TaxTMI 
TaxTMI 
2009 (2) TMI 298
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....as obtained 5 Advance Licences from JDGFT, Bangalore for import of 99.5% fineness gold bars and export of gold jewellery. (ii) The Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as FTP) regulates the export and import of goods into the country. In exercise of the powers under Section 5 of the said Act, the Foreign Trade Policy is notified for the period 2004-2009, which had come into effect from 1-9-04. As per the provisions of Para 2.4 of the Foreign Trade Policy, the Director General of Foreign Trade vide Public Notice No. 1/2004-09, dt. 31-8-2004 notified the Hand Book of Procedures w.e.f 1-9-2004 (hereinafter referred to as HBP). The objective of the HBP is to implement the provisions of the Act, Rules and the Policy. Chapter 4 of the HBP deals with the Duty Exemption Scheme and issue of Advance Licence. Para 4.1.3 of the Foreign Trade Policy provides for issue of an Advance Licence for duty free import of inputs, which are physically incorporated in the export product (making normal allowances for wastage), Para 4.1.6 of the said Policy provides that Advance Licence shall be issued with a positive value addition. Para 4.1.7 provides that Advan....
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....lue addition, due to which Para 4.1.2 of the FTP will not only apply to the value of the gold imported by respondents and also the foreign exchange spent on account of procurement of gold through the bank. It is the allegation that calculations reveal that after making such addition on account of the locally procured gold, the value addition being achieved by respondent M/s. Adani Exports in respect of his own licences, as also the licences issued to respondent M/s. Rajesh Exports where M/s. Rajesh Exports is the supporting manufacturer and/or the co-licensee, is actually negative, owner of M/s. Radhakrishna Jewellers, Dubai is Shri Mahesh Mehta, who is brother of Rajesh and Prashant Mehta of M/s. Rajesh Exports Ltd. and that, one of the affiliate companies of M/s. Radhakrishna Jewellers is M/s. Excel Goldsmith, Sharjah. From the foregoing facts and evidences, it appeared that both the respondents had deliberately, in tandem with their buyers M/s. Radhakrishna Jewellers, Dubai and M/s. Excel Goldsmith, Sharjah planned and operated a scheme whereby the exports of respondents under the Advance Licence scheme could be boosted far beyond their actual ability. The gold bars imported ....
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.... the Show Cause Notice subject to the outcome of the said judicial proceedings. 3. Both the respondents in these appeals contested the show cause notice on various grounds mainly on the point that when the jewellery was exported, it was certified by Jewellers Association recognized by the department, no samples were drawn and that export was cleared by the department after careful examination. The Adjudicating Authority after considering the oral and written submissions of the respondents concluded as under. "79. In view, of the above it is held and Ordered as below:- I. (1) The imported gold as per description and condition of the Advance Licence and has been utilized for manufacture and export of gold jewellery. The said exported jewellery has also not been mis-declared at the time of export. Hence, no case is made out for confiscation of imported gold i.e. 21428.643 kgs. of gold under Section 111(o) of the Customs Act, 1962, read with Notification No. 93/04 Cus., dt. 10-9-2004. (2) As there has been no mis-declaration of gold jewellery exported, no case is made out for confiscation of 23053.90 kgs. of gold jewellery exported under Section 113(i) of the Customs Act, 1....
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....-RES), (against which a Writ Appeal against the present judgment of the Karnataka High Court has been filed) and the same would be released only after the Judgment is received and/or on receipt of directions from the Joint DGFT Bangalore/Ahmedabad." Aggrieved by the above said order, revenue is in appeal before Tribunal. 4. Learned Special Counsel Shri P.R.V. Ramanan appearing for the Revenue would submit that the impugned order is not correct for more than one reason. It is his submission that the Adjudicating Authority should have waited for the outcome of the appeal filed by the revenue before Division Bench of Hon'ble High Court of Karnataka. It is his submission that the Adjudicating Authority has overlooked para 28 of the Show Cause Notice, wherein it is indicated that the revenue reserves right to add/alter/amend/modify the Show Cause Notice. It is his submission that both respondents had deliberately, in tandem with their buyers M/s. Radhakrishna Jewellers, Dubai and M/s. Excel Goldsmith, Sharjah planned and operated a scheme whereby the exports of Rajesh and Adani under the Advance Licence scheme could be boosted far beyond their actual capability. It is the submissi....
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.... veracity. In fact prima facie comparison of the said copies with the copies of Bills of Entry forwarded by the Indian Consulate revealed many discrepancies such as : (a) The description of goods indicated on the two documents is different; (b) In Col. 48 under "other remarks", Seal No. (Service Charges Collected) is mentioned, whereas no such remarks are found in the aforesaid copies; (c) The position of the "Airport Customs Cargo Clearance", Seal of Sharjah Customs affixed on the Bill of Entry is different in the aforesaid copies; (d) In the case of Bill of Entry No. 19972, dt. 24-12-2004, the rectangle seal of "Airport Customs Cargo Clearance" found on the copy submitted is missing and instead around seal of "Ports and Customs Dept. Sharjah" is affixed; (e) In the case of Bill of Entry 18295, dt. 26-11-2004, the HT Code is indicated as 71121000, whereas the HT Code shown on the submitted copy is 71131900; (f) Under the Column 26, the position of the word USD on the two documents is different; and (g) Under Column 26, the position of the figure "3.685" is different in the two documents. It is his submission that the impugned order may be set aside and the ....
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....lue of the goods exported, hence, there is no case is made out for misdeclaration. For this proposition, he relied on the decision of CC, Calcutta v. South India Television (P) Ltd. as reported at 2007 (214) E.L.T. 3 (S.C.). He would submit that decision of the Tribunal in the case of CC, Kandla v. Dimple Overseas - 2005 (190) E.L.T. 58 covers the issue in favour of the respondent for the proposition that declarations made at Dubai customs cannot be a reason for the allegation that there is mis-declaration. He would submit that the documents obtained by the Customs department and annexed to Show Cause Notice did not bear any signature, hence, are suspect. He would submit that the judgment of Apex Court in the case of East Punjab Traders - 1997 (89) E.L.T. 11 (S.C.) has settled this law. He would place reliance on the following decisions. (i) M/s. Frost International Ltd. v. CC - 2006 (206) E.L.T. 451 (Tri. - Mum.) = 2006 (76) RLT 388 (T) and is upheld by Apex Court, [2007 (215) E.L.T. A103 (S.C.)]. (ii) UOI v. Popular Ayecha - 1987 (28) E.L.T. 63 (Bom.). (iii) Madhus Garage Equipments v. Commissioner - 2006 (198) E.L.T. 388. He would submit that in Order-in-Original is ....
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....mitted for redemption were held back by DGFT authorities based on the said circular. Respondents moved Hon'ble High Court of Karnataka in W.P. No. 7256 of 2005 (GM-RES). Hon'ble Single Judge in the judgment dated 15th June 2005 disposed of the W.P. by ordering as under : "8. In the light of the aforesaid legal position it is unnecessary for us to go into the question whether the impugned circular would amend the policy or it is only clarificatory in nature. The material on record and the contents of the impugned circular itself makes it very clear that the authorities had a bona fide doubt regarding the calculation to be made to find out the value addition. Neither the definition given in the policy or in the handbook would mean that the value of the gold procured locally and added to the jewellery is to be taken into consideration to find out the outflow of foreign exchange in the gold content. The petitioner believe in view of the aforesaid definitions when the value of the gold contend locally procured in manufacturing the jewellery could be taken into consideration to calculate the value addition of the exported jewellery. Accordingly they have acted on that understanding. T....
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.... the above order in a Writ Appeal and the same is admitted in the Hon'ble High Court of Karnataka. On a specific query from the Bench, it was submitted that the Division Bench of Hon'ble High Court of Karnataka has not stayed the order of the Hon'ble Single Judge. It is a settled law, that, unless there is a stay of the order by higher judicial forum, the order is binding. We note that in the absence of any stay of the order in W.P. No. 7256 of 2005, the learned Adjudicating Authority was not in error, in taking up the matter for adjudication, as the show cause notice is dated 18-11-2005. We note that the action of the Adjudicating Authority to take up the matter for disposal vide Order-in-Original dated 31-1-2007 cannot be faulted, for the reason that Writ Appeal is pending before Division Bench. 8.3 The next issue for disposal is whether the impugned order needs to be set aside and the matter should be remanded back to the Adjudicating Authority only on the ground that the Commissioner should have awaited the outcome of the Writ Appeal filed by revenue. In our considered opinion, this proposition does not contain any merit. On perusal of the impugned order, we find that being ....
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....wellery exported by M/s. Rajesh Exports, Bangalore and five consignments of gold jewellery exported by M/s. Adani Exports substantiating the fact that the gold jewellery exported by the above said companies were cleared as gold scrap by M/s. Excel Goldsmith, Sharjah. Instead he proceeded to rely upon the attested copies of five Bills of Entry bearing the same DEC numbers submitted by M/s. Adani Exports during the personal hearing showing the goods declared by M/s. Excel Goldsmith as 'studded gold jewellery' and dropped the mis-declaration charge on them without causing any verification to ascertain the veracity of these documents particularly, when (a) the attested document submitted by M/s. Adani Exports, bore a stamp disclaiming responsibility for the contents by the Ministry of Foreign Affairs, Sharjah, (b) description of goods did not match, and (c) seal nos. were absent in the documents submitted by the party, further verification was called for. The Commissioner's argument that the declarations made before the Customs of the importing country and the documents produced therein have no evidentiary value is also incorrect in view of the Harmonized System of classification and t....
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....being exported. As a token of such check, a certificate from the representative of the Jewellers Association is also obtained verifying the purity of gold. All the Documents i.e. Shipping Bill, Invoice, Packing List are also examined by the Departmental officers indicating the Customs Appraiser and goods also examined by the Department before Let Export Order given. 64. I also note that the weight of the gold bangle exported and the fineness (purity) of the gold content in the gold product exported has also been made a ground for treating the product as 'not gold jewellery'. This allegation in the Show Cause Notice is not based on any valid or rational consideration. Jewellery is defined in the Thesaurus as 'an adorement (as a bracelet or ring or necklace) made of precious metal and set with gems (or imitation gems)'. Thus, to be categorized as jewellery', the weight or purity of the bracelet/bangles exported is not relevant. The weight/purity and nature/fineness etc. of a particular jewellery item or jewellery in general, depends on the taste, culture, customs and other consideration. Different Regions, Continents and Countries have different concepts and practices as to what c....
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....ociation recognized by the Department itself, had been furnished at the time of exports. No representative samples to dispute the same at the time of export had been drawn. The gold which has been exported had gone through a proper process of export in terms of documentation in which shipping bills, invoice, packing list etc. were filed with the Customs Authority and were assessed by the proper officer. Further, the entire lot of export consignment was examined, in terms of description and the goods exported against the Advance Licences. Further to this, some photograph of the exported products were also taken which clearly indicated the item exported as gold jewellery. The Judgments relied upon by the parties reported in Truwoods Pvt. Ltd. v. Commissioner - 2005 (186) E.L.T. 583 would be applicable. The decision rendered in Surendranath Nundi v. Asst. Collr of Customs - 1987 (27) E.L.T. 428 would also be applicable. I also rely on CESTAT decision in case of Truwood Pvt. Ltd. - 2006 (204) E.L.T. 288 and CEGAT decision in case of South India Television (P) Ltd. v. Commissioner, Customs Calcutta - 2001 (130) E.L.T. 243 and CESTAT judgment in case of Taito Watch Manufacturing Inds. v ....
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....s of the importing country. A point has been raised in the show cause notice that the exported gold jewellery at the time of import in foreign country was declared and/or cleared as 'gold scrap'. Such declaration by importer would have evidentiary value only if there had been similar evidence of 'gold scrap' been exported. There is no such collaborative evidence. On the other hand, there is overwhelming evidence in respect of description of product, at the time of export in respect of above exporters as per the description in Shipping Bill, Invoice, Packing List as well as examination by Jewellers Association. This evidence at time of export of products by the Customs Officials & examination of Jewellery' Association cannot be overlooked and reliance and conclusion reached merely on basis of how the goods were declared or at time of import in a foreign country. It is to be noticed that such declaration of goods in foreign country is by the Importer and not be the two Exporters. Therefore, mis-declaration at hand of two Exporters at time of export cannot be held." It can be seen from the above reproduced portion of Order-in-Original that the gold jewellery was exported by the res....
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....stody and it is difficult to understand why the Indian Customs did not interact with the Japan Customs and obtain authentic copies of the document from the latter. Merely because the Department offered cross-examination of the steamer agent from whom the export declaration had been obtained and the respondents chose not to avail of that opportunity is no ground for holding that the requirements of Section 139 are satisfied for the purpose of raising the presumption. In order to raise the presumption under the said provision, the basic facts had to be laid. Even though they bear a serial number and stamp of Japan Customs, the fact remains that they are copies of copies and indisputably bear no signature of the exporter, the forwarding agent, the stevedore or the Customs Officer; no signature at all of any of them. The discrepancy in regard to copies hearing the seal of customs at Kobe also raises a serious doubt whether the copies relate to any of the consignments in question. In these circumstances, if the majority was disinclined to place reliance on these documents we find it to hold that it was in error in doing so (Para 5)." 9.3 We find that in the present case before us, re....