TaxTMI 
TaxTMI 
2008 (3) TMI 127
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....amonds from Sharjah and declared the same as rough diamonds. The said goods were imported as per IGM No.5768 Line No.1 dated 24/04/99 under Airway Bill No.16068163620 dated 24/04/99 and the goods were shipped vide Invoice No.R0002/9990 dated 24/04/99 by M/s.Viraj Holdings Ltd., Sharjah. The duty free clearances of said goods was sought under Customs Tariff No.7102.31 and under exemption Notification No.20/99-Cus dated 28/02/99 against REP Licence. The consignment was ordered for first check examination. On examination of the goods by the officers, it was noticed that four pieces, as declared as rough diamonds do not appear to be diamonds. Hence, the goods were shown to Trade Panel Members and on their verification, the said consignment was found to be only "semi precious stones". On a reasonable belief that there was a misdeclaration of the goods, the said consignment was seized and investigation was conducted. The statements of the Chairman of the appellant company Shri Jatin Mehta was recorded and statements of various individuals were recorded, which led to issuance of show cause notice dated 26/10/99 to the appellants. The appellants co....
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....t. He submits that the appellant company never inspected the consignment, when it left Sharjah, but did inspect them during the examination conducted by the Customs authorities. He submits that there was no intention on the part of the company for importing four rough diamonds and mis-declaring the value as the company would not have benefited by such activities. For this proposition, he submits that the company has provided with three REP licence for entry of such diamonds. It is his submission that one debit is made in REP licence, it is loss to the appellant company. It was submitted that on the date of examination itself the appellant company disowned the consignment and relinquished the title. He draws our attention to the various statements recorded by the authorities of the different persons to submit that the appellant company and the Director of the company were not at all aware that the "semi precious stones" will be coming in place of "rough diamonds". He submits that it is an admitted fact that the goods are exempted from payment of duty by Notification No.20/99-Cus on production of REP licence. If it is so, there cannot be any penalty on t....
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....ompany and no members of the appellant company are holding any post in the said Viraj Holding. As regards the modus operandi adopted for, it is his submission that the appellant company being a star export company, could not have involved themselves into this kind of this as they were issued REP licence for importing diamonds and exporting them. 8. We considered the submission made at length and perused the records. 9. It can be seen from the reproduced portion of the order at para 3 that the adjudicating authority has come to the conclusion that there was an over valuation and it has been done with an intention to remit extra foreign exchange by importing worthless goods under the guise of diamonds. It is also seen from the reproduced portion of the order that the adjudicating authority has come to the conclusion that the claim of Chairman of the Company, they were cheated is only the alleviate the responsibility of overvaluation. We are unable to accept these findings. We find from the statements, which were read out by both sides, clearly indicate that the Director of the appellant company i.e. Shri Jatin Mehta (the appellant....
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....t remitted any foreign exchange. 12. As regards the submissions made by the Ld. SDR that over-valuation was resorted to remit extra foreign exchange, we find that it is undisputed, that the appellant is a Star exporter and is having a turn over of more than Rs.400 crores in import and export business, they would not take a risk of endangering their status as a Star Export House for the miniscule amount of Rs.2.00 crores, as is involved in this case. 13. It is undisputed that rough diamonds are exempted from payment of duty by Notification No.20/99 dated 28/02/99, if REP licenses are produced. The REP licence, which were produced by the appellant company were undisputedly valid licences. If the licences, which were submitted by the appellant company were valid licences the question of payment of Custom duty on the said goods would not arise. 14. We find ourselves in agreement with the ratio of the co-ordinate Bench of the Tribunal in the case of JAY AR Enterprises (supra), wherein it is held that "Goods when exempted from full payment of duty are not dutiable goods but are goods not chargeable to duty". Hence penalty under Section 1....