Indian importers, customs brokers, and public bonded warehouse operators face two major administrative developments this morning: the Central Board of Indirect Taxes and Customs (CBIC) has clarified the exact jurisdictional pathway for adjudicating duty recoveries under Section 28AAA of the Customs Act, 1962 involving fraudulently obtained DGFT duty credit scrips, while simultaneously releasing the comprehensive Draft Warehousing Operations Regulations, 2026 for industry-wide review.
SECTION 28AAA RECOVERY WORKFLOW
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DGFT Scrip Obtained Scrip Transferred / Customs Port of Import
[Fraud / Suppression] --> Sold to Third Party --> [Utilised for Duty Exemption]
| |
+-------------------- DEMAND ISSUED -------------------+
|
Primary Recovery TARGET: Original Scrip Holder
(Transferee buyer protected if bona fide)
|
Adjudication Jurisdiction: Port of Registration /
Common Adjudicating Authority (Not fragmented port-by-port)
Section 28AAA Adjudication: Liability on Scrip Fraud Clarified
In a significant relief to downstream buyers of trade instruments, A2Z Taxcorp LLP reports that CBIC has clarified the adjudication framework under Section 28AAA. Section 28AAA governs the recovery of duties when an exemption or concession is obtained through an instrument (such as a scrip, licence, or authorization issued under the Foreign Trade Policy) secured via collusion, wilful misstatement, or suppression of facts.
For years, clearance teams and secondary buyers of duty credit scrips have wrestled with aggressive show-cause notices (SCNs) issued by field formations at the port of import. When an export promotion scrip—such as RoDTEP, RoSCTL, or erstwhile MEIS/SEIS—was cancelled or flagged for fraud by the Directorate General of Foreign Trade (DGFT) or the Directorate of Revenue Intelligence (DRI), port customs officers routinely sought recovery directly from the importer who purchased the scrip on the open market and utilised it against Bills of Entry.
The CBIC clarification aligns enforcement firmly with the statutory intent of Section 28AAA:
- Primary Target of Recovery: Demands for duty under Section 28AAA must proceed against the person to whom the instrument was originally issued (the fraudulent exporter), rather than penalising downstream bona fide transferees who purchased transferable scrips through lawful banking channels.
- Jurisdictional Consolidation: Instead of multi-port assessments where an importer using one scrip across Nhava Sheva, Mundra, and Chennai receives conflicting notices, adjudication will be centralized under designated or common authorities. This follows the administrative mechanism seen in recent circulars, such as the CBIC appointing a Common Adjudicating Authority in multi-jurisdiction matters.
- Action Item for Exporters/CHAs: If your firm holds pending SCNs or demand notices under Section 28 for scrips purchased from secondary markets where the original issuer defaulted on export obligations, your legal team must immediately file representations citing this clarification to re-route recovery proceedings toward the original beneficiary.
Draft Warehousing Operations Regulations, 2026 Issued for Stakeholder Review
Simultaneously, CBIC has invited stakeholder comments on the Draft Warehousing Operations Regulations, 2026. This overhaul targets operations in public, private, and special customs bonded warehouses established under Chapter IX of the Customs Act.
| Key Area | Previous Framework | Proposed 2026 Regulations | | :--- | :--- | :--- | | Record Keeping | Manual / Fragmented digital registers | Mandatory integrated digital warehouse management system (WMS) API-linked to ICEGATE | | Audit & Re-conciliation | Periodic physical audits by bond officers | Monthly automated self-reconciliation with selective risk-based physical verifications | | Clearance Timelines | Ex-bond clearances subject to manual bond ledger debits | Auto-debiting of bonded security on duty payment via electronic ledger | | Storage Liability | Ambiguous custody transfer rules during transit | Strict carrier-warehouse shared electronic tracking under automated entry-exit gates |
The proposed regulations aim to modernize in-bond manufacturing and storage (MOOWR) and standard bonded warehousing. The operational friction experienced by warehouse keepers at major logistics hubs—such as manual register endorsements and slow bond re-credit protocols—will transition into an automated data stream. Importers utilizing bonded facilities for raw materials or project cargo must review these draft regulations immediately to verify whether their existing in-house warehouse management software can support the technical specifications for electronic record-keeping.
Additional Regulatory Watch
Beyond procedural customs reforms, manufacturing and commodity desks face two other major shifts:
- Metals: Domestic processors should note that anti-dumping duties on certain aluminium products may be extended for five years following sunset review recommendations, keeping import landed costs elevated for engineering units.
- Agri-Commodities: The DGFT and Ministry of Consumer Affairs have reinforced critical export boundaries, noting India's export ban on sugar remains strictly enforced until September 2026 to preserve domestic price stability.
WCL Perspective
At World Cargo Logistics, our clearance and compliance desks across Nhava Sheva (JNPT), Mundra, Kandla, and North India ICDs (TKD and Jaipur) are actively reviewing client portfolios affected by past scrip disputes. For clients facing legacy inquiries on transferred MEIS or RoDTEP scrips, our documentation teams are preparing jurisdictional alignment petitions under the clarified Section 28AAA provisions. Meanwhile, for our third-party logistics and bonded warehouse partners in the Mundra Special Economic Zone and western corridor freight hubs, we are compiling an industry response to CBIC’s draft warehousing regulations to ensure integration timelines remain feasible for commercial trade.
Reach out for a shipment-specific consultation via WhatsApp at +91 91602 11111 or email webq@wclogistic.in.