The Delhi High Court restored an adjudication order against garment exporters, holding that Customs may test whether third-party remittances are genuine export proceeds and that a civil decree against a bank does not bind Customs.

The Delhi High Court has allowed 22 Revenue appeals under Section 130 of the Customs Act, 1962, set aside a common CESTAT order and restored the order of the Commissioner of Customs (Export) dated 30 May 2023. It held that, where drawback under Section 75 is in issue, Customs may examine whether amounts shown as export realisations are in fact sale proceeds of the exported goods [Commissioner of Customs (Export) v. G.D. Manglam Exim Pvt. Ltd. & Ors., 2026-juristway.com-3328-HC(Delhi)-Customs].

The judgment of Justice Anil Kshetarpal and Justice Shail Jain was written by Justice Kshetarpal. Five exporters had shipped 13,008 consignments of readymade garments to the UAE between 2008-09 and March 2014, claiming drawback and Focus Product and Focus Market Scheme benefits. The DRI alleged inflated values, compared shipping bills with overseas import documents, and found over US$76 million received from third parties in Hong Kong, the British Virgin Islands and the UAE. After the DRI wrote to it, Punjab National Bank cancelled the bank realisation certificates (BRCs), and the adjudication relied on 1,650 cancelled BRCs. The CESTAT set the order aside on 25 Nov 2024.

The exporters argued that the appeals were barred because Section 130 excludes questions of value. The Court rejected this. The exclusion applies to value determined for purposes of assessment, and the CESTAT itself had recorded that no value was re-determined under Section 14. It applied M/s Alupro Building Systems Pvt. Ltd. v. Commissioner of Central Excise, Bangalore-II (2026 INSC 582).

On merits, the Court observed that “Receipt of money in a bank account is a fact”, but whether it represents sale proceeds depends on the evidence. Customs need not wait for the Reserve Bank of India to invalidate a remittance. Overseas values can be used to test a deliberate misdeclaration made to obtain export benefits, even without a fresh valuation under Section 14. A civil decree dated 13 Mar 2020 declaring the BRC cancellations void bound only the bank, since a declaratory decree operates in personam and Customs was not a party, citing Razia Begum v. Sahebzadi Anwar Begum (1958). Liability under Section 28AAA did not depend on proceedings against later users of the duty credit scrips. The Court also held that the CESTAT had failed to examine critically the findings it reversed.

One exception stands. The penalty on Nitin Gupta of Oak Shipping Services Pvt. Ltd. remains set aside, because it was imposed without the notice, documents and hearing that Section 124 requires, following Kothari Filaments & Anr. v. Commissioner of Customs (Port), Kolkata & Ors. (2009).

2026-juristway.com-3328-HC(Delhi)-Customs