passed by the Customs, Excise and
Service Tax Appellate Tribunal, New Delhi [hereinafter referred to as
“CESTAT”]. The said order allows a batch of appeals arising from
Order-in-Original No. 07/2023/VCG/PR.Commr/ ICD/Export/TKD
dated 30.05.2023 passed by the Commissioner of Customs (Export),
Inland Container Depot, Tughlakabad, New Delhi [hereinafter referred
to as “the Adjudicating Authority”].
2. Since the Appeals arise from the same investigation, the same
adjudication proceedings and the aforesaid common order of the
CESTAT, they have been heard together and are being disposed of by
this common judgment.
FACTUAL MATRIX:
3. In order to appreciate the controversy involved in the present
batch of Appeals, the relevant facts are required to be noticed. For
convenience, CUSAA 92/2025 is being treated as the lead Appeal for
setting out the factual background, while the facts and issues
pertaining to the other connected Appeals shall be noticed, to the
extent necessary, at the appropriate stage.
4. The controversy has its genesis in the export of readymade
garments by, inter alia , M/s G.D. Manglam Exim Pvt. Ltd. (now
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 10 of 88

known as M/s Welldone Exim Pvt. Ltd.), M/s Yogmaya Traders Pvt.
Ltd., M/s Konark Exim Pvt. Ltd., M/s Sidh Designer Pvt. Ltd. and M/s
DSM International during the period commencing from 2008-09 and
extending up to March, 2014.
5. The exporters sent 13,008 consignments of readymade garments
to the United Arab Emirates [hereinafter referred to as “UAE”] under
shipping bills on which they claimed drawback under Section 75 of
the Act and benefits under the Focus Product Scheme/Focus Market
Scheme [hereinafter referred to as “FPS/FMS”] under the Foreign
Trade Policy then in force. The drawback was sanctioned through the
Customs authorities at the port of export, whereas the duty credit
scrips under the aforesaid schemes were issued by the Directorate
General of Foreign Trade [hereinafter referred to as “DGFT”] on the
basis of exports authenticated by the Customs authorities.
6. The investigation subsequently undertaken by the Directorate
General of Revenue Intelligence [hereinafter referred to as “DRI”]
revealed, according to the Revenue, that the values declared in the
shipping bills were substantially higher than the actual values of the
goods exported. It was alleged that such overvaluation was resorted to
with a view to obtaining higher drawback and benefits under the
FPS/FMS. The Revenue’s case was that, in these circumstances, the
third-party remittances received by the exporters could not necessarily
be regarded as genuine payments made towards the goods covered by
the relevant shipping bills.
7. According to the Revenue, the exporters were connected with a
network of persons who allegedly facilitated procurement of the
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 11 of 88

garments, movement of funds through various bank accounts and
remittances from overseas entities, including persons described as
diamond traders. It was alleged that such remittances were thereafter
reflected as export proceeds against the relevant shipping bills, on the
strength of Bank Realisation Certificates [hereinafter referred to as
“BRCs”] issued by Punjab National Bank [hereinafter referred to as
“PNB”]. The investigation, thus, sought to establish that the apparent
realisation of export proceeds was part of a larger arrangement
involving third-party remittances and alleged round-tripping of funds.
8. On the basis of the investigation, show cause notices came to be
issued by the concerned Customs authorities proposing, inter alia ,
recovery of drawback under Rule 16/Rule 16A of the Customs,
Central Excise Duties and Service Tax Drawback Rules, 1995,
recovery of the duty foregone in respect of imports made against the
duty credit scrips under Section 28AAA of the Act, along with
applicable interest and penalties. The proceedings were premised,
inter alia , on the allegation that the exporters had not received the
export proceeds from the consignees and that the goods covered by the
shipping bills had been overvalued/incorrectly declared. For the
purposes of adjudication of the notices, the Commissioner of Customs
(Export), ICD Tughlakabad, was appointed as the common
adjudicating authority.
9. The adjudication proceedings ultimately resulted in partial
confirmation and partial dropping of the proposals contained in the
show cause notices. Insofar as the present controversy is concerned,
the Adjudicating Authority treated the cancellation of 1,650 BRCs
issued by PNB as material for determining that the corresponding
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 12 of 88

remittances could not be treated as realised export proceeds. On that
basis, demands towards drawback and duty foregone were confirmed
in respect of those consignments.
10. At the same time, the proposals for recovery in respect of the
remaining consignments, for which the corresponding BRCs had not
been cancelled, were dropped for want of sufficient material to
substantiate the allegations in respect of those consignments.
11. Revenue, aggrieved by the dropping of the demands in respect
of the consignments where the BRCs continued to remain
uncancelled, preferred appeals before the CESTAT. The exporters, on
the other hand, challenged the demands and penalties which had been
confirmed against them. Certain individual noticees also preferred
appeals against the penalties imposed upon them. Thus, the CESTAT
was called upon to examine both the Revenue’s challenge to the
dropping of the demands and the corresponding challenges by the
exporters and other noticees to the portions of the adjudication order
which were adverse to them.
12. Insofar as M/s G.D. Manglam Exim Pvt. Ltd. is concerned, the
present Appeal arises out of Customs Appeal No. C/50137/2024 filed
before the CESTAT against the Order-in-Original dated 30.05.2023.
The said appellant was issued Importer-Exporter Code [hereinafter
referred to as “IEC”] No. 0503078786 and, during the relevant period,
had undertaken exports of readymade garments. The period relevant to
the present Appeal, as set out in the proceedings, commenced from
02.05.2013 and extended up to 26.10.2013.
13. During the aforesaid period, M/s G.D. Manglam Exim Pvt. Ltd.
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 13 of 88

is stated to have filed 842 shipping bills through different ports. Of
these, 157 shipping bills were filed at ICD Tughlakabad, in respect of
which drawback amounting to Rs. 6,29,52,531/- and benefits under
the Focus Product Scheme/Focus Market Scheme amounting to Rs.
3,91,89,195/- were claimed. At ICD Patparganj, 274 shipping bills
were filed, involving drawback of Rs. 6,59,18,371/- and FPS/FMS
benefits of Rs. 3,73,30,853/-. At the Air Cargo Complex, Export, IGI
Airport, Delhi, 392 shipping bills were filed, involving drawback of
Rs.14,26,96,040/- and FPS/FMS benefits of Rs.8,34,24,634/-. A
further 19 shipping bills were filed at JNPT, Nhava Sheva, involving
drawback of Rs. 11,20,000/- and FPS/FMS benefits of Rs.47,83,249/-.
14. The investigation conducted by the DRI was triggered, inter
alia , by information concerning substantial movement of funds
through the banking accounts of entities allegedly connected with the
exporters. One such account referred to in the investigation was that of
M/s Ganapati Trading Company, Jodhpur, maintained with Citibank,
Punjabi Bagh, bearing Account No. 0036522-224. The investigation
recorded that substantial amounts had been received in the said
account through RTGS from entities including Noticee Nos.1-5
which, according to the Revenue, did not have any apparent
connection with the business of the beneficiary. These amounts were
thereafter transferred onwards from the account.
15. The investigation further noted that M/s Ganapati Trading
Company had itself not undertaken any import or export activity,
whereas the accounts of the five exporter entities, namely, M/s G.D.
Manglam Exim Pvt. Ltd., M/s Yogmaya Traders Pvt. Ltd., M/s Sidh
Designers Pvt. Ltd., M/s Konark Exim Pvt. Ltd. and M/s DSM
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 14 of 88

International, were reflected to have transferred funds to the account
of M/s Ganapati Trading Company. The DRI, on the basis of the
material gathered during investigation, alleged that the movement of
funds through these accounts formed part of a larger arrangement
concerning the exports undertaken by the aforesaid entities.
16. According to the investigation, amounts exceeding US$ 76
million were received by the five exporter entities from third parties
stated to be located in Hong Kong, the British Virgin Islands and the
UAE through the International Banking Branch of PNB,
notwithstanding that the goods were shown in the shipping documents
as having been exported to buyers in Dubai. The investigation alleged
that the persons through whom the remittances were received were not
the overseas buyers named in the relevant export documents and that
the accounts of certain such remitters were allegedly operated through
or fronted by Indian residents who occasionally travelled to Hong
Kong.
17. The DRI also relied upon inquiries conducted with the overseas
buyers. According to the Revenue, certain overseas entities whose
names appeared as consignees in the export documents denied having
purchased the goods in question or stated that the amounts actually
paid by them were substantially lower than the values declared in
India. The investigation consequently proceeded on the allegation that
the amounts reflected in the Indian banking records as export
realisations did not represent genuine sale consideration received from
the actual overseas buyers.
18. The investigation further alleged that the goods exported by the
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 15 of 88

five entities had been substantially overvalued. According to the
Revenue, the garments had been procured from domestic suppliers at
considerably lower values and the values declared in the shipping bills
were thereafter inflated, allegedly with the object of obtaining higher
drawback and other export-related benefits.
19. In support of the allegation of overvaluation, the DRI sought
information regarding the corresponding imports in the countries of
destination. According to the material relied upon by the Revenue,
details of 964 consignments were forwarded to the Consulate General
of India at Dubai on a sample basis. The material received in response
included 12 Bills of Entry covering 39 shipping bills in respect of 12
containers. According to the Revenue, comparison of the values
declared in India with the values declared before the foreign customs
authorities disclosed substantial differences, and the excess drawback
attributable to the consignments covered by the material received from
Dubai was stated to be Rs. 1,52,54,678/-.
20. The investigation also relied upon documents obtained from
customs authorities in other countries. In one instance concerning M/s
G.D. Manglam Exim Pvt. Ltd., the invoice bearing No.
GDM/7285/2013-14 dated 23.04.2013 was compared with the
corresponding import document, namely, DUA No. 13 ES 0281 3
251251 7, in Spain. The Revenue relied upon the difference between
the value declared in the Indian export documents and the value
reflected in the foreign import documentation as indicative of
overvaluation.
21. Similarly, in respect of another consignment of M/s G.D.
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 16 of 88

Manglam Exim Pvt. Ltd., invoice No. GMD/7221/2013-14 dated
25.06.2013 and Shipping Bill No. 6211945 dated 29.06.2013 were
relied upon. The FOB value declared in India was Rs.3,50,248/-,
whereas the value stated to have been declared before the customs
authorities in Greece was US$55,000.
22. The investigation also referred to consignments covered by
invoices bearing Nos. GMD/7982 and GMD/7981 dated 26.07.2013
and the corresponding shipping bills bearing Nos. 6641734, 6641964
and 6641649. In these cases, the Indian FOB value was stated to
aggregate to Rs. 2,17,18,036/-, whereas the value reflected in the
Netherlands import documentation was stated to be Rs. 26,69,161/-.
23. Similar comparisons were relied upon in respect of
consignments exported to other destinations, including Georgia,
Singapore, Australia, Belize, Poland and the Netherlands. The
Revenue relied upon these documents to contend that the values
declared in India were substantially higher than the values declared at
the port of import and that the disparity, in certain cases, was several
times the corresponding foreign import value.
24. In particular, in respect of certain consignments of M/s G.D.
Manglam Exim Pvt. Ltd. covered by invoices GMD/7529 to
GMD/7532 dated 05.03.2013 and Shipping Bills Nos. 5659625,
5659657, 5660850 and 5659656 dated 29.05.2013, the aggregate
value declared in India was stated to be Rs.2,50,19,667/-, whereas the
corresponding value reflected in the documentation from Belize was
stated to be Rs.39,47,078/-. In another set of consignments covered by
invoices GMD/7434, GMD/7535, GMD/7536 and GMD/7537 dated
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 17 of 88

16.05.2013, the aggregate Indian value was stated to be
Rs.2,55,61,184/-, as against Rs.24,14,343/- reflected in the Belize
documentation. A further two consignments covered by invoices
GMD/7947 and GMD/7948 dated 22.07.2013 were stated to have an
aggregate Indian value of Rs.1,09,77,520/-, whereas the corresponding
Belize value was stated to be Rs.20,99,194/-.
25. The Revenue also relied upon consignments of M/s Konark
Exim Pvt. Ltd. exported to Georgia and other destinations. The
investigation compared the values declared in the Indian shipping bills
with the values appearing in the corresponding foreign customs
documents and alleged substantial differences between the two.
Likewise, in respect of a consignment covered by invoice No.
KE/7059/2012-13 dated 22.03.2013 and Shipping Bill No. 4620585
dated 23.03.2013, the Indian declared value was stated to be
Rs.63,12,492/-, whereas the value reflected in the corresponding
documentation from Poland was stated to be Rs.4,81,788/-.
26. The investigation also referred to a consignment of M/s G.D.
Manglam Exim Pvt. Ltd. covered by invoice No. GMD/7936 dated
23.04.2013 and Shipping Bill No. 6619321 dated 25.07.2013, where
the Indian declared value was stated to be Rs.37,57,447/- as against
Rs.12,18,098/- reflected in the Netherlands import documentation. In
another case, the Indian FOB value was stated to be US$5,797.25,
whereas the corresponding import value reflected in the foreign
documentation was US$748.54.
27. On the basis of the aforesaid material, the Revenue alleged that
the values declared in the shipping bills were inflated, in some cases
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 18 of 88

by multiple times, and that the inflated values had the effect of
enhancing the amount of drawback and other export incentives
available to the exporters. The Revenue further alleged that the third-
party remittances and the alleged overvaluation were not independent
circumstances, but formed part of a common arrangement whereby
funds were circulated and subsequently brought into the exporters'
accounts as purported export proceeds.
28. Another significant aspect of the investigation concerned the
BRCs issued by PNB. The relevant BRCs were issued by the PNB
branch at DCM Building, Barakhamba Road, New Delhi, on various
dates between 18.11.2013 and 26.11.2013, certifying realization of
export proceeds in respect of the relevant exports.
29. Subsequently, in the year 2015, the DRI informed PNB that an
investigation was being conducted concerning alleged misuse and
irregularities in the availment of drawback and other export benefits.
PNB thereafter cancelled the BRCs which had earlier been issued in
respect of the exports.
30. M/s G.D. Manglam Exim Pvt. Ltd. challenged the cancellation
of the BRCs by instituting proceedings before this Court in W.P.(C)
No. 1230/2016. The said writ petition was disposed of on 14.03.2016
with a direction to PNB to consider and pass a reasoned order upon
the representations submitted by the petitioner dated 21.01.2016 and
29.01.2016.
31. Pursuant to the aforesaid directions, PNB, by communication
dated 01.04.2016, enclosed its reasons dated 30.03.2016 for
cancellation of the BRCs. PNB took the view that the third-party
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 19 of 88

realization of export proceeds did not conform to the requirements
contained in RBI Circular No. 70 dated 08.11.2013 and Circular No.
100 dated 04.02.2014. The reasons referred, inter alia, to the absence
of a firm irrevocable order backed by a tripartite agreement and the
absence of the requisite declaration regarding receipt of payment from
a third party in the export declaration.
32. M/s G.D. Manglam Exim Pvt. Ltd., which subsequently came to
be known as M/s Welldone Exim Pvt. Ltd., instituted Civil Suit No.
1114/2018 before the competent Civil Court at Patiala House Courts
on 18.08.2018, seeking, inter alia , a declaration that the cancellation
of the BRCs by PNB was null and void and of no legal effect. The
Customs Department was not impleaded as a defendant in the said
proceedings, notwithstanding that an investigation by the Customs
authorities into the transactions in question was pending.
33. The said civil suit culminated in a judgment and decree dated
13.03.2020 passed by the learned Additional Senior Civil Judge, New
Delhi District, whereby the cancellation of the BRCs was declared
null and void and without effect.
34. In the meantime, the Customs authorities proceeded with the
adjudication of the show cause notices issued pursuant to the DRI
investigation. In the case of M/s G.D. Manglam Exim Pvt. Ltd., four
show cause notices had been issued proposing recovery of the benefits
availed by the exporter, together with interest and penalties. The
exporter participated in the adjudication proceedings and submitted its
written submissions, including a written submission dated 08.05.2023.
35. The common adjudication proceedings culminated in Order-in-
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 20 of 88

Original No. 07/2023/VCG/PR.Commr/ICD/Export/TKD dated
30.05.2023. The Adjudicating Authority, after examining the material
on record, confirmed certain portions of the demands while dropping
the remaining proposals.
36. In respect of M/s G.D. Manglam Exim Pvt. Ltd., the
Adjudicating Authority confirmed demands towards drawback and
duty foregone in respect of the consignments covered by the cancelled
BRCs, besides ordering confiscation and imposing penalties, while
dropping the remaining proposals.
37. The confirmation of the demands was also linked by the
Adjudicating Authority to the cancellation of the BRCs in respect of
1,650 consignments. The Adjudicating Authority treated the
cancellation of the BRCs as demonstrating that the corresponding
export proceeds could not be treated as having been validly realised
and consequently proceeded to confirm the consequential demands.
38. In respect of the remaining consignments, for which the BRCs
had not been cancelled, the Adjudicating Authority did not accept the
Revenue’s proposals for recovery, holding that the material collected
by the Revenue was insufficient to sustain the proposed demands.
Accordingly, the proposals in respect of those consignments were
dropped.
39. The Revenue, being aggrieved by the dropping of the demands,
preferred appeals before the CESTAT. The exporters, being aggrieved
by the confirmation of demands and the penalties imposed upon them,
also preferred appeals. Appeals were likewise preferred by certain
individual noticees against the penalties imposed upon them. All these
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 21 of 88

appeals came to be heard together by the CESTAT.
40. The CESTAT, Principal Bench, New Delhi, by Final Order
Nos. 59488-59509/2024 dated 25.11.2024, disposed of the batch of
appeals by dismissing the appeals preferred by the Revenue and
allowing those preferred by the exporters and the concerned individual
noticees. The principal observations and conclusions recorded by the
CESTAT, insofar as relevant to the present appeals, may be
summarised as follows:
i. The foundational controversy was not whether the goods had
been exported or whether remittances against the exports had been
received, either wholly or in part. The principal controversy concerned
the fact that the payments credited to the exporters’ accounts had been
made by persons other than the overseas buyers identified in the
export documents, including persons described as diamond merchants.
ii. The allegations concerning a wider arrangement, including the
alleged round-tripping of funds, the connections between various
persons and entities, and irregularities in transactions involving
diamond traders, could not, by themselves, dispense with the statutory
requirements governing recovery under the Customs Act and the
applicable Drawback Rules. The Tribunal proceeded on the basis that
the Customs authorities were required to establish the statutory
grounds for recovery and could not sustain a demand merely on the
strength of allegations concerning the larger arrangement. The
Revenue, however, contends that the case involved allegations of
deliberate misdeclaration and incorrect declarations made to obtain
excess or ineligible drawback and export incentives, which required
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 22 of 88

examination of the material collected during the investigation.
iii. Insofar as drawback was concerned, the CESTAT considered
the second proviso to Section 75 of the Act, which addresses the
consequences where sale proceeds in respect of exported goods are
not received in India within the period prescribed under the Foreign
Exchange Management Act, 1999, and the rules and regulations made
thereunder. It held that this provision could not, by itself, be construed
as conferring upon the Customs authorities an independent jurisdiction
to determine the validity of the source of a remittance merely because
the payment had been received through banking channels.
iv. It referred to the decision of the Punjab and Haryana High
1
Court in Aura Creations v. Reserve Bank of India , in the context of
third-party payments. It understood the applicable regulatory
framework as not imposing an absolute prohibition on third-party
remittances and observed that such transactions were required to be
considered in accordance with the conditions governing them.
v. The mere fact that remittances had emanated from persons other
than the overseas buyers could not, without more, lead to the
conclusion that export proceeds had not been realised for the purposes
of Section 75 of the Act. It further reasoned that the Customs
authorities could not presume the remittances to be invalid in the
absence of a determination or other lawful action under the applicable
regulatory framework demonstrating that the payments could not be
treated as legitimate export realisations. The Revenue’s case, however,
was not confined to the identity of the persons from whom the

1
CWP No. 9685/2017, decided on 27.07.2017
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 23 of 88

remittances originated. It also relied upon the alleged overvaluation of
the exported goods, the circumstances surrounding the remittances,
and the other material collected during the investigation.
vi. It noted that the goods had already been assessed by the
Customs authorities and observed that any alteration of the declared
value of the export goods was required to be undertaken in accordance
with the statutory valuation mechanism prescribed under Section 14 of
the Act read with the Customs Valuation (Determination of Value of
Export Goods) Rules, 2007 [ hereinafter referred to as “the 2007
Rules”].
vii. It further held that the material relied upon by the Revenue,
including documents obtained from foreign Customs authorities, the
values declared by importers in the countries of destination, domestic
purchase prices and other material gathered during the investigation,
could not substitute the statutory process for determining or
redetermining the value of the export goods. It noted that no
independent exercise of valuation in accordance with Section 14 of the
Act read with the 2007 Rules had been undertaken in the adjudication
proceedings. The Revenue’s case, on the other hand, was that the
material relating to the allegedly inflated values and the use of
different or allegedly false invoices was relevant to establishing
deliberate misdeclaration for the purpose of claiming higher drawback
and benefits under the FPS and FMS, and was not confined to seeking
a fresh determination of the assessable value of the goods.
viii. The CESTAT observed that the existence of allegations
concerning a wider arrangement or alleged fraud could not dispense
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 24 of 88

with the need to establish the specific statutory ingredients prescribed
for action under Section 28AAA. It was further noted that the duty
credit scrips issued under the relevant export promotion schemes had
not been shown to have been invalidated in proceedings against the
persons who had utilised them, and that the importers who had utilised
the relevant scrips had not been proceeded against in the manner
contemplated by the statutory scheme. It consequently held that the
general allegations concerning the exporters’ transactions could not,
without satisfaction of the statutory requirements of Section 28AAA,
sustain the recoveries proposed in the show cause notices.
ix. Another circumstance that weighed with the CESTAT was the
judgment and decree dated 13.03.2020 passed in the civil proceedings
instituted by M/s G.D. Manglam Exim Pvt. Ltd. against PNB. The
CESTAT noted that the cancellation of the BRCs, which had formed
the basis for confirming the demands relating to the 1,650
consignments, had been declared null and void by the competent Civil
Court. Though, the Customs authorities had not been parties to the
civil proceedings, but still the Adjudicating Authority ought not to
have proceeded on the assumption that the decree was under challenge
without first ascertaining its status. It further held that, once the
cancellation of the BRCs had been declared null and void, the
distinction drawn in the adjudication order between the consignments
covered by the cancelled BRCs and the remaining consignments could
no longer be sustained.
x. In the case of Shri Nitin Gupta, an individual noticee associated
with M/s Oak Shipping Services Pvt. Ltd., the CESTAT additionally
noted that the relevant notice and documents had not been furnished to
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 25 of 88

him and that he had not been afforded an effective opportunity of
hearing. It accordingly treated the alleged violation of the principles of
natural justice as an independent ground for setting aside the penalty
imposed upon him.
41. It is against the aforesaid common Final Order dated
25.11.2024 that the present batch of Appeals under Section 130 of the
Act has been preferred by the Revenue.
CONTENTIONS OF THE PARTIES:
42. Contentions on behalf of the Appellant:
42.1. It was submitted that present Appeals raise substantial questions
of law and are maintainable under Section 130 of the Act. The dispute
is not one concerning determination of the rate of duty or valuation of
goods for the purposes of assessment. Reliance was placed, inter alia ,
on Navin Chemicals Manufacturing and Trading Co. Ltd. v.
2
Collector of Customs , Commissioner of Customs v. Motorola India
3 4
Ltd. , M/s Asean Cableship Pvt. Ltd. v. Commissioner of Customs ,
and Commissioner of Central Excise, Hyderabad v. Shriram
5
Refrigeration Industries , to contend that an issue concerning
eligibility to an exemption or export benefit, as distinct from
determination of the rate of duty or value for assessment, falls within
the jurisdiction of the High Court under Section 130
42.2. It was submitted that the investigation had revealed a
coordinated arrangement involving the five exporter entities, fictitious

2
(1993) 4 SCC 320
3
2019 (9) SCC 563
4
SLP (C) No. 2208/2022
5
CIVIL APPEAL NOS. 2589-2599 of 2011
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 26 of 88

or non-existent domestic suppliers and several intermediaries, through
which funds were routed between various bank accounts. The
investigation further revealed receipt of more than USD 76 million
from third-party entities based in Hong Kong, the British Virgin
Islands and the UAE, although the goods were declared to have been
exported to different overseas buyers. According to the Appellant, the
declared buyers either denied the transactions or acknowledged
payment of only substantially smaller amounts.
42.3. It was contended that the third-party remittances could not,
merely because they physically entered the exporters’ bank accounts,
be treated as genuine realisation of sale proceeds for the purposes of
Section 75 of the Act. Reliance was placed on the second proviso to
Section 75(1) and RBI Circular No. 70 dated 08.11.2013, as amended
by Circular No. 100 dated 04.02.2014, to submit that third-party
remittances were subject to prescribed conditions, including the
existence of a firm irrevocable order backed by a tripartite agreement
and appropriate declaration of the third-party remittance
42.4. It was further submitted that the expression “sale proceeds in
respect of such goods” occurring in the second proviso to Section
75(1) necessarily contemplates a genuine nexus between the amount
realised and the goods in respect of which drawback has been claimed.
Where the remittances were received from unrelated third parties, in
circumstances indicating that they had no connection with the declared
overseas buyers or the exported goods, such amounts could not
constitute legitimate sale proceeds so as to sustain the drawback
benefit.
42.5. On the issue of overvaluation, it was submitted that the
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 27 of 88

investigation disclosed that the garments exported by the five
exporters had been grossly overvalued, in some instances by two to
twenty times, with the object of obtaining higher drawback and other
export incentives. The Appellant relied upon the verification
undertaken through overseas customs authorities, including the
comparison of values declared before Indian Customs with the
corresponding values declared before foreign customs authorities. It
was submitted that the sample verification of consignments had itself
disclosed substantial excess drawback.
42.6. It was submitted that the CESTAT erred in treating the matter
as an ordinary valuation dispute requiring re-determination under
Section 14 of the Act and the Rules, 2007. According to the
Appellant, the case concerns fraudulent availment of export incentives
through deliberately inflated declarations and fictitious procurement
arrangements, and not a routine dispute regarding determination of the
assessable value of genuine exports. It was therefore contended that
the absence of a formal re-determination of value could not, by itself,
defeat the findings emerging from the investigation.
42.7. It was further submitted that the CESTAT erred in holding that
the Customs authorities had no jurisdiction to examine the nature of
the remittances merely because regulation of foreign exchange falls
within the domain of the Reserve Bank of India under FEMA.
According to the Appellant, Customs was not seeking to enforce
FEMA independently; rather, it was examining whether the statutory
conditions for retention of drawback under Section 75 of the Act stood
satisfied. The reference to the time permitted under FEMA in the
second proviso to Section 75, according to the Appellant, forms part
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 28 of 88

of the statutory mechanism governing eligibility to drawback.
42.8. As regards the 1,650 BRCs, it was submitted that the
Adjudicating Authority had relied upon their cancellation by Punjab
National Bank as evidence that the corresponding export proceeds had
not been validly realised. The Appellant contended that the subsequent
civil court order concerning the cancellation of the BRCs, passed in
proceedings between the exporter and the bank, could not by itself
extinguish the independent jurisdiction of the Customs authorities to
examine whether the underlying export transactions were genuine and
whether the drawback had been lawfully availed. The Revenue further
relied upon the surrounding evidence concerning the third-party
remittances, the declared buyers and the alleged overvaluation.
42.9. It was also submitted that the CESTAT failed to appreciate the
cumulative effect of the financial trail, statements recorded during
investigation, verification of domestic suppliers and overseas
enquiries. According to the Appellant, the evidence disclosed a
coordinated arrangement involving inflated export values and
movement of funds through third-party entities, and the Tribunal erred
in examining individual aspects of the transactions in isolation.
Reliance was placed on the principle that fraud cannot be permitted to
confer an entitlement to public revenue, with reference to decisions
6
including Commissioner of Customs, Kandla v. Essar Oil Ltd. , S.P.
7
Chengalvaraya Naidu v. Jagannath , K.I. Pavunny v. Assistant
8
Commissioner and Commissioner of Customs v. Candid

6
2004 INSC 587
7
1994 SCC (1) 1
8
1997 (90) E.L.T. 241 (SC)
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 29 of 88

9
Enterprises .
42.10. Finally, it was submitted that once the findings regarding non-
realisation of legitimate export proceeds and fraudulent overvaluation
were established, the consequential recovery of drawback under
Section 75, recovery of duty foregone under Section 28AAA, as well
as confiscation and penalties under the Act, could not have been set
aside merely on the grounds relied upon by the CESTAT. The
Appellant therefore contended that the Impugned Final Order dated
25.11.2024 gives rise to substantial questions of law warranting
interference by this Court.
43. Contentions on behalf of the Respondents:
43.1. Per contra , it was submitted that the present Appeals are not
maintainable under Section 130 of the Act, as the controversy before
this Court directly involves the valuation of the goods exported by the
Respondent. It was submitted that Section 130 expressly excludes
from the jurisdiction of the High Court an order relating, inter alia, to
the determination of any question having a relation to the value of
goods for the purposes of assessment, while Section 130E(b) provides
for an appeal to the Supreme Court in such matters.
43.2. It was submitted that the Department's own pleadings
demonstrate that the allegation of overvaluation constitutes a
substantive basis of the present Appeals. Reliance was placed on
Questions of Law (iii) and (iv), as well as Grounds A, B, M and N of
the Appeal, wherein the Department alleges that the goods were
overvalued by two to twenty times and that such overvaluation

9
1997 (93) ELT 363 (TRI-MUMBAI)
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 30 of 88

resulted in excess availment of drawback. It was, therefore, contended
that the Department could not characterise the dispute merely as one
concerning fraudulent availment of drawback so as to bring it within
the jurisdiction of this Court.
43.3. It was further submitted that the CESTAT, in paragraph 21 of
the Impugned Final Order, had specifically held that the demands and
confiscation rested upon the charge of overvaluation and that there
was neither any notice nor any finding re-determining the value of the
exported goods under Section 14 of the Act read with the Rules, 2007.
According to the Respondent, the question whether the declared value
was liable to be rejected and substituted necessarily pertains to
valuation for the purposes of assessment.
43.4. Reliance was placed upon the decisions of the Supreme Court in
Navin Chemicals (supra) and Motorola India . (supra), as also the
decisions of this Court in Laxmi Enterprises v. Commissioner of
10
Customs (Preventive) & Ors. and Commissioner of Service Tax,
11
Delhi v. Konark Exim Pvt. Ltd . , to contend that the exclusion under
Section 130 is attracted where the order involves a question having a
relation to valuation, even if valuation is not the only issue arising for
consideration.
43.5. It was submitted that the same principle applies to a drawback-
recovery proceeding founded upon alleged overvaluation. Reliance
was placed upon Siddachalam Exports Pvt. Ltd. v. Commissioner of
12
Central Excise, Delhi-III , Additional Director General, DRI v.

10
W.P.(CRL) 2242/2024 (Delhi)
11
SERTA 5/2024 (Delhi)
12
(2011) 5 SCC 114
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 31 of 88

13
Knowledge Infrastructure Systems Pvt. Ltd. , and Commissioner of
14
Customs, Willingdon Island v. Kishin S. Loungani , to contend that
where recovery of drawback is founded upon misdeclaration of the
value of exported goods, valuation is integral to the controversy and
the bar contained in Section 130 is attracted.
43.6. It was submitted that the Department’s reliance upon the
distinction between “valuation” and “fraudulent availment of
drawback” was misconceived, since the allegation of excess drawback
itself arises from the assertion that the goods were declared at inflated
values. According to the Respondent, determination of the correct
value would necessarily precede any determination of the extent of
excess drawback allegedly availed. It was also pointed out that, in
Kishin S. Loungani (supra), the Kerala High Court had considered
valuation integral to proceedings concerning confiscation and
recovery of erroneous drawback.
43.7. Without prejudice to the objection as to maintainability, it was
submitted that the questions framed by the Department do not give
rise to any substantial question of law but essentially seek re-
appreciation of the factual material already considered by the
CESTAT. It was contended that the Tribunal had examined the
overseas enquiry reports, Bank Realisation Certificates and the
material relating to third-party remittances, and had returned findings
against the Revenue. A mere possibility of taking a different view of
the evidence, according to the Respondent, would not justify
interference under Section 130.

13
CUSTOMS APPEAL NO. 7/2019 (Bombay)
14
CUS.APPEAL NO. 23/2022 (Kerala)
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 32 of 88

43.8. As regards the third-party remittances, it was submitted that the
CESTAT had considered the applicable RBI Circulars and had held
that Circular No. 70 dated 08.11.2013 did not constitute an absolute
embargo on third-party payments. The Tribunal had also relied upon
the decision in Aura Creations (supra) and had found that the
regulatory framework contemplated a mechanism for case-to-case
approval. It was thus contended that the Department’s challenge on
this aspect also seeks reconsideration of the factual and legal
conclusions already reached by the Tribunal.
43.9. Finally, it was submitted that the CESTAT had also taken note
of the judgment dated 13.03.2020 passed by the learned Patiala House
Court setting aside the cancellation of the BRCs and that the said
BRCs had subsequently been restored by Punjab National Bank
during execution proceedings. The Respondent accordingly submitted
that the present Appeals, being barred by Section 130 insofar as they
concern valuation and, in any event, not disclosing a substantial
question of law warranting interference, deserve to be dismissed.
ISSUES FOR DETERMINATION:
44. In view of the rival submissions, the following issues arise for
determination:
I. Whether the present Appeals under Section 130 of the Customs
Act are maintainable, having regard to the allegation of overvaluation
and third party remittance raised by the Revenue, particularly when
the exported goods had already been assessed and there was no re-
determination of their value under Section 14 of the Act read with the
Customs Valuation (Determination of Value of Export Goods) Rules,
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 33 of 88

2007?
II. Whether the Customs authorities have no jurisdiction/authority
to examine the validity of third-party remittances for the purposes of
determining the entitlement to retain drawback under Section 75
merely because the regulation of foreign exchange and realisation of
export proceeds falls within the regulatory domain of the Reserve
Bank of India?
III. Whether declaratory judgment and decree passed in a civil suit
binds the parties to the suit or it also binds those who are not party to
the civil suit?
IV. Whether the CESTAT correctly appreciated the scope and
applicability of Section 28AAA of the Act in relation to the duty
foregone on imports made against the duty credit scrips obtained on
the basis of the disputed exports?
ANALYSIS & FINDINGS:
45. This Court has carefully considered the detailed submissions
advanced on behalf of the parties and perused the material on record.
Maintainability of the Appeals under Section 130:
46. At the outset, it is necessary to deal with the preliminary
objection raised by the Respondents regarding the maintainability of
the present Appeals under Section 130 of the Act. The objection
proceeds on the premise that since the Revenue has alleged that the
export goods were overvalued, the Impugned Final Order is an order
relating to determination of the value of goods for the purposes of
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 34 of 88

assessment and, consequently, the jurisdiction of this Court stands
excluded.
47. The submission, in the view of this Court, proceeds on an
erroneous appreciation of the controversy which actually arose before
the CESTAT. It is undoubtedly correct that Section 130 of the Act
excludes from the appellate jurisdiction of the High Court an order
relating, amongst other things, to determination of any question
having a relation to the rate of duty of customs or to the value of
goods for the purposes of assessment. However, the statutory
exclusion is attracted only where the question concerning value bears
the requisite relationship with the assessment of the goods.
48. The distinction is of considerable significance in the present
case. The Revenue does not challenge, in the present proceedings, an
assessment order determining the assessable value of the exported
goods. Equally, the Revenue does not seek to have the assessable
value determined under Section 14 of the Act in these proceedings.
The very finding of the CESTAT, which constitutes the basis of the
Respondents’ objection, is that the export goods had already been
assessed and that no re-determination of their value under Section 14
of the Act read with the Rules, 2007 had been undertaken.
49. The Supreme Court, while examining the corresponding
exclusion contained in the Central Excise Act, 1944 in M/s Alupro
Building Systems Pvt. Ltd. v. Commissioner of Central Excise,
15
Bangalore-II , has explained that the words “any” and “among other
things” give the exclusion a wide ambit. At the same time, the

15
2026 INSC 582
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 35 of 88

expression “for purposes of assessment” qualifies the reference to the
rate of duty as well as the value of goods. Thus, every question which
may incidentally touch upon value does not, merely for that reason,
stand excluded from the jurisdiction of the High Court. The question
must bear a direct and proximate relationship with the assessment.
50. The principle laid down in Alupro (supra), therefore, is not that
the mere presence of an allegation concerning value is sufficient to
oust the jurisdiction of the High Court. What is material is the nature
of the question which the Court is called upon to decide. If the
question concerns the assessable value of the goods and the
determination of such value forms part of the assessment, the statutory
exclusion would undoubtedly operate. However, where the value is
referred to for an altogether different purpose, the exclusion cannot be
invoked merely by labelling the controversy as one of “valuation”.
51. In the present case, the allegation of overvaluation was made in
the context of the alleged fraudulent availment of drawback and other
export incentives. The Revenue's case was that the exporters had not
only deliberately declared inflated values in the shipping bills and, by
doing so, had claimed benefits in excess of what would otherwise
have been available, but also the third party remittance reflected as
payments for the exported goods were also not connected. The
valuation material was consequently relied upon as evidence bearing
upon the entitlement to retain the benefits already availed and upon
the alleged manner in which such benefits had been obtained.
52. This distinction is borne out from the Impugned Final Order
itself. In paragraph 21, the CESTAT recorded that the demands and
the consequential action were founded, inter alia, upon the allegation
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 36 of 88

of overvaluation. At the same time, the CESTAT specifically noted
that the assessment under Section 17 had not been disturbed and that
there had been no notice or finding re-determining the value under
Section 14 read with the 2007 Rules.
53. In other words, the CESTAT itself recognised that there had
been no adjudication determining the assessable value of the exported
goods in accordance with the statutory valuation mechanism. The
question before the CESTAT was whether the material gathered
during investigation could nevertheless be relied upon for determining
whether the exporters had fraudulently availed drawback and other
export benefits.
54. It would, therefore, be somewhat anomalous to accept the
Respondents' submission that the Appeals are barred under Section
130 because they involve determination of value for purposes of
assessment when the very finding of the CESTAT is that no such
determination of value for purposes of assessment had taken place.
55. The reliance placed by the Respondents upon Kishin S.
Loungani (supra) does not advance their case. In that matter, the
valuation of the goods was itself adjudicated upon and the valuation
finding was found to be integral to the conclusions concerning
confiscation and denial and recovery of drawback. The Kerala High
Court consequently held that the order involved, amongst other things,
the issue of valuation of goods for purposes of assessment and that the
statutory appellate remedy lay before the Supreme Court.
56. The factual and procedural position in the present case is
materially different. Here, the CESTAT has expressly proceeded on
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 37 of 88

the basis that the declared value had not been re-determined under
Section 14 read with the 2007 Rules. The Revenue's grievance is not
that the assessable value determined by Customs was incorrectly
fixed, but that the exporters allegedly manipulated the declared values
for the purpose of obtaining drawback and other export incentives.
57. The distinction is also consistent with the principle underlying
Navin Chemicals (supra). The expression “for purposes of
assessment” is the controlling expression. The exclusion concerns
questions relating to rate of duty or value in the context of assessment.
It does not convert every question in which the value of goods may be
relevant into a valuation dispute for purposes of Section 130.
58. The fact that the Revenue relies upon the difference between the
values declared in India and those appearing in the foreign customs
documents does not alter the nature of the proceedings. The Revenue
relies upon those differences as evidence of alleged inflation and
fraudulent availment of benefits. Whether such evidence is ultimately
sufficient to establish the alleged fraudulent availment is a matter to be
examined on the evidentiary record. It is distinct from determining the
assessable value of the goods under Section 14.
59. This Court is, therefore, unable to accept the preliminary
objection raised by the Respondents. The present Appeals are
maintainable under Section 130 of the Act. The issue of alleged
overvaluation, as it arises in the present proceedings, does not
constitute a determination of the value of goods for purposes of
assessment so as to attract the exclusion contained in Section 130.
Third-party remittances and the scope of the Customs enquiry:
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 38 of 88

60. Having answered the question of maintainability, the principal
controversy arising in these Appeals concerns the manner in which the
CESTAT dealt with the third-party remittances and the material relied
upon by the Revenue to question the entitlement of the exporters to
retain the drawback.
61. Section 75 of the Act provides the statutory basis for grant of
drawback on exported goods. The second proviso to Section 75(1), as
relevant for the present controversy, contemplates the consequence
where the sale proceeds in respect of the exported goods are not
received by the exporter in India within the period prescribed under
the Foreign Exchange Management Act, 1999 and the rules and
regulations made thereunder.
62. The controversy before this Court is not whether a payment
received from a third party can, in every conceivable circumstance, be
treated as an invalid export realisation. Nor is it necessary for this
Court to hold that every third-party remittance is prohibited. The
question is narrower: whether the Customs authorities, while
examining the entitlement of an exporter to drawback, were entitled to
examine whether the amounts shown as export realisations actually
represented sale proceeds in respect of the goods for which drawback
had been claimed.
63. In the considered view of this Court, the answer has to be in the
affirmative. The reference in Section 75 to “sale proceeds in respect of
such goods” necessarily requires the Customs authorities, when the
entitlement to drawback is put in issue, to examine whether the
amounts relied upon as export realisations have the requisite nexus
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 39 of 88

with the exports in question. The Customs authorities are not thereby
exercising the regulatory jurisdiction of the Reserve Bank of India
under FEMA. They are examining the statutory entitlement to retain a
benefit granted under the Customs Act.
64. The CESTAT, however, appears to have treated the matter as
though the Revenue was seeking to adjudicate upon the validity of the
foreign exchange transaction as such. The Revenue's case, properly
understood, was different. The Revenue relied upon the identity of the
remitters, the identity of the declared overseas buyers, the statements
and enquiries concerning those buyers, the movement of funds
through various accounts and the surrounding circumstances to prove
that the amounts shown as realisations could not be accepted as
genuine sale proceeds of the exported goods.
65. The distinction assumes significance because the material relied
upon by the Revenue was not confined to the fact that the remitter was
a person other than the named buyer. As recorded in the Order-in-
Original, the investigation extended to the entities from which the
remittances originated, the nature of their business activities, the
persons shown as their directors or partners, the relationship, if any,
between such entities and the declared overseas buyers, and the
circumstances in which the remittances were received by the Indian
exporters.
66. The adjudicating authority also relied upon the material
obtained during overseas enquiries and the documents concerning the
corresponding imports. The findings recorded in the Order-in-Original
refer to instances where the overseas buyers or consignees allegedly
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 40 of 88

denied having undertaken the transactions attributed to them, as well
as instances where the value reflected in the overseas import
documentation was substantially different from the value declared
before the Indian Customs authorities. The Order-in-Original further
refers to the investigation concerning the third-party remitting entities
and the banking records relating to the receipt of export proceeds.
67. In such circumstances, the Customs authorities could not have
been precluded from examining the transactions merely because the
amounts had physically entered the exporters' bank accounts. Receipt
of money in a bank account is a fact; whether that receipt constitutes
sale proceeds in respect of the exported goods is a matter which has to
be determined from the surrounding circumstances and the evidence
available on record.
68. The CESTAT was, therefore, not justified in proceeding on the
basis that the Customs authorities could not examine the nature of the
remittances unless the Reserve Bank of India or another authority
exercising jurisdiction under the foreign exchange regulatory
framework had first declared the remittances to be invalid. The
Customs authorities were required to examine the remittances only to
the extent necessary for deciding the statutory entitlement under the
Customs Act.
Duty of the appellate authority to critically examine the Order-in-
Original:
69. Before proceeding further, it is necessary to notice a
fundamental aspect of appellate adjudication which assumes particular
significance in the present case. When an appellate authority exercises
jurisdiction over an adjudication order and proposes to reverse the
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 41 of 88

conclusions recorded therein, it is required to critically analyse the
findings recorded by the adjudicating authority and the material on
which those findings are founded. The appellate authority must, by a
process of reasoning, demonstrate why the conclusions recorded by
the adjudicating authority are erroneous or unsustainable before
substituting its own conclusion.
70. The requirement is not merely procedural. It is inherent in the
exercise of appellate jurisdiction. An appellate authority is not
required merely to state that it has taken a different view. Where the
order under challenge is founded upon an investigation involving
several pieces of evidence and a series of findings, the appellate
authority is required to examine the material findings which constitute
the foundation of the adjudication order and record reasons for
disagreeing with them.
71. This aspect assumes particular significance in the present case
since the Order-in-Original dated 30.05.2023 records findings based
upon documentary material obtained during the investigation, apart
from statements recorded under the Customs Act. The CESTAT was,
therefore, required to examine the material considered by the
adjudicating authority and determine whether the conclusions drawn
therefrom were sustainable in law and on facts.
72. The question before this Court is consequently not whether this
Court would itself have arrived at the same factual conclusions as the
Commissioner of Customs (Exports). Nor is this Court required, in
exercise of jurisdiction under Section 130, to undertake a wholesale
re-appreciation of the evidentiary record. The relevant question is
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 42 of 88

whether the CESTAT, while reversing the Order-in-Original, critically
examined the findings and material which constituted the basis of the
adjudication.
Findings recorded by the adjudicating authority:
73. It is, therefore, necessary to notice the nature and extent of the
findings recorded by the adjudicating authority. The Order-in-Original
contains detailed findings concerning the source and movement of the
remittances, the entities through which the funds were routed, the
overseas buyers and consignees, the values declared before Indian
Customs vis-à-vis those reflected in the overseas documents, the
cancellation of e-BRCs by Punjab National Bank and the alleged
availment of drawback and other export incentives.
74. In paragraph 43.1 of the Order-in-Original, the Adjudicating
Authority recorded that the investigation conducted by the DRI had
revealed that substantial amounts had been transferred from the bank
accounts of Noticees Nos. 1 to 5 to the bank account of M/s Ganpati
Trading Co. during the period from February 2012 to May 2012. The
amounts were thereafter transferred by M/s Ganpati Trading Co. to
various firms based in Surat and Mumbai. Thus, the investigation
traced a sequence of transfers from the accounts of the said noticees to
M/s Ganpati Trading Co., and thereafter to other firms.
75. The Show Cause Notice dated 17.02.2017, in paragraphs 20.7
to 20.10, contains pictorial charts depicting the alleged flow of funds
between the five exporting firms, the vendors of the exported goods
stated to be controlled by Shri Pavan Sharma, Shri Yogesh Mittal,
Shri Gaurav Bhardwaj and Shri Gopal Sharma, the firms based in
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 43 of 88

Surat and Mumbai alleged to be fictitious, and the overseas firms
which, according to the Revenue, remitted the funds back as export
proceeds. The said charts, as set out in the Show Cause Notice, are
reproduced below:

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 44 of 88

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 45 of 88

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 46 of 88

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 47 of 88

76. In paragraph 43.2, the adjudicating authority recorded that no
import or export had been made by M/s Ganpati Trading Co. and that
the entities to whom the money was transferred suggested that their
declared line of business was diamond trading. It was further recorded
that many of the bank accounts had remained operational for only a
short period of time while witnessing substantial monetary
transactions.
77. In paragraph 43.3, the adjudicating authority recorded that the
declared addresses of M/s Ganpati Trading Co. and other trading firms
controlled by Shri Pavan Kumar, proprietor of M/s Ganpati Trading
Co., were found vacant or occupied by other firms, despite invoices
allegedly being raised from those addresses for sale of ready-made
garments to the five exporting firms till August-September 2013. The
purchases shown by Noticees Nos. 1 to 5 from the trading firms
controlled by Shri Pavan Kumar were, therefore, recorded as
appearing dubious since the vendors were not found at their declared
addresses during search and verification.
78. Paragraph 43.4 records a similar finding in respect of the other
supplier firms. The DRI investigation with the different supplier firms
was recorded as having revealed that the purchases shown by the five
exporters from the supplier firms and their trading firms appeared
dubious, since the vendors had not been found at their declared

addresses during search and verification.
79. Paragraph 43.5 records the findings arising from the overseas
enquiries conducted by the DRI with various Consulate Generals of
India in the importing countries and with the buyers and consignees in
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 48 of 88

respect of the exports made by the five exporting firms. The relevant
findings recorded by the adjudicating authority are reproduced below:
“43.5. The overseas enquiries of the DRI with various Consulate
Generals of India based in the importing countries and with the
buyers/consignees in respect of the impugned exports made by the
firve exporting firms (Noticee No. 1 to 5) revealed :-
(i) that the exported goods were overvalued before Indian Customs as
the same has been cleared very lower price at overseas.
(ii) that in some cases the name of exporter was changed.
(iii) that in some cases the name of consignee was changed
(iv) that the tune of over-valuation ranges from 2 to 20 times
(v) that in the case exported goods cleared at overseas at very lower
price, the remittances of the said exported goods were received from
buyers yiz M/s A Khat Al Fizi General Trading, Dubai and M/s Al
Wadi Al Saeed, Dubai
(vi) that Shri Mohammed Zia Ul Haque, Partner of M/s Whitewood
General Trading LLC, Dubai (WWGT) in his statement recorded
under Section 108 of the Customs Act, 1962, inter alia, denied having
imported any consignments in his firm WWGT in Dubai and denied
having any knowledge of the buyer i.e., Al Khat Al Fizi Trading LLC,
Dubai and the exporter M/s Konark Exim Pvt Ltd, 6/846, Main Bazar,
Mehrauli, New Delhi. He also categorically denied having made any
payments to the said Indian exporting firms.
(vii) that Shri Juned Beg, Partner M/s Al Basit Trading LLC, Dubai,
in his statement recorded under Section 108, inter alia, denied having
ordered or purchased any goods purported to be exported by Indian
exporting firm M/s Yogmaya Traders Pvt Ltd.
(viii) that Shri Gopal Nanikram, Partner M/s Advancetech Tradiug
LLC, Dubai in his statement recorded under Section 108, inter alia,
denied having ordered or purchased any goods purported exported by
Indian exporting firm M/s Konark Exim Pvt Ltd.
Thus, the investigation concluded that the exports were made io fake
buyers/consignees and the remittances received in foreign exchange
were not in relation to the exported goods but were only for the
purpose of fulfilment of the requirement of Bank Realization
Certificate (BRC).”
80. The adjudicating authority thereafter recorded findings
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 49 of 88

concerning the investigation into the third-party transactions between
the five exporting firms and firms based in Hong Kong. Paragraph
43.6 records as follows:
“43.6. The DRI conducted investigation of third party transaction,
ie. the transaction between the five exporting firms (Noticee No. I to 5)
and firms based in Hongkong. The investigation conducted with the
Directors/Partners of the Hong Kong firms revealed that :-
a) The so called Directors/partners in the Honkong based firms, from
whom payments were received by the Indian exporting firms were only
name sake owners of the overseas entities.
b) These persons belonged to very low income group, and had fallen
into the trap of scamsters for petty amounts in cash or reimbursement
of travel and lodging expenses.
c) These persons had no knowledge of any business dealings with the
five Indian exporter firms.
d) There persons had no knowledge of the Dubai based buyers namely
(a) M/s Al Khat Al Fizi Trading LLC, UAE and (b) AL Wadi Saeed
General Trading LLC UAE.
e) Front companies had been opened in Hong Kong in the name of
Indian National by group of persons for the purpose of trade based
money laundering.
f) The total amount of such illicit transfers from the overseas bank
accounts of Able Bright International Trading Limited, Winful
Trading Limited, Max Rise Trading, Star Grace Trading Limited, Star
Corporation. Lad, Joy Glory Trading Lad, Daimur Gems Jewellery
LLC Limited and Loyal Top International Limited to the 5 Indian
exporting firms amounted to more than USD 76 million.
g) Diamonds had been imported into India from Hong Kong based
firms by way of overvaluation so as to remit foreign exchange outside
India and part of such foreign exchange remittance was used to
finance overvaluation of exported goods as third party remittance for
availing undue exports incentives.”
81. Paragraph 43.7 records the allegation that the RBI Guidelines
concerning third-party remittances, issued vide RBI Circular No. 70
dated 08.11.2013, RBI Circular No. 100 dated 04.02.2014 and the
subsequent communications referred to therein, were not followed.
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 50 of 88

82. Paragraph 43.8 records that the Enforcement Directorate, Surat
had also investigated a case of money laundering concerning three
Surat-based companies, namely M/s Harmony Diamonds Pvt. Ltd.,
M/s Agni Gems Pvt. Ltd. and M/s R.A. Distributors Pvt. Ltd., in
relation to remittances of foreign exchange equivalent to more than
Rs.4,000 crores against allegedly fake import documents of diamonds.
The Order-in-Original records the allegation that a circuitous route
had been adopted to circulate the money from one entity to another,
which was ultimately remitted abroad through allegedly bogus
transactions, and that such remittances were received back by the five

Indian exporting firms as third-party payments for the export goods.
83. The findings recorded in paragraph 43.9 concern the
investigation and enquiry with Shri Sahdev Gupta, Director/Controller
of the five exporting firms. The adjudicating authority recorded, inter
alia, the following: The said paragraph 43.9 is reproduced as under:
“43.9. that the investigation and enquiry with Shri Sahdev Gupta
Director/Controller of the five exporter firms revealed that all these
irregular payments were in violation of the contracts entered into by
the exporting firms with the buyers as under :-
(i) Shri Sahdev Gupta had been admittedly controlling all the
operations related to the business activities of the five exporting
firms
(ii) these exporting firms have received payments from unrelated
persons/ firms (who were neither buyers nor consignees) and have
shown the said payments as export proceeds to avail drawback from
Customs and also other export incentives from DGFT.
(iii) the Hong Kong (HK) based entities which have sent foreign
remittances to the Indian exporting firms on behalf of the UAE based
buyers have been found to be incorporated by some Indian Nationals
based in Hong Kong in the name of many other Indian Nationals
living in India, having very low income. The Directors of the entities
based in Hong Kong, from whom third party remittances have been
received, admitted having no knowledge of any business dealings
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 51 of 88

with the five exporting firms based in India. Sh. Sahdev Gupta also
admitted that he had no knowledge about these persons/entities.
(iv) that the remittances are not in relation to the exported goods but
are only for the purpose of fulfilment of the requirement of Bank
Realization Certificate (BRC).
(v) that the five exporting firs had two major buyers based in Dubai -
Al Wadi Al Saeed General Trading LLC and Al Khat Al Fizi General
Trading LLC; which placed the contract with Sahdev Gupta which
also specified the name of the consignees and other contract terms
as agreed upon.
(vi) That he admitted that he had not exported any consignments to
the Hong Kong based companies and that he had exported Ready
Made Garments/Fabrics to Dubai based buyers only and all the
export documents were sent by him through PNB, IBB, New Delhi
for onward submission through banking channel to the bank of the
Dubai based buyer(s).
(viii) That he admitted that in some cases, the payments were
received from third parties, whose names were not figuring in the
export documents.
(ix) On asked to explain the reasons for receipt of payments from
unrelated, which were neither the buyer nor the consignee as per the
export documents, he admitted that these payments were sent to their
firms from the third parties on the instructions of his buyers Al Khat
or Al Wadi.
(x) On being asked to comment on the genuineness of the letters
submitted by his firms to the bankers showing relationship between
his buyers and the Hong Kong based remitting entities in the light of
various denial statements voluntarily tendered by the so called
directors of these Hong Kong based entities, admitted that he also
did not know all these persons and had no business relationship with
them and had never exported or consigned any goods to these
persons/entities and that his buyers had sent those letters claiming
their relationship with Hong Kong based companies.
(xi) Sh. Sahdev Gupte admitted having known Sh. Sahil Jain of
Gandhi Nagar, Delhi, Shri Yogesh Mittal, Shri Pavan Kumar and
Shri Gaurav Bharadwaj.
(xii) Sh. Sahdev Gupta also admitted that in terms of the contracts
entered into with the buyers, the payment would be sent by Buyer
and that in some cases, the payments were received from third party,
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 52 of 88

whose names were not figuring in the export documents as buyer or
consignee, on the instructions of his buyer Al Kha or Al Wadi
In view of the above, the SCN alleges that the remittances received
by the said exporting firms from Hong Kong/ Dubai based firms were not
in relation to the exported goods but were the difference of corresponded
to the overall overvalued exported goods for the purpose of fulfilment of
the requirement of Bank Realization Certificate and to avail undue export
incentives, which is allegedly further corroborated by the fact that there
was huge difference in the declared price before Indian Customs and at
the Port of Destination.”
84. The adjudicating authority thereafter recorded that, in view of
the aforesaid material, the show cause notice alleged that the
remittances received by the exporting firms from Hong Kong/UAE
based firms were not in relation to the exported goods but represented
the difference corresponding to the overall overvalued exported goods
for fulfilment of the requirement of BRC and for availing undue
export incentives. The Order-in-Original records that this allegation
was further sought to be corroborated by the substantial difference
between the prices declared before Indian Customs and the prices at
the ports of destination.
85. Paragraph 43.10 concerns the enquiry conducted by the DRI
with Punjab National Bank regarding the procedure prescribed and
followed in respect of realisation of export proceeds. The adjudicating
authority recorded, inter alia, that PNB officials admitted that the
tripartite agreements contemplated under the relevant RBI circular
were not available for the relevant period; that the procedure
prescribed by the RBI had not been followed in the realisation of
export proceeds; and that PNB had thereafter decided to cancel the e-
BRCs in respect of shipping bills realised against such non-compliant
third-party remittances.
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 53 of 88

86. The adjudicating authority further recorded in paragraph 43.10
that PNB, vide letter dated 16.01.2016, had intimated that, in
accordance with the observations of the investigating agencies and the
findings of its internal audit, it had decided to cancel the e-BRCs in
respect of the shipping bills realised against such non-compliant third-
party remittances and had requested the DGFT to treat such e-BRCs as
cancelled/null and void, with consequential impact upon the export
incentives claimed or availed against those shipping bills. The
adjudicating authority recorded that PNB had cancelled BRCs relating
to 1,650 Shipping Bills pertaining to the five exporting firms,
amounting to USD 12,77,16,228.59. The said paragraph 43.10 is
reproduced as under:
“43.10. The enquiry by DRI with Punjab National Bank regarding
procedures laid down and the procedures followed by them in respect
of export proceeds realization by the five exporting firm, the
investigation revealed as under:
(i) On being asked to explain the compliance of RBI Circular No.
70/2013 dated 08.13.2013 which categorically inter-alia stipulated
that AD Banks might ensure before allowing payments fir export of
goods from third party that a firm irrevocable order backed by a
tripartite agreement was in place; that the said requirement remained
in place till 04.02.2014 and requested to produce the copies of such
tripartite agreements produced by the impugned exporters for the
period 08.11.2013 to 01.02.2014, Bank Officials admitted that no such
tripartite agreements produced by the impugned exporters for the said
period were available with them as the same were not obtained by the
respective branch from M/s G.D. Mangalam Exim Pvt. Ltd and other
group companies controlled by Shri Sahdev Gupte during the said
period.
(ii) Further PNB officials admitted that the procedure prescribed by
RBI was not followed in case of realization of proceeds leading in
issuance of e-BRCs and agreed to initiate necessary corrective steps
for rectifying the procedural violations which occurred during the
said period i.e. 08.11.2013 to 04.02.2014.
(iii) PNB vide letter dated 16.01.2016 intimated that in accordance
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 54 of 88

with the observations of investigating agencies and finding of their
bank's internal audit, it had been decided to cancel all the eBRCs in
respect of shipping bills(detailed in SCN) which were realised against
such non complying third party remittances. DGFT was also
requested io treat all the eBRCs CANCELLED (Null & Void) with al
consequential impacts on the application of the concerned exporter
firms for availment of various export incentives, applied/ availed
against these shipping bills.
(iv) Thus, PNB cancelled BRCs relating to 1650 Shipping Bills
pertaining to said five exporting firms amounting to USD
12,77,16,22859/.”
87. Paragraphs 43.11 and 43.12 further record the allegation that
the overseas enquiries revealed substantial differences between the
values declared before Indian Customs and those reflected abroad and
that the remittances received by the exporting firms from Hong Kong
and UAE based third parties were from entities which were neither
buyers nor consignees according to the shipping/export documents.
The said paragraphs 43.11 and 43.12 read as under:
“43.11. The SCN further alleges that the overseas enquiries revealed
that the exports made by the said exporting firms were highly over-
valued as there was huge difference in the declared price before
Indian Customs and abroad. The investigation established that the
remittances received by the said exporting firms from Hong Kong/
Dubai based firms were not in relation to the exported goods but were
managed for the purpose of fulfilment of the requirement of Bank
Realization Certificate and to avail undue export incentives.
43.12. It has been further alleged in the SCN that a large number of
remittances from so called suppliers of exported goods were in the
accounts of entities which were dealing in Diamonds. Further, it was
also found that there were inward remittances in the accounts of five
exporting firms controlled by Shri Sahdev Gupta from such companies
based abroad. It revealed that remittances were received in the
accounts of the exporting firms of Shri Sahdev Gupta from Hong Kung
and, UAE based third parties, who were neither buyers nor consignee
as per Shipping/ Export documents.”
88. Paragraph 43.13 concerns the allegation regarding the diversion
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 55 of 88

of consignments declared for FMS/SFMS countries. The adjudicating
authority recorded that Shri Sahdev Gupta, owner/controller of M/s
Konark Exim Pvt. Ltd., M/s DSM International and M/s Sidh
Designers Pvt. Ltd., in connivance with Shri Nitin Gupta, Director of
M/s OAK Shipping Services Pvt. Ltd., had exported goods under 11
Shipping Bills by showing exports to countries falling within the
FMS/SFMS scheme for claiming the corresponding benefits, whereas
the consignments were allegedly diverted to non-FMS/SFMS
countries such as Turkey and Korea. The adjudicating authority
further recorded the allegation that the country of destination had
thereby been misdeclared and that fraudulent benefits had been
availed by wilful misstatement, misrepresentation and suppression of
facts.
89. The adjudicating authority further recorded that Shri Nitin
Gupta had abetted Shri Sahdev Gupta in obtaining FMS authorisation
from the DGFT by arranging/issuing allegedly fake or bogus landing
certificates, which Shri Nitin Gupta had admitted in his statement. The
said paragraph 43.13 reads as under:
“43.13. Further That Shri Sahdev Gupta, owner/controller of M/s
Konark Exim Pvt. Ltd., M/s DSM International and M/s Sidh
Designers Pvt. Ltd, in connivance with Shri Nitin Gupta Director of
M/s OAK Shipping Servics Pvt. Ltd. had exported goods under 11
Shipping bills by showing exports to the countries listed in
FMS/Special Focus Market Scheme for claiming undue benefits of
FMS/SFMS but the same were diverted to non FMS/SFMS countries.
Thus, by mis declaring the country of destination on export
documents, they availed fraudulent benefits under FMS/SFMS by way
of willful mis-statement, mis- representation and suppression of facts
as regards the country of destination, presented the subject goods for
export before the designated authority of Customs with intent to avail
fraudulent benefit of FMS/SFMS. Whereas the goods were actually
exported to non FMS/SFMS countries such as Turkey, Korea etc
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 56 of 88

That Shri Nitin Gupta, Director of M/s OAK Shipping Services Pvt.
Ltd. have abetted Shri Sahdev Gupta to obtain FMS Authorisation
from DGFT by arranging/ issuing fake/bogus Landing certificates,
which Shri Nitin Gupta admitted in his statement.”
90. The aforesaid findings demonstrate the breadth of the material
considered by the adjudicating authority. The case was not founded
upon a single statement, nor merely upon the fact that the remitters
were third parties. The findings proceeded upon banking records,
overseas enquiries, documents obtained from foreign customs
authorities, statements of persons associated with the overseas entities,
statements of the persons controlling the exporting firms, material
concerning the declared and actual destinations of the consignments,
and the action taken by PNB in respect of the e-BRCs.
91. The adjudicating authority thereafter recorded further findings
in paragraph 46.5, which are relevant for appreciating the nature of the
investigation. The said paragraph reads:
“46.5. I find that the DRI has carried out extensive investigation of
the foreign exchange realized on account of the impugned exports
made by the five exporting Noticee firms from the actual buyers of
the exports as well as from the third party firms based in Hongkong
& Dubai on behalf of the buyers, as claimed by the exporters.
However, the DRI investigations/'enquiries have gone to prove that
the third party firms from who a huge amount of money have been
transferred into the accounts of the exports have no relation with the
buying firms, nor have they any relation of the exports goods or the
exporters/importers in any way. The DRI investigation has also
revealed that the third party firms have different line of business
from the export goods i.e. Readymade garments and in some cases,
they have been found to be in no business. The investigation further
revealed that the so called Directors/partners of these overseas firms
were only name sake owners. These front companies had been
opened in Hong Kong in the name of Indian National by group of
persons for the purpose of trade based money laundering. One of the
persons. It was also revealed in the investigation of the DRI that
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 57 of 88

Diamonds had been imported into India from some of such Hong
Kong based firms by way of overvaluation so as to remit foreign
exchange outside India and part of such foreign exchange
remittance was used to finance overvaluation of impugned exported
goods as third party remittance for availing undue exports incentives
by the five exporting firms. The total amount of such illicit transfers
from the overseas firms amounted to more than USD 76 million.”
92. The adjudicating authority also specifically dealt with the action
taken by PNB concerning the e-BRCs. Paragraph 46.14 records that
Shri Dhruv Sinha, Assistant General Manager of Punjab National
Bank, International Banking Branch, Barakhamba Road Branch, New
Delhi, vide letter dated 16.01.2016 addressed to the Additional DGFT,
New Delhi-01, with a copy marked to the DRI, intimated that, in
accordance with the observations of the investigating agencies and the
findings of the bank's internal audit, PNB had decided to cancel the e-
BRCs in respect of the shipping bills realised against non-compliant
third-party remittances. The gist of the Bills realised during the
relevant period was recorded as follows:
Sr.
No
Name of Firm IEC No. No. of
Shipping
Bills
Shipping Bill
amount in USD
1 M/s GD Mangalam
Exports Pvt. Ltd.
0503078786 842 53955243,59
2 M/s Sidh Designers Pvt.
Ltd.
0507010353 184 I 7552076. 15
3 M.s Yogmaya Traders
Pvt Ltd.
0507010868 283 26808412.89
4 M/s Konark Exim Pvt
Ltd
0505000440 227 19285074.98
5 M/s DSM International 0599058102 114 10115420.98
GRAND TOTAL 1650 12,77,16,228.59
93. Paragraph 46.16 records that, although 13,008 Shipping Bills
were involved in the show cause notices in which the sale proceeds
were stated to have been received through third-party remittances, the
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 58 of 88

Authorised Dealer, namely Punjab National Bank, had cancelled the e-
BRCs only in respect of 1,650 Shipping Bills. The said paragraph
46.16 reads as under:
“46.16. In view of above findings, I find that though there are
13008no of shipping bills involved in the present notice, wherein
sale proceeds remittance is related to third party, Authorised Dealer
(Punjab National Bank) have cancelled e-BRC only in respect of
1650 slipping bills. PNB in their letter have categorically stated that
in accordance with the observations of investigating agencies and
finding of their bank's internal audit, they have cancelled all the
eBRC's in respect of shipping bills which were realised against such
non complying third party remittances. As per PNB letter, number of
shipping bills were 1650 as against 13008 no of Shipping bills
mentioned in show-cause notices.
I further find that during investigation of remittance received
from third party and issuance of e- BRC by PNB on the basis of
remittance of third party in violation of RBI guidelines/ circulars,
matter was intensively taken up by DRI with the officials of PNB and
RBI. That RBI in its letter dated 07.04.2014 addressed to Additional
Director informed that
"In this connection we advise that third party payments have
not been enabled in Notification No. FEM4 14/2000-RB
rd
dated 3 May 2000 (Manner of Receipt and payment). Prior
to November 08, 2013; cases relating to exports where
payments were received from a third party (other than the
buyer), were examined by RBI on a case to case basis and
specific approvals were granted depending on the contract
sufficient documentation supporting the third party
payments, being in palace"
As per provisions of FEMA 1999, manner of realisation and
repatriation of foreign exchange is to be specified by RBI and
accordingly directions are issued by RBI to Authorised dealer for
compliance. That in pursuance to DRI taking up matter with RBI
and PNB for issuance of e-BRC in violation of RBI guidelines, it
transpires that PNB had conducted internal audit and investigation
and arrive on conclusion of cancellation of e-BRCs for 1650 S/B,
already issued by them, where third party remittance was not in
complying to RBI guidelines. This inter-alia means balance e-BRCs
11358 shipping bills [13008-1650] issued by PNB on the basis of
third party remittance [received during period excluding 08.11.2013
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 59 of 88

t0 04.02.2014] were in conformity to RBI guidelines.
That there is nothing on record to suggest that DRI has
further taken up matter with PNB and RBI for balance 11358
shipping bills as treating any remittance of an exporter as lawful or
other-wise, proper authority is RBI as per Notification No. FEMA
rd
14/2000-RB dated 3 May 2000 (Manner of Receipt and payment).
That even after lapse of more than 7 years of issuance of SCN, there
is no additional evidences from investigating agency to refute the
letter of PNB for non-cancellation of additional e-BRC other than
that of 1650 shipping bills.
In view of above, other than 1650 shipping bills e-BRC,
which had been cancelled by PNB, authorised dealer, there is no
additional facts or reason before me to doubt about bona fide of e-
BRC issued by PNB on balance 11358 shipping bills for Third Party
remittance. Accordingly, drawback to the extent of 1650 S/Bs out of
13008 S/Bs specified in SCN shall be deemed never to have been
allowed under Proviso 2 of the Section 75(1) of the Customs Act,
1962 as sale proceeds of other than such goods and the same shall
be recovered from them under the provisions of Rule I6A of the
Customs & Central Excise Duties Drawback Rules, 1995 along with
interest under the provisions of Section 75A (2) of the Customs Act,
1962. Accordingly, the drawback amounting to Rs. 67,46,26,135
(Rupees Sixty Seven Crore Forty Sir Lakh Twenty Six Thousand One
Hundred and Thirty Five only) is recoverable as detailed at Table -1
and Table -2 below under second Proviso of the Section 75(1) of the
Customs Aet, 1962 shall be recoverable and rest demand doesn't
hold good.”
The adjudicating authority referred to the letter of PNB stating that the
e-BRCs had been cancelled in respect of Shipping Bills realised
against non-compliant third-party remittances.
94. The adjudicating authority further referred to the
correspondence exchanged during the investigation between the DRI,
PNB and RBI concerning the applicable requirements for receipt of
third-party payments. The Order-in-Original records the RBI's
communication dated 07.04.2014 stating, inter alia, that third-party
payments had not been enabled in Notification No. FEMA 14/2000-
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 60 of 88

RB dated 03.05.2000 and that, prior to 08.11.2013, cases involving
receipt of export payments from third parties were examined by the
RBI on a case-to-case basis and specific approvals were granted
depending upon the contract and supporting documentation.
95. The adjudicating authority thereafter recorded its conclusion
that, out of the 13,008 Shipping Bills, e-BRCs had been cancelled
only in respect of 1,650 Shipping Bills and that, according to the
material before it, the balance 11,358 e-BRCs had not been cancelled.
On that basis, the adjudicating authority concluded that, apart from the
1,650 Shipping Bills, there was no additional material before it to
doubt the bona fides of the e-BRCs relating to the balance 11,358
Shipping Bills.
96. The adjudicating authority consequently held that drawback
relatable to the 1,650 Shipping Bills was liable to be treated as having
never been allowed under the second proviso to Section 75(1) of the
Customs Act and recovered under Rule 16A of the Customs and
Central Excise Duties Drawback Rules, 1995, together with applicable
interest. The amount so determined was Rs.67,46,26,135/-.
97. The adjudicating authority also separately considered the
allegation of excess drawback under Rule 16. Paragraph 47.6 records
that the demand of differential excess drawback under Rule 16 was
confined to the Shipping Bills in respect of which remittances had
been received from third parties and not to the other Shipping Bills
forming part of the 13,008 Shipping Bills.
98. The adjudicating authority further recorded that overseas
enquiries had been conducted in respect of 74 Shipping Bills, of which
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 61 of 88

24 were already part of the 1,650 Shipping Bills considered for
recovery under Rule 16A. Of the remaining 50 Shipping Bills, seven
(07) were not part of the 13,008 Shipping Bills covered by the show
cause notices for recovery under Rule 16/16A. The adjudicating
authority consequently proceeded to consider 43 Shipping Bills for
recovery under Rule 16, recording that the noticees had not produced
evidence or supporting documents contrary to the findings emerging
from the overseas enquiries. Paragraph 47.6 of the Order-in-Original
reads as under:
“47.6. In view of above I find that demand of differential excess
drawback under Rule 16 of the Customs & Central Excise Duties
Drawback Rules, 1995 along with interest under the provisions of
Section 75A (2) of the Customs Act, 1962 is only limited to shipping
bills for which remittance received from third parties and not for
other than 13008 shipping bills.
I further find that overseas inquiry was conducted in 74 Shipping
bills. 24 shipping bills out of 74 are already part of 1650 shipping
bills discussed at para 46 above for recovery under Rule 16A, hence
are not being separately discussed for recovery under Rule 16. For
balance 50 shipping bills, 07 Nos. of shipping bills are not part of
13008 shipping bills for which demand has been raised in present
show cause notices under adjudication for recovery under Rule
16/16A for Third party remittance. Therefore only rest 43 shipping
bills are to be discussed for recovery of drawback under Rule 16 of
Customs, Central Excise Duties and Service Tax Drawback Rules,
1995. In these 43 shipping bills, noticees have failed to give any
evidences or supporting documents contrary to the overseas inquiry
findings of DRI and hence excess drawback so sanctioned to notices
are liable for recovery under Rule 16 of Customs, Central Excise
Duties and Service Tax Drawback Rules,1995. SCN and notices-wise
break-up are as under-
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 62 of 88

The above excess drawback calculation has been arrived prorate/
actual amount on the basis of excess drawback amount reflected in
overseas inquiry in SCN.”
99. The adjudicating authority thereafter dealt with the duty credit
scrips under Section 28AAA. Paragraph 48.2 records the following
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 63 of 88

finding:
“48.2. I find that whole evidences outlining getting remittance from
third party in violation of RBI instructions, e-BRC issued in collusion
with Authorised dealer and getting Duty Credit Scrips under Focus
Product/Market Scheme issued by DGFT shows the case squarely
falls under Section 28AAA of Customs Act 1962. As already
deliberated at length at para 46 supra regarding legal provision for
acceptance of e- BRC for remittance received from Third Party, it is
on record that in the present case, as the BRC's in respect of 1650
shipping bills discussed at Table I & 2 above have been cancelled by
the AD Bunk, as they were not found to be in conformity with the RBI
guidelines in vogue during the relevant period of time, as discussed
supra, FMS/FPS duty Scrips amounting to Rs. 39,19,69,078/- (Rs.
Thirty Nine Crore Nineteen Lakh Sixty Nine Thousand and Seventy
Eight only) relatable to the abovementioned 1650 shipping bills is
also recoverable under the provision of sub section (3) of section 28
AAA of the Customs Act, 1962 read with Section I1 of the Foreign
Trade (Development & Regulation) Act, 1992, along with the interest
under Section 28 AAA (2) of the Customs Act, 1962 frum the five
noticee exporting firms.”
100. Paragraph 48.3 records the further allegation concerning the
FMS/SFMS benefits obtained by M/s Konark Exim Pvt. Ltd., M/s
DSM International and M/s Sidh Designers Pvt. Ltd. The adjudicating
authority recorded that the export documents, including invoices and
packing lists, showed the countries of destination as FMS/SFMS
countries, whereas, after clearance from Customs, the consignments
were allegedly diverted to non-FMS/SFMS countries. It was further
recorded that M/s OAK Shipping Services Pvt. Ltd. had arranged the
containers and booked the consignments with the shipping lines and
that fake/bogus landing certificates and House Bills of Lading/Multi-
modal Transport documents were allegedly issued as proof of delivery
to the consignees in FMS/SFMS countries.
101. The adjudicating authority concluded in paragraph 48.3 that the
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 64 of 88

aforesaid conduct resulted in obtaining duty credit scrips fraudulently
from the DGFT by collusion, suppression of facts and wilful
misstatement and held the case to be covered under Section 28AAA of
the Customs Act. The adjudicating authority accordingly directed
recovery of the FMS/FPS duty scrips relatable to the specified
Shipping Bills, including the amounts attributed to M/s Konark Exim
Pvt. Ltd., M/s DSM International and M/s Sidh Designers Pvt. Ltd.
The said paragraph 48.3 reads as under:
“48.3. I further find that noticees adopted novel modus-operandi
forging documents to claim higher FMS/SFMS incentives as under-
- that M/s Konark Exim Pvt. Ltd,, M/s DSM International and
M/s Sidh Designers Pvt. Ltd prepared the export documents
viz. Invoices and packing list in the name of consignees,
showing country of destination as FMS/SFMs Countries
which were notified countries (as listed in Appendix 37C of
HBP vol.1 of Foreign Trade Policy) for availment of export
incentives under FMS/SFMS.
- that after, the clearance of goods from Customs, the
exporters booked the said consignments with respective
shipping lines and the same were diverted to non-FMS/SFMS
countries instead of declared destinations
- that M/s OAK Shipping Services Pvt. Ltd., arranged the
containers and booked the consignments to shipping lines, as
per direction of Shri Sahdev Gupta gave fake/bogus landing
certificates on their company's letter head and House
BLs/Multi-modal transport documents, as proof regarding
the delivery of the goods to the consignees based et
FMS/SFMS Countries.
- that the said landing certificates and House BLs/Multi-
modal transport documents were submitted to the DGFT to
claim FMS/SFMS benefits for CIS countries in their firms
Thus noticees M/s Konark Exim Pvt. Ltd., M/s DSM International and
M/s Sidh Designers Pvt. Ltd have obtained duty scrips fraudulently
from DGFT by collusion, suppression of facts and wilful mis-
statement and case is squarely covered under section 28AAA of
Customs Act. Accordingly, FMSFPS duty Scrips amounting to Rs.
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 65 of 88

13,88,948/-, Rs 31,410/- and Rs. 15, 82,691/- relatable to 6, 1 and 4
shipping bills is also recoverable from M's Konark Exim Pvt. Ltd.,,
M's DSM International and M/s Sidh Designers Pvt. Ltd respectively
under the provision of sub section (3) of section 28 AAA of the
Customs Act, 1962 read with Section 11 of the Foreign Trade
(Development & Regulation) Act, 1992 along with the interest under
Section 28 AAA (2) of the Customs Act, 1962 from the five noticee
exporting firms.”

102. The aforesaid findings are noticed only to demonstrate the
material which was before the CESTAT. This Court is not, at this
stage, expressing any final opinion upon the correctness of these
findings. What is significant is that the Order-in-Original proceeded
on the basis of a cumulative body of documentary and other material,
and not merely on one isolated circumstance.
Documentary material relied upon by the adjudicating authority:
103. The nature of the material considered by the adjudicating
authority is further evident from paragraph 22.8 of the Order-in-
Original. The adjudicating authority noticed that the Consul
(Economic), Consulate General of India, Dubai, vide letter dated
10.07.2014, had forwarded details of 12 Bills of Entry received from
Dubai Customs in response to the DRI's letter dated 06.03.2014
concerning the enquiry into alleged overvaluation of exports from
India to Dubai by the five Delhi-based exporting firms. The said 12
Bills of Entry covered 38 Shipping Bills and 12 containers. The
adjudicating authority recorded the comparative values declared
before Indian Customs and those appearing in the corresponding
documents before Dubai Customs.
The comparative chart recorded in paragraph 22.8 of the Order-in-
Original is reproduced below:
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 66 of 88

“22.8. The Consul (Economic), Consulate General of India, Dubai vide
letter NO.CE/IV/1/1/2014 dated 10.07.2014 had forwarded details of 12
Bills of Entry received from Dubai Customs, in response to DRI letter
dated 06.03.2014 in respect of enquiry initiated by DRI in respect of
overvaluation of exports from India to Dubai by five Delhi based exporting
firms (12 Bills of Entry covering 38 Shipping Bills and 12 containers), As
per the report received from Dubai Customs, the comparative chart of the
value declared before Indian Customs vis-i-vis Dubai Customs is as under:

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 67 of 88

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 68 of 88

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 69 of 88

Signature Not Verified

Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 70 of 88

104. The adjudicating authority further noticed that, in three Bills of
Entry, the name of the exporter had changed at Dubai. Similar Bills of
Entry were stated to have been received through the First Secretary
(Trade), Embassy of India, Brussels/Netherlands, London and
Moscow, including 11 Bills of Entry, and through the Consul (Trade,
Education and Commerce), New York, including four Bills of Entry.
According to the findings recorded in the Order-in-Original,
comparison of these documents disclosed substantial differences
between the values declared before the Indian Customs authorities and
those appearing in the corresponding overseas documents. This
material was relied upon by the adjudicating authority in support of
the allegation that the invoices had been inflated for the purpose of
obtaining higher drawback and benefits under the Focus Product
Scheme/Focus Market Scheme.
105. The adjudicating authority also examined the material relating
to the receipt of export proceeds. Paragraph 24.1 of the Order-in-
Original records that, upon scrutiny of the SWIFT messages furnished
by the bank, remittances had been received from entities based in
Hong Kong, the British Virgin Islands and the UAE, which, according
to the investigation, were neither the buyers nor the consignees
mentioned in the export documents filed before the Indian Customs
authorities. The adjudicating authority also recorded the investigation
concerning the ownership and activities of certain overseas entities
from which such remittances had been received.


Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 71 of 88

The relevant portion of paragraph 24.1, including the table referred to
therein, is reproduced below:
24.1 A perusal of the export data and documents relating to these five
exporting firms revealed that the major buyers of the goods are M/ s
Al Khat Al Fizi Trading LLC, P.O. Box No. 181639, Dubai, UAE,
(49% share controlled by Indian citizen Shri Tarun Kumar Kavara, s/
o Shri Sushil Chandra Kavara, Passport No. G3922605); Al Wadi Al
Saeed General Trading LLC, P.O. Box No.39649, Dubai, UAE, (49%
share controlled by Indian citizen Shri Tarun Kumar Gupta, s/ o Shri
Devender Kumar Gupta, Passport No. H7750379) and Gum Sum
Trading LLC, P.O.Box No.56442, Dubai, UAE. However, the scrutiny
of SWIFT messages of exporting firms, provided by the Bank in soft
form via email, has revealed that remittances have been received from
Hong Kong, British Virgin Islands, UAE based third parties, who are
neither buyers nor consignees as per export documents filed with the
Indian Customs. Investigation revealed that some of the Hong Kong
based firms also belonged to Indian nationals. The details of such
firms, some of whom were investigated by DRI, on the basis of
onwerhsip details, are as under:

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 72 of 88

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 73 of 88

Signature Not Verified

Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 74 of 88

Signature Not Verified

Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 75 of 88

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 76 of 88

106. The aforesaid material demonstrates why the controversy could
not have been disposed of merely by observing that the remittances
had been credited into the bank accounts of the exporters or that the
export goods had not been re-valued under Section 14 of the Act. The
Revenue's case involved an interconnected body of material
concerning the identity of the buyers, the identity and nature of third-
party remitters, overseas import documents, comparative values,
banking records, e-BRCs and the alleged availment of export
incentives.
Principles of natural justice and cross-examination:
107. One of the submissions advanced on behalf of the Respondents
is that the proceedings stand vitiated on account of violation of the
principles of natural justice since an opportunity to cross-examine the
witnesses whose statements were relied upon by the Revenue was not
afforded. This contention requires examination from different
perspectives.
108. First, as noticed above, the material forming the basis of the
adjudication was not confined to statements recorded during
investigation. The Order-in-Original refers, inter alia, to Bills of Entry
and other documents obtained from overseas customs authorities,
comparative details of the values declared before Indian Customs and
those reflected in the corresponding overseas import documents,
SWIFT messages and banking records, as well as enquiries
concerning the overseas buyers, consignees and third-party remitting
entities. The statements recorded during investigation constitute part
of the evidentiary record, but the adjudication cannot, on a reading of
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 77 of 88

the Order-in-Original, be characterised as resting exclusively upon
oral statements.
109. This aspect assumes significance because the necessity and
effect of cross-examination cannot be considered in isolation from the
nature of the evidence relied upon by the adjudicating authority.
Where the findings are founded substantially upon documentary
material independently available on record, the question whether
every person whose statement has been recorded was required to be
offered for cross-examination cannot be answered in the abstract. The
precise role played by the statement in the adjudication, the nature of
the documentary material corroborating or contradicting it, and the
prejudice, if any, caused by denial of cross-examination would
necessarily require consideration.
110. Second, sub-section (2) of Section 138B of the Customs Act
provides for an opportunity of cross-examination “so far as may be
permitted by the Adjudicating Authority”. The statutory scheme,
therefore, does not make cross-examination an inflexible or automatic
requirement in every adjudication in which a statement recorded
during investigation is relied upon.
111. Reliance in this regard has been placed upon the judgment of
the Supreme Court in Kanungo & Company v. Collector of Customs
16
and Others . In the facts of that case, the Supreme Court considered a
contention based upon the denial of an opportunity to cross-examine
persons whose statements had been relied upon and held that the
principles of natural justice did not require that the persons concerned

16
(1973) 2 SCC 438
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 78 of 88

be examined and offered for cross-examination.
112. The aforesaid decision, however, has to be understood in the
context of the nature of the evidence and the circumstances of that
case. It cannot be understood as laying down an absolute proposition
that cross-examination can never be necessary in customs
adjudication. The requirement has to be considered having regard to
the statutory scheme, the nature of the evidence relied upon, the role
played by the statements in the findings ultimately recorded and the
prejudice, if any, caused to the noticees.
113. The appropriate enquiry, therefore, was whether the findings
against the Respondents rested materially and exclusively upon
statements whose makers were not made available for cross-
examination, or whether the statements constituted only one
component of a larger body of documentary and other evidence
independently available to the adjudicating authority. The CESTAT
was required to undertake this examination before concluding that the
adjudication stood vitiated on account of denial of cross-examination.
114. There is yet another perspective from which the contention
requires consideration. The Revenue placed before the adjudicating
authority the material collected during investigation, including the
statements recorded during investigation, the Bills of Entry and other
documents obtained from overseas sources, the banking and
remittance records and the material concerning the overseas buyers,
consignees and third-party remitting entities. The adjudicating
authority thereafter recorded findings on the basis of the material so
placed before it.
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 79 of 88

115. Once such material was brought on record and relied upon in
support of the allegations contained in the show cause notices, the
Respondents were required to meet the case so set up by the Revenue
by placing appropriate material in rebuttal. The question of burden
cannot be approached on the footing that the Revenue was required to
establish the allegations with the degree of proof applicable to a
criminal prosecution. The proceedings in question are adjudicatory
proceedings concerning the statutory consequences flowing from the
alleged availment of drawback and other export incentives.
116. This does not, however, mean that the Revenue stands absolved
of the obligation to establish the statutory ingredients of the provisions
invoked by it. The material relied upon by the Revenue must be
examined in accordance with law and the Respondents must be
afforded a fair opportunity to meet that material. The point is only
that, once the Revenue placed substantive documentary and other
material on record, the Respondents were required to rebut the case on
the merits. The absence of cross-examination, by itself, could not
render the remaining documentary material irrelevant or incapable of
consideration.
117. The CESTAT was consequently required to examine the nature
of the evidence relied upon by the adjudicating authority, the role
played by the statements in the ultimate findings, the documentary
material independently available on record and the defence, if any,
offered by the Respondents. A conclusion on violation of natural
justice without undertaking this exercise would not adequately address
the controversy.
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 80 of 88

Alleged overvaluation and Section 14:
118. The next aspect concerns the allegation of overvaluation. As
noticed hereinabove, the Revenue relied upon material obtained from
foreign customs authorities, corresponding import documentation and
other investigation material to contend that the values declared in the
shipping bills were substantially inflated.
119. The CESTAT rejected this aspect principally on the ground that
the value of the export goods had not been re-determined in
accordance with Section 14 of the Act read with the Customs
Valuation (Determination of Value of Export Goods) Rules, 2007. In
doing so, however, the CESTAT proceeded on a premise which does
not adequately distinguish between determination of assessable value
and examination of an allegation that an exporter deliberately
misdeclared the value for the purpose of obtaining an export benefit.
120. Section 14 read with the 2007 Rules undoubtedly governs
determination of the value of goods where such determination is
required for assessment. That statutory mechanism cannot be bypassed
where Customs seeks to substitute or re-determine the assessable
value of the goods. The present controversy, however, does not
require this Court to determine a different assessable value of the
exported goods.
121. The relevant question is whether the material relied upon by the
Revenue could legally be considered while examining the allegation
that the exporters had deliberately inflated the values declared in the
shipping bills with the object of obtaining drawback and other export
incentives. The absence of a fresh determination of assessable value
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 81 of 88

under Section 14 cannot, by itself, render such evidence incapable of
consideration for an altogether different statutory enquiry.
122. The distinction is important. Determination of assessable value
under Section 14 is one enquiry. Examination of whether a declaration
made by an exporter was deliberately false or inflated for the purpose
of obtaining a statutory benefit is another. The latter enquiry may, in
an appropriate case, involve consideration of comparative values,
including values reflected in corresponding overseas import
documentation. Such consideration does not, by itself, amount to
undertaking a fresh assessment of the goods.
123. The CESTAT erred in failing to examine whether the material
relied upon by the Revenue was legally capable of supporting the
allegation of deliberate misdeclaration and, thereafter, whether the
findings recorded by the adjudicating authority on the basis of that
material could be sustained. The absence of a formal re-determination
under Section 14 and the 2007 Rules could not, by itself, be treated as
dispositive of the entire allegation.
124. The same consideration bears upon the consequential action for
recovery of drawback, confiscation and penalties. If the allegation of
deliberate misdeclaration is otherwise established in accordance with
law, the fact that the original assessment was not reopened cannot, by
itself, constitute an absolute bar to examining the statutory
consequences of such misdeclaration in proceedings specifically
initiated in respect of the export benefits allegedly obtained on that
basis.

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 82 of 88

Effect of the civil judgment and decree concerning the BRCs:
125. The CESTAT has also relied upon the judgment and decree
dated 13.03.2020 passed in the civil proceedings between M/s G.D.
Manglam Exim Pvt. Ltd. and Punjab National Bank, whereby the
cancellation of the BRCs by PNB was declared to be null and void.
The effect of the said decree, therefore, requires to be examined in its
proper legal perspective.
126. A declaratory judgment and decree passed by a Civil Court in a
civil suit operates, in the ordinary course, in personam and not in rem .
Its binding effect is upon the parties to the proceedings and those
claiming through or under them, subject to the principles governing
the binding effect of judgments. A declaration granted in proceedings
between two parties cannot, merely by virtue of its existence, operate
as an adjudication of the rights and liabilities of a person who was
neither a party to the proceedings nor afforded an opportunity of
contesting the issues which arose therein.
127. It is undisputed that the Customs Department was not
impleaded as a defendant in Civil Suit No. 1114/2018, instituted by
M/s G.D. Manglam Exim Pvt. Ltd. on 18.08.2018, in which a
declaration was sought, inter alia , that the cancellation of the BRCs
by PNB was null and void and of no legal effect. The said proceedings
were instituted against PNB and concerned the validity of PNB’s
action in cancelling the BRCs.
128. The Customs proceedings, on the other hand, concerned an
independent statutory question, namely, whether the exporters were
entitled to retain drawback and other export benefits under the
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 83 of 88

Customs Act. The Customs authorities were not parties to the civil
proceedings and the statutory questions arising under the Customs Act
were not the subject matter of adjudication in the said suit.
129. The CESTAT was, therefore, required to examine the civil
decree in its proper legal context and determine the extent to which it
could affect the independent proceedings initiated by the Customs
authorities under the Act. A declaratory decree does not ordinarily
operate as a judgment in rem binding upon the world at large. The
17
Supreme Court, in Razia Begum v. Sahebzadi Anwar Begum ,
explained that a declaration granted in a civil suit operates in
personam , binding the parties and, where the law so provides, persons
claiming through them. This principle was reiterated in Deccan Paper
18
Mills Co. Ltd. v. Regency Mahavir Properties Pvt. Ltd. , with
reference to Sections 34 and 35 of the Specific Relief Act, 1963. In the
present case, the Customs Department was not a party to the civil
proceedings and was not shown to be claiming through either of the
parties thereto. Consequently, the decree declaring the cancellation of
the BRCs to be null and void could not, merely by its existence, be
treated as conclusively determining the Customs Department’s
independent statutory rights or foreclosing examination of the material
relied upon in the adjudication proceedings. The CESTAT erred in
failing to consider the decree alongside that material and determine its
legal effect on the demands in question, rather than treating it as
having, by itself, extinguished the foundation of the Revenue’s case.


17
AIR 1958 SC 886
18
(2021) 4 SCC 786
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 84 of 88

Section 28AAA:
130. The next question concerns Section 28AAA of the Act. The
CESTAT correctly observed that the provision contains specific
statutory requirements and that a mere allegation of fraud, without
satisfaction of those requirements, would not be sufficient. However,
the CESTAT appears to have proceeded on the basis that because the
scrips had not been independently invalidated and the subsequent
users of the scrips had not been proceeded against, the proceedings
against the exporters could not be sustained.
131. The scope of Section 28AAA required examination in the light
of the specific allegations in the show cause notices and the material
relied upon by the Revenue. If the duty credit instruments had been
obtained by means of collusion, wilful misstatement or suppression of
facts, as alleged, the statutory consequences under Section 28AAA
could not be rejected merely by observing that the subsequent users of
the instruments had not been proceeded against.
132. The essential question was whether the ingredients of Section
28AAA stood established against the concerned noticees on the basis
of the material on record. The liability under the provision could not
be made dependent upon a separate proceeding against every
subsequent user of the instruments unless the statute itself made such
proceeding a condition precedent.
133. The CESTAT was, therefore, required to examine the statutory
ingredients of Section 28AAA in the context of the findings and
evidence available on record, rather than treating the absence of
proceedings against the subsequent users as determinative of the
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 85 of 88

proceedings against the exporters.
134. The questions considered herein consequently constitute
substantial questions of law arising from the Impugned Final Order
and warrant interference under Section 130 of the Act. The
appropriate course, having regard to the nature of the errors identified,
is to set aside the impugned order passed by the CESTAT.
Penalty imposed upon Shri Nitin Gupta: Compliance with Principles
of Natural Justice:
135. A separate consideration arises in respect of the penalty
imposed upon Shri Nitin Gupta, Director of M/s Oak Shipping
Services Pvt. Ltd. As noticed hereinabove, paragraph 43.13 of the
Order-in-Original records the allegation that he had assisted Shri
Sahdev Gupta in obtaining benefits under the FMS/SFMS by
arranging or issuing allegedly false landing certificates. However, the
merits of this allegation must be considered separately from the
question whether the statutory requirements governing the imposition
of a penalty upon Shri Nitin Gupta were complied with.
136. In paragraph 24 of the impugned Final Order, the CESTAT
specifically recorded that the penalty imposed upon Shri Nitin Gupta
had been proceeded with without notice, without service of the
relevant documents and without affording him an opportunity of being
heard. This finding raises a distinct question of compliance with
Section 124 of the Act, which prescribes the procedural safeguards
that must be observed before a penalty can be imposed under Chapter
XIV of the Act.
137. Section 124 of the Act mandates that no order imposing a
Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 86 of 88

penalty upon a person under the said Chapter shall be made unless the
person concerned is given notice in writing of the grounds on which
the penalty is proposed, an opportunity to make a representation
against those grounds and a reasonable opportunity of being heard.
These requirements are not mere procedural formalities. They are
intended to ensure that the person against whom penal action is
proposed is informed of the case he is required to meet and is afforded
a meaningful opportunity to answer it.
138. In Kothari Filaments & Anr. v. Commissioner of Customs
19
(Port), Kolkata & Ors . , the Supreme Court emphasised that a person
proceeded against for misdeclaration is entitled to know the grounds
on which the penalty is sought to be imposed and to a proper hearing,
which includes access to the documents relied upon by the
adjudicating authority. The Court held that adverse findings cannot be
founded upon material that has neither been supplied to the affected
person nor made available for inspection, thereby depriving that
person of an effective opportunity to respond.
139. In view of the statutory mandate under Section 124 of the Act
and the principles laid down in Kothari Filaments (supra), the penalty
imposed upon Shri Nitin Gupta cannot be restored unless the requisite
notice and opportunity contemplated by law were afforded to him. The
allegations recorded in paragraph 43.13 of the Order-in-Original,
including the alleged arrangement of false landing certificates, cannot
by themselves cure a failure to comply with these mandatory
requirements. Accordingly, notwithstanding the conclusions reached
in respect of the other noticees, the penalty imposed upon Shri Nitin

19
(2009) 2 SCC 192
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
Signature Not Verified
CUSAA 92/2025 & connected matters Page 87 of 88

Gupta must remain set aside, consistently with the finding recorded by
the CESTAT on this distinct procedural ground.
CONCLUSION:
140. Accordingly, the present Appeals are allowed. The Final Order
Nos. 59488-59509/2024 dated 25.11.2024 passed by the CESTAT are
set aside, except to the extent that the penalty imposed upon Shri Nitin
Gupta of M/s Oak Shipping Services Pvt. Ltd. was set aside on the
ground of non-compliance with the requirements of notice, supply of
documents and opportunity of hearing. The Order-in-Original dated
30.05.2023 passed by the Commissioner of Customs (Export) is
restored in all other respects, but the penalty imposed upon Shri Nitin
Gupta shall remain set aside.
141. The present Appeal, along with the pending applications, stands
disposed of.
ANIL KSHETARPAL, J.


SHAIL JAIN, J.
NOVEMBER 04, 2026
jai/pal

Signature Not Verified
Signed By:JAI
NARAYAN
Signing Date:04.11.2026
15:26:40
CUSAA 92/2025 & connected matters Page 88 of 88