CESTAT grants CVD exemption for diamond studded jewellery under Notification 6/2002-CE but denies SAD exemption

CESTAT New Delhi partially allowed the appeal concerning duty demands on goods allegedly manufactured and clandestinely cleared from Noida SEZ. The tribunal granted CVD exemption under Notification 6/2002-CE (S.No. 171) for diamond studded jewellery, finding it clearly covered under ornaments exemption. However, SAD exemption under Notification 6/2004-Cus was denied as the notification was not available during the relevant clearance period (2000-2002). The tribunal upheld the demand based on notebook entries, rejecting claims regarding WIP register entries used as supporting evidence. Personal penalty on the promoter was maintained, dismissing his plea of non-involvement in day-to-day operations during the relevant period.

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Issues Involved:
1. Exemption notifications applicable to CVD.
2. Exemption notifications applicable to SAD.
3. Entries in the work in progress (WIP) register.
4. Personal penalty imposed on Shri Anand Srivastava.

Summary:

Exemption notifications applicable to CVD:

The Tribunal examined whether the appellant was entitled to the benefit of exemption notification no. 6/2002-CE dated 1.3.2002 (S.No. 171) for CVD. The Principal Commissioner had denied this benefit, erroneously considering entry no. 44A which the appellant did not claim. The Tribunal found that the exemption under S.No. 171, which includes "ornaments and the like articles" whether or not set with stones or gems, clearly covers diamond-studded jewellery. Therefore, the appellant was entitled to the exemption from additional duty of Customs (CVD) under Notification no. 6/2002-CE (S.No. 171).

Exemption notifications applicable to SAD:

The appellant claimed the benefit of exemption notification No 6/2004-Cus dated 08.01.2004. However, the Tribunal held that the appellant cannot claim the benefit of a notification applying Section 9A(5) of the Central Excise Rules, 1944, which was not in existence at the time of the SCN and had been superseded. Since the goods were removed between 7.9.2000 and 4.10.2002, and the exemption notification no. 6/2004-Cus was not available during this period, the appellant was not entitled to the benefit of this exemption notification for SAD.

Entries in the work in progress (WIP) register:

The appellant argued that some diamonds received were rejected and returned, and thus, the demand must be reduced. The Tribunal found that the demand was based on entries in two notebooks and other documents, with the WIP register used as supporting evidence. The Commissioner found no documentary evidence supporting the claim that 501.407 carats of diamonds were returned. The Tribunal upheld the Commissioner's view, finding insufficient evidence to believe the diamonds were returned.

Personal penalty imposed on Shri Anand Srivastava:

Shri Anand Srivastava challenged the personal penalty imposed on him, claiming a violation of principles of natural justice. The Tribunal noted that his role was addressed in the original proceedings and the penalty was imposed under Rule 26 of the Central Excise Rules, 2002. The Tribunal found no new grounds or additional documents in the de novo proceedings and upheld the penalty, noting that the original rejection of his plea was not interfered with in the remand order.

Conclusion:

Customs Appeal No. 50642 of 2019 filed by M/s Global Diamond Pvt Ltd. is partly allowed, giving the benefit of Notification No. 6/2002-CE dated 1.3.2002 (S.No. 171) for CVD. Customs Appeal No. 50643 of 2019 filed by Anand Shrivastav (Promoter) is dismissed.

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