Instruction
21 Sep 2026
CBIC
Operative & In Force
Instruction No. 17/2026- Customs — Clarification in respect of difficulties being faced by field formations in adjudication of cases where Show Cause Notices have been issued under Section 28AAA of the Customs Act, 1962 in light of TRU instruction vide D.O. letter dated 01.06.2012 at para II.2
Legal Citation
CBIC Instruction No. Instruction No. 17/2026- Customs, dt. 21-09-2026
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Executive Directive & Regulatory Background
This CBIC Instruction No. 17/2026-Cus, dated September 21, 2026, addresses procedural difficulties faced by field formations in adjudicating Show Cause Notices (SCNs) issued under Section 28AAA of the Customs Act, 1962, concerning the recovery of duty on fraudulently obtained instruments/scrips.
Key Statutory Takeaways & Compliance Mandates
01
Registration & Revocation Procedures
It clarifies the interplay between Customs/DRI investigations and DGFT's role in scrip cancellation, particularly in light of a 2012 TRU instruction.
02
The instruction delineates distinct procedures based on the nature of the alleged fraud: misdeclaration in shipping bills, policy interpretation issues, or situations where DGFT cannot cancel scrips due to legal/technical reasons.
03
Applicability & Compliance Framework
It aims to streamline adjudication processes, prevent undue delays, and ensure proper jurisdictional authority is exercised before final determinations.
04
Applicability & Compliance Framework
This instruction is effective immediately upon its issuance and applies to all ongoing and future cases involving Section 28AAA SCNs where instrument cancellation by DGFT is a prerequisite for adjudication.
Key Procedural Changes & Industry Impact
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For alleged misdeclarations (misclassification, overvaluation) in Shipping Bills leading to fraudulent scrip obtainment, Customs/DRI must first investigate, adjudicate, and amend the Shipping Bill under the Customs Act.Customs authorities gain primary jurisdiction in such cases. Adjudication under Section 28AAA will only proceed after Customs' final determination and amendment, followed by referral to DGFT for consequential action, including scrip cancellation. This prevents DGFT from acting solely on allegations.
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For alleged fraud based on policy interpretation, eligibility, or entitlement issues falling under DGFT's domain, the matter must first be referred to DGFT.DGFT's view on the validity and entitlement of the instrument/scrip will be binding on Customs/DRI. This ensures consistency and defers to the competent authority for policy-related matters, streamlining adjudication by Customs based on DGFT's determination.
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Where DGFT is legally or technically unable to cancel an instrument/scrip (e.g., due to court orders precluding retrospective cancellation), adjudicating authorities shall proceed with SCN adjudication under Section 28AAA on merits, without awaiting DGFT's cancellation.This prevents indefinite pendency of SCNs. Taxpayers and authorities will see faster resolution in such specific circumstances, as the lack of DGFT cancellation will no longer be a barrier to adjudication, provided the grounds for non-cancellation are legal/technical.
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In all other cases where fraud is alleged and DGFT has initiated action for cancellation, adjudication under Section 28AAA should still occur only after DGFT has cancelled the instrument/scrip.This reaffirms the general principle from the 2012 TRU instruction, maintaining the sequential process where DGFT's cancellation is a prerequisite for Customs adjudication in standard fraud cases not covered by the specific exceptions outlined.