Tribunal Overturns Customs Duty on Precious Metals, Citing Lack of Bank Realization Certificate Requirement in Original Notification

The Tribunal allowed the appeals filed by the Appellant, a Nominated Agency, setting aside the demand for customs duty on imported gold/silver/platinum supplied to exporters. It ruled that the requirement for a Bank Realization Certificate (BRC) was not stipulated in the original Exemption Notification No. 57/2000-Cus and could not be imposed by a later Circular. Consequently, the Tribunal also rejected the Department's appeals for redemption fine and penalty, as the demand for duty was deemed unsustainable.

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Issues Involved:
1. Demand of Customs Duty from the Appellant.
2. Requirement of Bank Realization Certificate (BRC) for Exemption.
3. Applicability of Circulars vs. Notification.
4. Imposition of Redemption Fine and Penalty.

Summary:

1. Demand of Customs Duty from the Appellant:
The Appellant, a Nominated Agency, imported gold/silver/platinum without paying customs duty under Exemption Notification No. 57/2000-Cus and supplied these to exporters for manufacturing jewellery for export. The Directorate of Revenue Intelligence (DRI) alleged that the exporters did not fulfill their export obligations as they failed to submit the bank realization certificate (BRC) to the Appellant. Consequently, the customs duties foregone on the goods supplied were demanded from the Appellant.

2. Requirement of Bank Realization Certificate (BRC) for Exemption:
The Appellant argued that Notification 57/2000 required them to execute a bond and ensure the export of goods within 120 days, evidenced by Shipping Bills. There was no condition in the Notification mandating the submission of BRCs. This requirement was introduced only in Circular 28/2009, which, according to the Appellant, cannot impose new conditions not specified in the Notification.

3. Applicability of Circulars vs. Notification:
The Tribunal observed that the issue was not new and referred to the CESTAT Bangalore's decision in the Appellant's own case (2009 (233) ELT 260), which held that non-realization of sales proceeds by exporters does not justify demanding customs duty from the Nominated Agency. The Tribunal reiterated that a Circular cannot introduce new conditions not present in the Notification, citing the Supreme Court's ruling in Sandur Micro Circuits Ltd Vs CCE, Belgaum (2008(229)ELT 641 (SC)) and CCE Allahabad Vs Sangam Structurals Ltd. (2015(39)STR 1034 (Tri-Del)).

4. Imposition of Redemption Fine and Penalty:
The Department's appeals against the non-imposition of redemption fine and penalty under Sections 112(a) and 114A of the Customs Act, 1962, were also considered. Since the demand for duty itself was found unsustainable, the Tribunal held that the question of demanding redemption fine and imposing penalties did not arise, and thus, the Department's appeals were rejected.

Conclusion:
The Tribunal allowed the appeals filed by the Appellant, setting aside the demand of customs duty and rejecting the Department's appeals for redemption fine and penalty.

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