AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 492
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....onds were declared to be of mixed origin. The said diamonds were procured by M/s SRDSIL, FZE, UAE from M/s CD Jewels, DMC, UAE who in turn had procured them from M/s MBABDA Diamonds Pvt. Ltd. through Mineral Metal Trading Corporation of Zimbabwe vide invoice no. PD006/01/11 dt. 20.02.2011 and KP Certificate No. ZW 000114 dt. 12.11.2010 and the remaining diamonds were procured from another local diamond trader M/s Alliance Impex, FZE, UAE vide Invoice No. LOC/0254/2011-2012 dt. 16.11.2011 and KP Certificate No. EC 00276664 dt. 22.07.2011 issued by the authorised officer of the European Community Kimberley Process Certificate Import confirmation office. Based upon investigation the Appellant M/s SRDSIL were issued show cause notice dt. 01.03.2016 alleging that the diamonds were from Marange mines of Zimbabwe and were not permitted to be imported in India as the KP Certificates accompanying the consignments were not issued in accordance with the restrictions imposed by the KP Committee from time to time. The diamonds were seized and released provisionally. The Show Cause Notice proposed to confiscate the diamonds and to impose penalties under Section 112 (a) and Section 114 AA of the ....
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....appearing for both the Appellants submits that the impugned order is not sustainable. The adjudicating authority has wrongly considered the date of sale invoice i.e 20.01.2011 as date of procurement which is subsequent to 17.11.2010. Theterms "procure" has wrongly been equated with term 'sale' and even with date of sale. In absence of any definition of term "procure", the same cannot be equated with term "sale". It is well settled both commercially and legally that raising of an invoice is based on commercial factors agreed between the parties and the date of raising an invoice has no necessary co-relation with the date of sale of goods. The documents shows that the diamonds were procured before 17.11.2010 by C.D. Jewels and even the adjudicating authority has held that the legitimacy of K.P. Certificates issued by Zimbabwe prior to 17.11.2010 cannot be procured and yet he ignored the said certificate which would only be obtained subsequent to an order of rough diamond being placed. The KP certificates clearly identified CD Jewels as buyer of the diamonds and therefore affirms that the diamonds are clearly at the very least earmarked for CD Jewels alone. The import of rough diamond....
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.... placed by CD Jewels on MMCZ prior to 12.11.2010 and certainly prior to 17.11.2010. The diamonds were subsequently invoiced by MMCZ vide invoice no. PD006/01/11 dt. 20.01.2011. However the placing of order and sale thereof by MMCZ to CD Jewels took place prior to 17.11.2010 and hence the impugned order has incorrectly concluded that the facilitation provided vide OM dt. 19.08.2011 is not available to the Appellants. He relies upon the following documents to show that the diamonds were received prior to 17.11.2010 : (i) Letter dt. 16.08.2011 by CD Jewels to Mr. Abbey Chikane, KP Monitor, South Africa which requested that it be certified that the diamonds purchased by M/s CD Jewels from MMCZ (MBADA Diamonds), Zimbabwe were purchase prior to 17.11.2010. This letter was written as UAE authorities required proof of procurement prior to 17.11.2010 to sanction release of the diamonds. (ii) Letter dt. 26.08.2011 by Mr. Abbey Chikane issued in response to above request. This letter issued by KP Monitor evidences that the diamonds were in fact procured by CD Jewels, UAE prior to 17.11.2010. On this basis the consignments were cleared by the UAE authorities. (iii) Letter issued by MB....
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....h exercise. That the diamonds are not of Zimbabwe origin but of mixed origin as stated in KPC certificates. That the UAE authorities issued 5 KPCs on 17.11.2011 and 20.11.2011 after perusing the various documents submitted by SRDSIL FZE alongwith their application seeking issuance of the KPCs. The UAE KP Authority also examined sample of diamonds exported to India. These KPCs therefore evidence that there was no contravention of the KPCs provisions and issued KPCs after due process. He submits that the Office memorandum dt. 24.11.2011 issued by the Ministry of Commerce lifted ban unconditionally if the imported goods had the requisited KPCs with them. The OM dt. 24.11.2011 does not envisage condition whereby diamond which were procured prior to 17.10.2011 only could be imported into India post lifting such ban. An importer could import rough diamonds prior to 17.10.2011 with a valid KPC even without OM dt. 24.11.2011 being in place. The interpretation of adjudicating authority is thus bad in law. 3. Shri T.G. Rathod, Learned (Authorised Representative) appearing for the revenue submits that since the goods were procured after 17.11.2010 as apparent from the sale invoice and clear....
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....d have been post 17.11.2010, it would have led to conclusion that the goods were procured post 17.11.2010, but when the procurement was already in place as the seller and the buyer and even the KP Certificate recognised the goods in transaction prior to 17.11.2010 and such KP Certificate has not held to be void, it has to be construed that the goods were already procured. Further the OM dt. 19.08.2011 does not create any bar on the impugned goods as the OM dt. 24.11.2011 states that in KPCS (Kimberley Process Certification Scheme) an agreement on resumption of exports of rough diamonds mined from KP Compliant mines in the Marange area in Zimbabwe including MBADA has been reached. It also requested the Customs to again allow import of rough diamonds supported by prescribed KP documentation from the Marange region in Zimbabwe. Notably this OM dt. 24.11.2011 is not with any rider. There is no reference of any date as to from which the diamonds from Marange area are to be allowed. It does not contain the date of excavation, sourcing or purchase date of diamonds by any intermediary or the first buyer from Marange. It simply states that if the goods are accompanied by KP Monitor certific....
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.... held to be banned. 4.2 Further the Kimberly Process certificate ZW 0001114 shows the diamonds to be conflict free which is as under : 4.3 We find that the fact of KPC Certificates which holds that the goods were KPCC Compliant and the aforesaid documents unequivocally proves that the diamonds were procured by CD jewels before 17.11.2010. Unless and until such procurement was in process, there would not have been any KP certification and even the certificates show the buyer of goods as CD Jewels. Thus when the contracting parties and the authorities concerned with the certification process conclude that the procurement was prior to 17.11.2010, the same cannot be questioned as all these documents stands accepted by the adjudicating authority as far as their veracity is concerned. In such case only on the ground that the invoice was issued to M/s CD jewels after 17.11.2010, the same cannot be a ground to hold that the diamonds were banned from importation. Further had the goods were not procured, they would not have been identified with M/s C.D. Jewels. It is that when the buyer initiates the process or causes to obtain the goods that the goods are procured. It cannot be equated ....