2023 (10) TMI 825 - AT - Customs

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

M/s The Bank of Nova Scotia Versus Commissioner of Customs (Admn. & Airport), Kolkata And Commissioner of Customs (Admn. & Airport), Kolkata Versus M/s The Bank of Nova Scotia

The Tribunal allowed the appeals filed by the Appellant, a Nominated Agency, setting aside the demand for customs duty on imported gold/silver/platinum ... Demand of Customs Duty foregone - Non-fulfilment of export obligation - non-submission of bank realization certificate to the Appellant - HELD THAT:- It is a settled position in law that a new condition which does not form part of the Notification cannot be introduced through a Circular. Accordingly they contended that the demand of duty from them is against the conditions of the notification. The issue is no longer res integra as the CESTAT, Bangalore in Appellant's own case BANK OF NOVA SCOTIA VERSUS COMMISSIONER OF C. EX. (ADJ.), BANGALORE [2008 (7) TMI 246 - CESTAT BANGALORE] categorically held that the provisions of the Exemption Notification 57/2000 read with erstwhile Circular No. 24/98- Cus dated 24.04.1998 nowhere states that non-realization of sales proceeds by Exporters will result in demand of Customs duty foregone from the Nominated Agency. Accordingly, the Tribunal has held that no duty can be demanded from them. We observe that the ratio of this decision is squarely applicable in this case. In respect of Circulars specifying the conditions which are not there in the Notification, it is found that the Hon’ble Supreme Court has decided in the case of M/S. SANDUR MICRO CIRCUITS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELGAUM [2008 (8) TMI 3 - SUPREME COURT] where it was held that it was held that by issuing a circular a new condition thereby restricting the scope of the exemption or restricting or whittling it down cannot be imposed. By following the decision of the Hon’ble Supreme Court and the Tribunal the demand of customs duty from the Appellant is not sustainable - the demand of duty confirmed in the impugned order set aside. Non imposition of redemption fine and penalty under Section 112(a) and 114A of the Customs Act, 1962 - HELD THAT:- Since the demand of duty itself is not sustainable, the question of demanding redemption fine and imposing penalty does not arise. Accordingly, the department's appeals are rejected. Appeal filed by appellant allowed. 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.