2018 (12) TMI 308 - AT - Customs

Import eligibility for gold granules clarified under Customs Act, 1962 emphasizing statutory provisions over circulars.

Sri Exports Versus CC, Hyderabad

The Tribunal held that the appellant is eligible to import gold granules under the Customs Act, 1962, based on RBI regulations, emphasizing that ... Justification for import of Gold granules (non-monetary) - gold in semi-manufactured form classifiable under chapter heading 7108 13 00 of the CTA, 1975 - It is the case of the revenue that import of gold granules is permitted only through a nominated bank or a nominated agency or a holder of the status of star in premium trading houses, subject to RBI regulations and procedures - appellant is not a nominated bank or a nominated agency or a holder of the status of star in premium trading houses and are not entitled to import gold granules - RBI’s Master Direction No. 17/2016-17 dated 1.1.2016. Held that:- As per the import policy notified by the DGFT, gold in any form, other than monetary gold, are placed under “FREE” category with policy condition subject to RBI regulations. The RBI in the master circular only prescribed regulation at Para C.11.1 for method of import and types of payment vis-à-vis credit facility by banks for gold imports by nominated agencies notified by DGFT and at Para C.11.2 for others. In fact, the RBI categorically permitted the banks to open Letters of Credit for maximum period of 90 days for importing gold in any form. Nowhere in the master circular, the RBI has notified category of persons eligible for import of gold and have not imposed any restrictions on such imports - RBI directions, at the most, are restrictions made at regulating import and export of goods in terms of restrictions on current account transactions in foreign exchange but not prohibiting import and export of goods as such. In the present case, gold granules were neither imported on a consignment basis nor on a credit basis. The importer/appellant paid an advance payment through bank Letter of Credit/Swift - the contention of the learned Commissioner (Appeals) that the Appellants are prohibited from importing gold granules, in terms of Circular No. 34/2013-CUS, dated 04.09.2013 and Circular No.27/2016-CUS dated 10.06.2016 is not legally sustainable. They are only clarificatory/procedural circulars, to give effect to the exemption contained in the above notifications, with special reference to disposal and monitoring of the gold imported, duty free, by the nominated agencies. The appellants are eligible to import gold granules, in terms of Para C.11.2 of RBI’s Master Direction No. 17/2016-17 dated 1.1.2016 to which the said notifications and circulars are not applicable - appeal allowed - decided in favor of appellant. Issues:- Import of gold granules under Customs Act, 1962- Confiscation and penalty imposed by adjudicating authority- Appeal against Order-in-Appeal- Interpretation of RBI regulations and DGFT notifications- Eligibility to import gold granules- Legal sustainability of prohibitions imposed by circularsAnalysis:The judgment revolves around the import of gold granules under the Customs Act, 1962. The appellant imported 1000 gms of gold granules of purity 99.99% from Jakarta, Indonesia, leading to a query on the eligibility for import. The adjudicating authority confiscated the gold and imposed a penalty under the Customs Act, which was modified by the Ld. Commissioner (Appeals). The appellant contested that they are eligible to import gold granules under relevant policies and regulations, emphasizing the absence of specific restrictions on import of gold by the RBI. The appellant also argued that RBI regulations should be followed by ADC-I bankers and not by DGFT or Customs authorities.The Tribunal analyzed the contentions and found that the dispute centered on the eligibility to import gold granules. The revenue contended that import of gold granules is restricted to nominated banks or agencies, which the appellant did not fall under. However, the appellant argued that gold granules are freely importable subject to RBI regulations as per relevant policies. The Tribunal noted that RBI regulations primarily address payment methods for gold imports and do not restrict import eligibility based on the category of importers.Further, the Tribunal highlighted that prohibitions on imports should be explicitly provided in the concerned statute, and circulars do not hold the force of law. The Tribunal held that the appellant is eligible to import gold granules based on RBI's Master Direction, which the circulars in question did not apply to. Therefore, the impugned order was set aside, and the appeal by the appellant was allowed, providing consequential relief.In conclusion, the judgment clarifies the eligibility criteria for importing gold granules under relevant regulations and policies, emphasizing the legal basis for prohibitions and restrictions on imports. The decision underscores the importance of statutory provisions over circulars in determining import eligibility and sets a precedent for cases involving similar disputes regarding import of restricted goods under the Customs Act, 1962.