TaxTMI 
TaxTMI 
2010 (3) TMI 430
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....y/warehouse of the DJ and noticed shortage of 2732.73 Gms of gold as against the recorded stock. 3. Entire consignment of diamonds was seized and subsequently released provisionally and allowed to be exported after deposit an amount of Rs. 10 Lakhs by DJ. DJ also deposited an amount of Rs. 6,65,000/- towards duty liable on the shortage of gold noticed during stock taking. 4. After recording statement of the Shri P.K. Jain, Managing Director who is also an appellant in this case, show cause notice was issued which culminated into adjudication order whereby the demand for customs duty on the shortage of gold noticed was confirmed; confiscation of seized diamonds was ordered and an amount of Rs. 10 Lakhs deposited was adjusted towards redemption fine and penalty of Rs. 10 Lakhs was imposed on DJ and penalty of Rs. 5 lakhs was imposed on Shri P.K. Jain, Managing Director. 5. On an appeal filed by the Appellants, this Tribunal vide order No. A/1854-1855/WZB/2005 dated 26-10-2005 [2006 (197) E.L.T. 514 (Tri. - Mumbai)] allowed the appeal filed, by Shri P.K. Jain, Managing Director against the penalty. The appeal of the company was partially allowed as regards penalty and confiscation ....
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.... Notification No. 177/94 dated 21-10-94 as amended allows import or diamonds by the Gem & Jewellery units set up in the Export Processing Zone either for manufacture or for packaging of the diamonds for exports out of India subject to the conditions specified therein. It is not necessary that the diamonds imported should be subjected to certain processes/ activities, before they are exported. Even re-packing of the imported diamonds prior to their export, is sufficient for meeting the requirements of export obligation as well as value addition. B. The learned Commissioner has also grievously erred on facts. His finding that except for changing the paper in which the imported diamonds were packed, no other activity was carried out on the imported diamonds, is totally misconceived. The diamonds were being re-exported to the Company in U.S.A. As per the requirement of U.S. Customs, it was mandatory to specifically mention in the export documents, the quantity of diamonds of above 0.5 cts. and those below 0.5 cts. It was because of this requirement that the diamonds imported by the Appellants were sorted out in their Private Bonded Warehouse on 21-3-99 in the presence of and under the....
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....ravin Kumar Jain, the Mg. Director of the Appellants in New Jersey, out of genuine concern for his own brother in India, has volunteered or agreed to help his brother, by selling the diamonds to the Appellants and buying the same from them, even if this transaction results in some financial loss for him, this transaction cannot be held as one concluded with an ulterior motive and therefore not genuine. What is relevant for consideration is whether foreign exchange earnings to the extent of an increase of minimum of 5% over the value of import consignments would have accrued if only the Department had allowed the export of diamonds, on the basis of the export value declared in the Shipping Bills. The answer to this question will be in the affirmative. It has already been explained vide grounds A and B above that it is not necessary to carry out any operations or activities on the imported diamonds and that mere re-packing of these diamonds will result in value addition of the diamonds. In view of this correct legal position in terms of Paras 8.12 and 9.21 of the Exim Policy for a relevant period, the Ld. Commissioner's order, holding that the transaction of Import and Export in the ....
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....above these percentages will be found in some form containing gold that can be recovered. Such loses are in the form of dust, scrap or sweeping of gold arising in the manufacturing process. The Appellants refine such scrap, dust and sweepings and recover gold. They are also permitted to forward to the Government Mint, the quantity of gold so recovered from dust etc., for conversion into standard gold bars and return to the Export Processing Zone, in accordance with the procedure specified by the Customs. The Appellants therefore claim that there was no such shortage of 2732.73 grams of gold, as alleged by the Department when the officers visited the Appellants' premises on 25-3-99. (iii) As per the stock taking report conducted by the Customs on 25-3-99 only the physical stock, the closing stock and the recorded stock of gold of 995 purity, was taken into consideration and on this basis the Customs Officers arrived at the shortage of 2732,73 grams of gold. However, it can be clearly seen from that stock taking report dated 25-3-99 that the quantity of dust, scrap and sweeping of gold lying in the premises of the Appellants, was not weighed and was not taken into consideration to a....
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.... of the Hon'ble Supreme Court in the case of Amrit Foods v. CCE, UP. - 2005 (190) E.L.T. 433 (S.C.), Max G.B. Limited reported in 2008 (221) E.L.T. 491 (P & H) and Nakoda Textile Industries Limited reported in 2009 (240) E.L.T. 199 (Bom.) in support of his contention that in the absence of specific Provisions having been mentioned in the show cause notice, penalty could not have been imposed on DJ. Penalty was proposed to be imposed on the appellants under Section 112(a) and 114 of Customs Act, 1962 and it is his submission that Sections are not applicable. Learned advocate relied upon the decision in the case of MMK Jewellers v. Commissioner of Customs, Mumbai - 2003 (156) E.L.T. 722 (Tri. - Mum.) to support his contention that the Exim Policy recognizes the invisible waste in the manufacture of gold and jewellery and Notification No. 177/94-Cus. specifically provides that the Assistant Commissioner may allow the loss of percentage of gold as specified in the notification. Further he also reiterated the submissions that the stock taking was not done properly and the Commissioner's reliance on the stock taking report as faulty. 10. Learned DR on behalf of the Revenue submitted tha....
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.... advocate submitted that Section 111(d) would not be applicable at all in view of the fact that there was no mis-declaration of value or description etc. As regards Section 111(o), he submitted that 6% value addition was permitted in the Exim Policy and was also accepted by CBE&C. No doubt the value addition is possible as observed earlier when the transactions genuine transactions. No prudent person can believe that a company owned by a person would send diamonds for re-packing or sorting etc all the way to India from U.S.A. and the same person would re-import in the name of another company owned by himself. Obviously the purpose of import was not what it was stated to be. Section 111(o) of Customs Act reads as under "any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer'. As already held by us that Para 8.13 of Exim Policy has been violated because there is absolutely no value addition but it is only a paper transaction. When there is no v....
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....ector had admitted that the shortage could arise because of excess processing loss or because of manufacture of different types of jewellery or because of pilferage. However, he was not asked to quantifv the same since he himself voluntarily admitted to pay duty. The departmental officers did not proceed to investigate the matter further in view of the shortage of stock was on the basis of report given by the Managing Director on 25-3-1999 and not on the basis of Panchanama or on the basis of stock arrived at by the officers. The perusal of stock report also shows that statements have been signed only on behalf of DH and there are no other signatories. Commissioner has also observed in his order that department could not be found fault with for non supplying of stock taking report before 27-8-1999. The report was given only after it was requested for. This is because the stock taking report has a letter submitted by the unit to the department. We find considerable force in the observation of the Commissioner that after confirming the position of stock available in the unit on the date of stock taking, there is no point in advancing arguments based on un-verifiable facts because the....