Securities and Exchange Board of India

According to CESTAT Mumbai, it is illegal and unfeasible to hold export commodities for longer than three days without notifying the Commissioner of Customs or the Chief Commissioner of Customs.


The appellants exported goods valued at FOB at Rs. 6,40,08,136.70. They claimed a total of Rs. 11,71,805 in drawback, along with refunds of Rs. 42,32,438 in IGST and Rs. 6,91,458 in refund of state levies (ROSL), which were taxes and charges levied on the export goods. Following the proper protocol, Customs duly evaluated and approved for export the products covered by the shipping invoices. Following the issuance of the “Let Export Order” and the export of the goods, the appellants have received the drawback, the IGST refund, and the ROSL amounts as mentioned above.


The Commissioner (General), JNCH, Nhava Sheva instructed the custodian CFS-JWR, Panvel to place the goods exported by the appellants on hold in a letter dated October 25, 2018, based on specific intelligence that the exporter had misrepresented the goods’ description and overvalued the exports to benefit from an inadmissible higher amount of drawback, refund of IGST, and ROSL. On October 30, 2018, however, the Custodian reported that the goods had already been gated out of the Container Freight Station (CFS) and that Maersk Line India Pvt. Ltd. had already dispatched them on board to Lagos in container number MSKU0011063. The Commissioner then instructed the shipping company to bring the container back in a letter dated November 7, 2018. 


The original authority, the Additional Commissioner of Customs, JNCH, Nhava Sheva, passed an Order-in-Original in which the assessable value was recalculated as Rs.2,34,42,440/-under Rule 6 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007; the contested export goods were seized under sections 113 (i), 113 (i)(a) of the Customs Act, 1962, with the option to redeem the goods upon payment of a redemption fine of Rs.20,000,000. The exporter was penalized Rs.40,00,000/-under s. 114(iii) ibid, and Shri Mohd. Siddique Muchhada, the holder of the Power of Attorney, was fined Rs.15,00,000/-under s. 114AA ibid. In addition, the eligible drawback was reduced to Rs.5,25,786/-and other eligible refunds were limited to lower amounts than those claimed by the appellants.



Held that, in accordance with Circular No. 01/2011-Customs, dated 4th January 2011, the commodities might have been provisionally released to the appellants immediately following panchnama proceedings on April 10, 2019, for which the appellant had made a request on April 12. However, Revenue failed to finish the proceedings early and within the allotted period, which had an impact on both the revenue interests and the interests of the exporters.

We therefore remand the case back to the original authority for the restricted purpose of determining the acceptable amount of drawback to the extent that it arises due to a change in the drawback rate alone, rather than a redetermination of the FOB value.

G Akshay Associates