TaxTMI 
TaxTMI 
2016 (2) TMI 476
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....nd Circular No. 133 dated 21st May, 2014, issued by the second respondent and proceedings consequent thereto initiated vide show-cause notice dated 14th October, 2014 so also the order passed in furtherance thereof dated 14th January, 2015. It is prayed that these be quashed and set aside. 3. The facts lay in a narrow compass. The petitioners claim to be one of the largest bullion dealers and petitioner No.1 is an Associate Member of the London Bullion Market Association and a member of the Bombay Bullion Association. It claims to be recognized as a Premier Trading House by the Government of India, Ministry of Commerce and Industry through the Office of the Zonal Joint Director General of Foreign Trade, which is valid till 31st March, 2016. On the basis of this certificate of recognition, a certificate as 'Nominated Agency' is also granted every year to the petitioners by the authorities under the Foreign Trade (Development and Regulation) Act, 1992 (for short "Act of 1992"). All this enables the petitioners to import precious metals in terms of paragraph 4A.4 of the Foreign Trade Policy. The Nominated Agency certificate (for short "NAC") is also claimed to be valid and subsisting....
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....-2009 was issued by Director General of Foreign Trade (for short "DGFT") prescribing guidelines for import of precious metals by the Nominated Agencies which included Premier Trading Houses. The monitoring mechanism and the format of Certificate for the said purpose, were also provided in the said Policy Circular. Annexure-E to the petition is a copy of the said Policy Circular no. 77 (RE-2008)/2004-2009 issued by DGFT. Subsequently Policy Circular 24(RE-2009-2014) was issued. Annexure-F to the petition is copy of the said Circular. Both these circulars were withdrawn vide Policy Circular 14(RE-2010)/2009-14 dated 1.02.2011, thereby relaxing the norms and doing away, inter alia, with the requirement of sale of 15% quantity to exporters. Annexure-G to the petition is a copy of the said Policy Circular 14(RE-2010)/2009-14 dated 1st February, 2011. 8. On 8th August, 2011, the petitioner No.1-Company was awarded status of "Premier Trading House" by the Ministry of Commerce. Prior thereto, the petitioner was awarded Certificate of Recognition as Star Trading House on 09.09.2009. Annexure-H to the petition is a copy of the said Premier Trading House Status Certificate awarded by the Min....
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.... and 4:35 p.m. (UAE time) to Brinks' Global Services, the renowned International Logistic Company handling Precious Metals, for onward transport to destination, for which Collection Notes were also issued by the said Brinks' Global Services evidencing the delivery time. Annexures-Q and R to the petition are copies of the Collection Notes issued by the said Brinks' Global Services evidencing handing over shipment at 4.30 p.m. and 4.35 p.m. on 22nd July, 2013. 14. The Customs procedure was completed in respect of the two shipments at Dubai time 18.00 hrs. and 18.05 hrs. and consequently, two airway bills bearing numbers 17652586273 (for Ahmedabad shipment) and 17652586262 (for Hyderabad shipment) both dated 22nd July, 2013 were issued at 19:21 hrs and 21:13 hours (both UAE time). Annexures-S, T-1 and T-2 to the petition are copies of the certificate issued by Brinks' Global Services showing time for completion of customs procedure at Dubai, for Airway bills bearing Nos. 17652586273 (for Ahmedabad shipment) and 17652586262 (for Hyderabad shipment) both dated 22nd July, 2013. 15. Subsequently, on the same day, the impugned Circular bearing No.15 dated 22.07.2013 was issued by the Res....
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.... any, to the customs authorities / DGFT to operationalize and monitor the above requirements for import of gold." 21. Consequently, in order to operationalize the RBI Circular no. 25 dated 14th August, 2013, the Central Board of Excise and Customs issued Instructions on 04.09.2013, which were made applicable with the repeated usage of word "henceforth". Annexure-Z to the petition is a copy of the said Instructions dated 4th September, 2013 issued by CBEC operationalizing the RBI Circular No. 25 dated 14th August, 2013. 22. No corresponding Instructions issued in this regard by the DGFT have been brought to the notice of the petitioner. 23. On or about 27th September, 2013, the Directorate General of Export Promotion, Department of Revenue, Ministry of Finance issued instructions inter alia clarifying that gold imported between 22nd July, 2013 and 14th August, 2013, if pending clearance, should be cleared under the amended and clarified position in terms of RBI Circular dated 14th August, 2013 and CBEC Circular dated 4th September, 2013. Annexure-AA to the petition is a copy of the said Instructions dated 27th September, 2013 issued by Directorate General of Export Promotion, Dep....
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....s of the RBI Circular dated 22nd July, 2013. Annexure-FF to the petition is a copy of the said letter dated 17th July, 2014 issued by the office of the Respondent No.3. 31. On or about 25.08.2014, the petitioner No.1 submitted a letter dated 20.08.2014 seeking time of a fortnight for submitting the reply, as the concerned person was out of town and was to resume the office in the first week of September 2014. Annexure-GG to the petition is a copy of the said letter dated 20th August, 2014, issued by the petitioner No.1. 32. On or about 1st September, 2014, the petitioners submitted various details to the office of the Respondent No.3 with documentary evidence of time and negotiation, and delivery of shipment for further transportation to India. It was placed on record that the consignments covered vide the subject two bills of entry, were cleared by the Customs Authorities after verification and being satisfied about the correctness of the declaration and claims of the petitioners, upon payment of applicable customs duties. It was also pointed out that the remittances for the two shipments effected on 22nd July, 2013, were made by the authorized dealer after taking into account t....
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.... at 3.42 p.m. from the office of the Respondent No.3 by fax. The said addendum to show the cause notice proposed cancellation of the Nominated Agency certificate dated 5th May, 2014 in terms of Section 9(4) of Act of 1992 and Rule 10 of FTR Rules, 1993. 38. As per the said addendum the personal hearing was scheduled for 11th November, 2014 at 11.30 a.m. 39. In none of the imports made by the petitioner No.1 except the aforesaid two shipments of 22nd July, 2013, whether before or after 14th August, 2013, any objection has been raised by the Respondent No.3. Even in regard to these 2 shipments the Customs Authorities were satisfied that RBI Circular had no applicability and hence permitted clearance thereof without obtaining any bond otherwise required to be submitted. Similarly, even the Authorized Dealer had permitted foreign remittances against the said two shipments on being satisfied that the restrictions placed if any vide Circular dated 22nd July, 2013 were inapplicable for the said two shipments. There is no proceeding issued against the petitioner in this regard by either RBI or by the Customs Authorities. Neither any violation of FEMA nor any duty evasion has been alleged....
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....ssed an order on 14th January, 2015 and which was communicated by fax on 15th January, 2015, to the petitioner. It is aggrieved by the above that the present Writ Petition has been filed. There are two affidavits-in-reply which have been filed by the contesting respondents. There is also an affidavit-in-reply filed by the respondent No.2 - Reserve Bank of India. The petitioners have filed their rejoinder affidavits. 46. The justification for the action in the affidavit-in-reply of the third respondent has been set out in detail, but prior thereto, the third respondent in the affidavit-in-reply filed in this Court on 12th March, 2015, has submitted that the issue of illegality of the Circulars can be raised by the petitioner before the Appellate Authority. Therefore, when the petitioners have an alternate and equally efficacious remedy of filing an appeal in terms of section 15 of the Foreign Trade (Development and Regulation) Act, 1992, then, this Writ Petition should not be entertained. 47. Thereafter it is urged that the condition for import of any item has to be seen with specific reference to the Indian Trade Classification (Harmonised System) for export and import items [for....
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....t was uploaded on the website, then, this Circular has been clearly violated. 50. For renewal of the Nominated Agency Certificate for the period 2014-2015, it is stated that it came to the notice of the Additional Director General of Foreign Trade, Mumbai, on 9th May, 2014 that his office had inadvertently and by oversight renewed this certificate. That was without due diligence as required under the provisions of para 4A.35 of the Handbook of Procedures. The NAC was renewed on 5th May, 2014, by the office of the Director General of Foreign Trade without verifying the half yearly return for the period 1st March, 2013 to 31st March, 2014. Further, it was observed that 550 Kgs. of gold had been imported by the petitioners between 22nd July, 2013 and 31st March, 2014. The Additional Director General of Foreign Trade on 9th May, 2014, sent a copy to the Director General of Foreign Trade Headquarters stating that it was necessary to check the shipping bills, bills of entry and domestic invoices for satisfying as to whether the petitioners exported the gold imported by them as required by the Reserve Bank of India Circulars issued from time to time. After ascertaining this factual posit....
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....he resultant product to the extent of 100% of imported gold. By issuance of this Circular a clear line was drawn among the Nominated Agencies with one set of Nominated Agencies being put under obligation to export resultant product to the extent of 20% while another set of Nominated Agencies were subject to export 100% of resultant product out of the imported gold. The Petitioners being Premier Trading House were under an obligation to export 100% quantity of imported gold, as such they were not allowed to divert the imported material into domestic market. 54. All allegations with regard to the alleged unfairness or bias of the Adjudicating Authority have been denied in paragraph 20 of this affidavit. The details of the personal hearing are then set out and it is submitted that the Reserve Bank of India is authorised to regulate the trade of precious metals, including gold. Under the Foreign Exchange Management Act, 1999 (For short "FEMA"), the Reserve Bank or India has full authority to regulate remittances and this Act read with the provisions of the Foreign Trade Policy would enable the RBI to regulate import of gold. Once the bill of entry also refers to the condition that imp....
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....res, we find a rejoinder of one Mahendra Bafna. It is a joint rejoinder to the affidavit-in-reply of 12th March, 2015 and the additional affidavit-in-reply of 8th June, 2015. Before we make reference to this rejoinder affidavit, it would be necessary to refer to the additional affidavit-in-reply. According to the Joint Director of Foreign Trade, the additional affidavit-in-reply filed on 8th June, 2015, was necessitated in view of the developments during the pendency of the petition. It was also necessitated because, according to this deponent, the Director General of Foreign Trade was required to place before the Court, a further fact that the petitioners imported 550 Kgs. of gold 100% of which had to be exported after making value addition as per the provisions of the RBI Circular No.15 dated 22nd July, 2013. However, out of these 550 Kgs. of gold, the petitioners exported 350 Kgs. only. There were no exports from the balance 200 Kg. of gold and this also violates the circular. The circular was issued to address the problem of the Current Account Deficit (CAD) related to foreign exchange management under the provisions of Indian Trade Classification (Harmonised System) for export....
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....s submitted that as a fundamental question of illegality and validity of the Circular applied by the Director General of Foreign Trade is concerned, then, the Writ Petition be entertained and this Court should give authoritative pronouncement in that regard. It is reiterated that there is no power, authority and jurisdiction conferred in the Reserve Bank of India by FEMA or its predecessor enactment, viz. The Foreign Exchange Regulation Act, 1973, (for short 'FERA") to issue the subject circular seeking to restrict import of gold / bullion by a nominated agency. The various provisions of the said Act and that of The Foreign Trade Act, 1992, are relied upon to support this contention. Then, it is urged that there is no reasonable explanation or justification for passing the impugned order and imposing a penalty on the petitioner-company of Rs. 100 crore when the petitioners had paid total customs duty of Rs. 4,08,94,132/- for the consignments in question to the satisfaction of the proper officer of Customs at Ahmedabad for home consumption without any restriction on domestic sales thereof, which otherwise was not payable if the clearance would have been permitted under bond only for....
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....tting that the bill of entry was filed post the uploading of the impugned Circular on the RBI's website, that Circular itself provided that till the instructions were not issued by the Government of India, the Customs/Director General of Foreign Trade cannot operationalise the import restriction. In the absence of separate instructions issued by the Government of India, no proceedings could have been initiated by the Director General of Foreign Trade/Customs. Then it is urged that the petitioners have never contended that the date and time of despatch of shipment as indicated in the Airway bills is the date of import. Thus, alternate and without prejudice contentions have been raised essentially to support the primary plea. The other part of the Rejoinder is nothing but denials of what is said to the contrary by the petitioners. 64. The respondent No.2 - Reserve Bank of India has also filed an affidavit-in-reply in which in paragraphs 5 and 6, it is stated as under : "5. I say and submit that the Reserve Bank (herein after to be referred as "Bank") is a statutory corporation, established under the Reserve Bank of India Act, 1934, to regulate the issue of bank notes and keeping o....
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....t it will abide by the guidelines issued by the Reserve Bank of India. Thus, the certificate issued by the Director General of Foreign Trade to the petitioners from time to time designating it as a Nominated Agency under para 4A.4 of the Foreign Trade Policy for the purpose of direct import of precious metal was subject to the provisions of Foreign Trade Policy and the procedure laid thereunder, the RBI guidelines and the Customs' Rules and Regulations. The affidavit states that paragraph 4 of the Policy Circular No.39 (RE-2010)/2009-14 dated 19th August, 2011, regarding Consolidated Guidelines for import of precious metal by the Nominated Agencies issued by DGFT provides that "The Policy and Procedure for import of precious metal shall be as per the guidelines stated in Foreign Trade Policy (FTP) and the relevant RBI Guidelines". This circular also states that the Nominated Agencies may refer the RBI Guidelines as stated in A.P. (DIR Series) Circular No.2 dated July 9, 2004, paragraph B 15 of part III of Master Circular of RBI, as amended from time to time. This circular pertains to Import of Gold by (i) Export Oriented Units (EOUs), (ii) Units in SEZ/EPZ, and (iii) Nominated Agen....
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....py of the Order-in-Original which is impugned in the petition. Mr. Chagla would submit that the Order-in-Original proceeds on the footing that the petitioners had supplied 200 Kgs of imported gold vide bill of entry dated 23rd July, 2013 to domestic units. Thus, they failed to comply with the conditions of RBI Circular No.15 dated 22nd July, 2013. They have also violated the conditions of the Nominated Agency Certificate dated 9th April, 2013, and, therefore, violated Rule 13(2) of the Foreign Trade (Regulation) Rules, 1993, which attracts section 9(4) and 11(2) of the Foreign Trade (Development & Regulation) Act, 1992, as amended. Mr. Chagla submits that the petitioners were also held guilty for violation of the conditions of the NAC because in terms of paragraph 4A.35 of the Handbook of Procedures 2009-2014, they were not eligible for renewal of the NAC for the period 2014-2015. That certificate is declared to be ab initio void. 70. Mr. Chagla submits that the findings in the impugned order would show that there is total non application of mind on the part of the Additional Director General of Foreign Trade. The Additional Director General of Foreign Trade ought to have realised....
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....ing guidelines for import of precious metal by the Nominated Agencies. It is submitted by Mr. Chagla that the Premier Trading Houses are entitled for direct import of precious metal and the monitoring mechanism provided therein vide paragraph 3 would make it clear that the only obligation is that at least 10% of the imports of each entity shall be supplied to the exporters. The Policy and procedure for import of precious metal shall be as per the guidelines stated in the Foreign Trade Policy and the relevant RBI guidelines. However, there were no RBI guidelines either in the form of Circular or otherwise when the imports by the petitioners took place. The petitioners have entered into the transaction prior to the Circular dated 22nd July, 2013 being issued. In these circumstances, Mr. Chagla would submit that, the impugned order insofar as it relies upon the above material cannot be sustained and must be quashed and set aside. The Joint Director General of Foreign Trade has acted beyond the jurisdiction vested in it by law. It has taken cognizance and note of certain instructions issued by authorities not contemplated by the Foreign Trade (Development & Regulation) Act, 1992. 71. ....
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....make any changes or amendment in the foreign policy. Mr. Chagla has then relied upon a Division Bench judgment delivered by this Court to which both of us have been parties in the case of Alfa Laval (India) Ltd. vs. Union of India 2014 (309) ELT, 17 (Bom.). Mr. Chagla has also placed reliance upon the addendum to the show-cause notice dated 30th October, 2014, and to submit that the same tries to improve upon the original allegations and thus make out a new case for the department. 73. Mr. Chagla would submit that sections 13 to 17 of FERA came to be amended later on and in that regard he submits that the words marked by asterisk in sub-section (1) "any gold or silver or" were omitted by Act 29 of 1993 with effect from 8th January, 1993. Similarly, the words "gold, jewellery or precious stones" were omitted from sub-section (2) of section 13 of FERA by the same Amendment Act and with effect from the same date. This is relevant and germane, according to Mr. Chagla, for understanding the controversy. Mr. Chagla has also placed before us the Transitional Arrangements in Chapter 1A of the Foreign Trade Policy 2009-2014 Part 1 clause 1.4 to submit that on account of the same, there was....
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....precious metal for making it available to all concerned, in particular the exporting community requiring the metal for manufacture of its product. The guidelines cover the export of precious metal by Premier Trading Houses. Reference is made to para 4A.4 of the Foreign Trade Policy and Mr. Dada would submit that in clause 4 of these guidelines it is stated that the policy and procedure for import of precious metal shall be as per guidelines set out in the Foreign Trade Policy and relevant RBI guidelines. It is submitted that by Annexure-2 which is appended to Policy Circular No.77 dated 31st March, 2009, there is a reference in Note 4 to Nominated Agencies. They are obliged to follow the RBI guidelines and particularly, Circular No.2 dated 9th July, 2004 as amended from time to time. Mr. Dada would submit that the guidelines for import and supply of precious metal by Nominated Agencies may have been withdrawn by the Director General of Foreign Trade on 1st February, 2011, by Policy Circular No.14, copy of which is at page 80, yet there is nothing erroneous or illegal when the Director General of Foreign Trade relies upon the RBI Circular No.15 dated 22nd July, 2013. The attempt of ....
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.... what are the violations and breaches committed by the petitioners. Mr. Dada would submit that in answer to these allegations, the petitioners do not question the authority of the RBI, but state that there is no violation of the subject Circular No.15 dated 22nd July, 2013, as the import was complete prior to the uploading of the same. For these reasons Mr. Dada would submit that every argument to the contrary should not be countenanced and the petition be dismissed. 77. Mr. Dada has relied upon the Foreign Trade Policy and the guidelines monitoring the import of precious metal by Nominated Agencies. He has also relied upon the Master Circular No.13 / 2013-2014 dated 1st July, 2013. Mr. Dada has also relied upon the Foreign Exchange Management (Current Account Transactions) Rules, 2000 and finally he would submit that the RBI Circular dated 28th January, 2014, would denote as to how the prior Circulars, particularly Circular No.25 dated 14th August, 2013, stand withdrawn with immediate effect. These would demonstrate, according to Mr. Dada as to how the Circular dated 22nd July, 2013, was in force when the subject import took place. 78. The counsel appearing for the RBI has broug....
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....d sale of gold or silver coins and gold and silver bullion and foreign exchange and the opening of gold account with the Principal Currency Authority of any foreign country or the Bank For International Settlements or any International or Regional Banks or Financial Institutions formed by such Principal Currency Authority or by authorities of the Government of any foreign country. Chapter III titled as Central Banking Function, apart from obliging the bank to transact Government business and vesting it a right in that behalf, the RBI has also a right to issue bank notes and for that purpose, by section 23 it has an Issue Department. The issue of bank notes shall be conducted by the bank in an Issue Department which shall be separated and kept wholly distinct from the Banking Department and the assets of the Issue Department shall not be subject to any liability other than the liabilities of the Issue Department in terms of section 34. By section 33, the assets of the Issue Department consist of gold coin and gold bullion. The bank by section 40 undertakes transactions in foreign exchange and this section 40 has been substituted by Act 26 of 2006. Section 40 reads as under : "40. ....
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....conservation of foreign exchange resources of the country and a proper utilisation thereof in the interest of the economic development of the country. Mr. Chagla makes much capital of the omission of the words "and bullion" from the preamble and from sections 13(1) and 13(2). So far as section 13(1) is concerned, the omission is of the words "any gold or silver" and "gold, jewellery or precious stones". However, we do not think that such omission can have any impact or would affect the controversy raised before us. It is clear that so long as the dealings in foreign exchange and securities transactions indirectly affecting foreign exchange and the import and export of currency so also conservation of foreign exchange resources of the country and the proper utilisation thereof in the interest of the economic development of the country are the common objects in both FERA and FEMA, then, that element necessarily brings in the Reserve Bank of India and the Ministry of Commerce, Government of India as well as the Directorate General of Foreign Trade. The FEMA has its object not only to consolidate and amend the law relating to foreign exchange, but that is with the objective of facilita....
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....he Act or any rule, regulation, notification, direction or order made thereunder: Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless the authorised person has been given a reasonable opportunity of making a representation in the matter. (4) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with such general or special directions or orders as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorisation under this section. (5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, and where....
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....l in foreign securities as an authorised dealer, money-changer or off-shore banking unit or in any other manner as it deems fit. Sub-sections (2), (3), (4) and (5) of section 10 would enable us to hold that the Reserve Bank of India can monitor, regulate and control the activities of such Authorised Person and the dealings that he undertakes in foreign exchange. It is also able to check the unauthorised dealings in foreign exchange. Secondly, for all the above purposes the Reserve Bank of India is empowered to issue directions to the Authorised Person. That direction is in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security. By section 12, the Reserve Bank of India is empowered to inspect an Authorised Person. The other argument that penalties and which are to be imposed vide section 13 in Chapter IV of the FEMA can be imposed by the Reserve Bank of India but the impugned order has been passed an authority under The Foreign Trade (Development & Regulation) Act, 1992, fails to impress us. 89. Before setting out our reasons for rejecting this argument of Mr.Chagla based on sections 10 to 13 of the FEMA, it would be a....
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....Section 3 confers a specific power and the Central Government, therefore, can make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. Once this order in relation to foreign trade policy is published in the Official Gazette that indicates the policy. The Central Government by order published in the Official Gazette may also make provision for prohibiting, restricting or otherwise regulating in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the order, import or export of goods or services or technology. By sub-section (3) of section 3 it is clarified that all goods to which any order under sub-section (2) applies shall be termed to be goods, the import or export of which has been prohibited under section 11 of the Customs Act, 1962 and all the provisions of that Act shall have affect accordingly. Thus, the Act of 1992 compliments the Customs Act,1962. It goes hand-inhand with that enactment and does not authorise doing of anything or dealing in anything which is prohibited by the Customs Act, 1962. Then by sub-section (4) of section 3 it is stated that no permit o....
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....IA, quantitative restrictions can be imposed by the Central Government and by Chapter IV search, seizure, penalty and confiscation is contemplated. By section 11, contravention of provisions of the 1992 Act, rules, orders and foreign trade policy is made punishable and sub-sections (2) and (3) of section 11 read as under : "11. Contravention of provisions of this Act, rules orders and foreign trade policy.- (1) ... ... ... ... (2) Where any person makes or abets or attempt to make any export or import in contravention of any provision of this Act or any rules or orders made thereunder or the foreign trade policy, he shall be liable to a penalty of not less than ten thousand rupees and not more than five times the value of the goods or services or technology in respect of which any contravention is made or attempted to be made, whichever is more. (3) Where any person signs or uses, or causes to be made, signed or used, any declaration, statement or document submitted to the Director-General or any officer authorised by him under this Act, knowing or having reason to believe that such declaration, statement or document is forged or tampered with or false in any material parti....
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....ctor General of Foreign Trade to direct that the policy and procedure for import of precious metal shall be as per the guidelines stated in the Foreign Trade Policy and the relevant Reserve Bank of India guidelines. 95. Upon a reference to these Circulars what the petitioners state that both these Circulars were withdrawn by a further Circular bearing No. 14 dated 1st February, 2011. That relaxes the norms for doing away, inter-alia, with requirement of sale of 15% quantity to exporters. Annexure F is a copy of this Circular. It is evident that this relaxes the rigour of serial number 3(c) of the Circular No.1 dated 27th August, 2009 and to a certain extent of the Circular dated 31st March, 2009 (77 of 2009). However, the petitioners refer to the status of Premier Trading House granted by the Ministry of Commerce. It also refers to the certificate of recognition as Star Trading House dated 9th February, 2009. Though the petitioners rely upon the withdrawal of the Policy Circular No.77 of 2009 with effect from 1st February,2011 what the petitioners state is that they applied for issuance of a certificate as Nominated Agency. That certificate was granted and copy of which is at Anne....
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....ons of law they were required to comply and in terms of the Nominated Agency Certificate. All terms and conditions as imposed by the NAC would have to be fulfilled by them. Any breach thereof, therefore, would empower issuance of a showcause notice and demanding penalty. 96. The petitioners are aware that there was a Circular issued by the Reserve Bank of India on 22nd July, 2013. 97. With the assistance of the advocate appearing for the Reserve Bank of India we have perused the Circular issued on 13th May, 2013 by the Reserve Bank of India on the subject of import of gold by Nominated Banks / Agencies. These circulars read as under : "RESERVE BANK OF INDIA Foreign Exchange Department Central Office Mumbai - 400 001 RBI/2012-13/499 A.P. (DIR Series) Circular No.103 May 13, 2013 To, All Scheduled Commercial Banks which are Authorised Dealers in Foreign Exchange Madam / Sirs Import of Gold y Nominated Banks/Agencies Attention of Authorised Persons is invited to paragraph 97 of the Monetary Policy Statement 20123-14 dated May 3, 2013 regarding import of gold. In terms of AD(G.P. Series) circular No.7 dated March 6, 1998 (copy enclosed for ready reference), nominate....
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....pened by Nominated Banks / Agencies for import of gold under all categories will be only on 100 per cent cash margin basis. Further, all imports of gold will necessarily have to be on Documents against Payment (DP) basis. Accordingly, gold imports on Documents against Acceptance (DA) basis will not be permitted. These restrictions will however not apply to import of gold to meet the needs of exporters of gold jewellery. 3. The above instructions will come into force with immediate effect. ADs may bring the contents of this circular to the notice of their constituents and customers concerned. They are also advised to strictly ensure that foreign exchange transactions effected by / for their constituents are compliant with these instructions in letter and spirit. 4. All other instructions relating to import of gold issued from time to time shall remain unchanged. 5. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (C D Srinivasan) Chief General Manager ....
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....lar have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (Rudra Narayan Kar) Chief General Manager" 97A. In the series of Circulars would appear the subject Circular, namely, Circular dated 22nd July, 2013, which reads as under : " RESERVE BANK OF INDIA Date: Jul 22, 2013 Import of Gold by Nominated Banks / Agencies/ Entities RBI/2013-14/148 A.P. (DIR Series) Circular No.15 July 22, 2013 To All Scheduled Commercial Banks which are Authorised Dealers (Ads) in Foreign n Exchange/All Agencies nominated for import of gold. Madam /Sir, Import of Gold by Nominated Banks/Agencies /Entities Attention of Authorised Persons is drawn to the Reserve Bank's A.P. (DIR Series) Circulars No.103, 107 and 122 dated May 13, June 04 and June 27, 2013 respectively on the captioned subject; As per these instructions, certain restrictions were imposed on the import of various forms of gold by nominated banks /nominated agencies/premier or star trading houses/SEZ UITS/ EoUs which have been permitted t....
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.... come into force with immediate effect. Authorised dealers may please bring the contents of this circular to the notice of the notice of their constituents and customers concerned. 7. Instructions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act (FEMA), 1992 (42 of 1999), and are without prejudice to permissions / approvals, if required under any other law. Yours faithfully (Rudra Narayan Kar) Chief General Manager-in-Charge Annex An example of the working of the scheme. 1. Nominated agency ABC imports say 100 kg of gold in any form/purity. 2. Out of the above import of 100 kg 20 kg gold held in the bonded warehouse can be got released in part or full to be sold to exporters of gold against undertaking to customs authorities as is the practice now. 3. Any further import of gold by ABC shall be permitted to the customs authorities only to the extent of actual export out of 20 kg gold held in bonded warehouse. This can happen only after at least 15 kg of gold out of 20 kg is actually exported from the previous lot. 4. If ABC wants to place order for the second lot of import, only 75 kg of import (....
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....w-cause notice. It was also alleged in the show-cause notice that there is a violation of the Circular dated 22nd July, 2013. This Circular was also, on the petitioners own showing, uploaded on the website on 22nd July, 2013, at 19:47 IST. We are not entering into the controversy whether because this Circular came into force with immediate effect and, therefore, corresponded with the time at Dubai, namely, 18:47 Hrs. The affidavit-in-reply points out the reference to the Airway bills and claims that these were handed over to the Airlines only after uploading of the Reserve Bank of India's Circular. The affidavit extensively refers to the endorsements on the Airway bills, particularly of date and time. We do not wish to enter into this controversy as it is factual. Apart from the same being factual, in the impugned order, it has been found and after detailed reference to the documents relied upon by the petitioners themselves that this Circular was very much in force and applied to the imports by the petitioners. 100. We should not disbelieve this factual finding and which is in consonance with the overwhelming record. The speaking order passed by the respondents, copy of which is ....
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....ling of bill of entry and not the date and time of shipment of goods. The import into India and the above act of filing of Bills of entry are, therefore, rightly relied upon to enter a factual finding against the petitioner on the point of applicability of RBI Circular dated 22nd July, 2013. 101. We have, therefore, no hesitation in concluding that none of the contentions as raised before us by the petitioners have any merit. 102. Mr. Chagla's reliance on the judgments rendered by the Hon'ble Supreme Court is of no assistance. In the first decision in the case of Atul Commodities Pvt. Ltd. vs. Commissioner of Customs, Cochin 2009 (235) E.L.T. 385 (SC), it is apparent that the issue raised was distinct, namely, that the restriction placed on the import of second hand capital goods was not to be found in the Foreign Trade Policy. Once the categorization of items meant for import was free, then, the Director General of Foreign Trade could not have changed it and by issuing Circulars. Its attempt to change the categorization from free to restricted was frowned upon for the Hon'ble Supreme Court found that in the garb of interpretation of the policy and its implementation, the Directo....