TaxTMI 
TaxTMI 
2008 (7) TMI 246
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....agency under the scheme. The nomination is done by DGFT. In terms of the scheme, the nominated agency imports gold free of duty. The said gold is given on loan/payment basis to various exporters. The idea is that the gold imported free of duty should be converted into value added products and exported. In case, the gold imported is not exported after value addition, a duty liability is cast on the nominated agency. 5. The whole scheme is governed by EXIM Policy (2002-2007), Handbook of Procedures, Foreign Exchange Management Act, 1999, Customs Act 1962 and the circulars issued in respect of imports and exports by the gem and jewellery sectors. 6. The first appellant in the instant case, imported gold bars weighing 1500 kilo grams duty free under Customs Notification 80/1997, dated 21-10-1997 and warehoused the same on the strength of a general bond executed under Section 59(2) of the Customs Act, 1962. Out of the said quantity of 1500 Kgs, 925 Kgs of gold were delivered on loan basis to the second appellant M/s. Rajesh Exports Ltd. (REL). The second appellant converted the gold to value added products and exported the same. However the foreign exchange representing the sale p....
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....xport obligation within the prescribed period. It is not the Revenue's case that the exports have not been made. In fact, exports have been made and the general bond executed by the first appellant was cancelled by Customs Authorities after the appellants produced copies of the shipping bills evidencing proof of export of gold medallions by the Exporter, viz. M/s. REL, vide Para 14.2 of the Show Cause Notice. (iii) In terms of Notification 57/2000-Cus., dated 8-5-2000, the importer executes a bond with the Assistant Commissioner of Customs undertaking to export either by itself or through other exporters gold jewellery or articles having gold content equivalent to the imported gold within a period of 120 days from the date of issue of gold to the Exporters. In the instant case, admittedly, the articles of gold viz, gold medallions manufactured out of 925 kgs. of gold issued by the appellants have been exported by M/s. REL of Star Jewellers and proof of export have been submitted. In such circumstances, there is no violation of the above mentioned Notification. Hence, demand of duty in terms of the bond executed by the first appellant does not arise. (iv) As far as the 'Bank C....
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....4 (164) E.L.T. 95 (Tribunal). 8. Shri Laxminarayana, learned Advocate, for the second appellant urged the following points: The appellant (2) had procured gold from appellant (1) and paid for the same in Bangalore and utilized the same to manufacture and export jewellery. They were not concerned with the import of the material at any stage and had obtained the material locally in India on payment in Indian Rupees. The material was exported and the shipping bills were duly examined and let-export was ordered. They produced export documents to the Bank of Nova Scotia and in turn, the bank produced the proof to the customs Authorities. The Customs Authorities accepted the same and cancelled the bonds executed by Bank of Nova Scotia. As the appellants were not concerned with the import at any stage, the levy of penalty under Section 112 is not sustainable. As the bond has been cancelled, further proceedings are not maintainable in view of various decisions of the Tribunal. 9. Shri P.R.V Ramanan, special Counsel urged that the term 'Export Obligation' is to be construed in the light of paragraphs 4.62, 4.77 and 4.79 of Hand Book of Procedures. He referred to the Para 4.62 where....
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....enalty is erroneous. 11.1 Non-execution of bond as per Board's Circular dated 20-4-1998 and not keeping a watch over realization of foreign exchange by REL constituted non-performance of a critical procedural requirement on the part of BNS. The Hon'ble Supreme Court in the case of Indian Aluminum Co. Ltd. v. Thane Municipal Corporation - 1991 (55) E.L.T. 454 (S.C.) has held that "non-observation of even a procedural condition not to be condoned if likely to facilitate commission of fraud and introduce administrative inconveniences." 12. The Special Counsel invited our attention to Board's Circular No.24/1998-Cus., dated 20-4-1998 Para XIII wherein it is stipulated that "wherever such proof of export is not produced within the period prescribed in the EXIM Policy, the nominated agencies shall (without waiting for its recovery from the exporters) deposit the amount of duty calculated at the effective rate leviable within seven days." 13. When the learned Counsels for the appellants referred to the provision of write-off of unrealized export bill to the extent of 5% of the average annual realization during preceding three years or 10% of export proceeds during the financial y....
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....tions of notification 57/2000. The said condition is given in Proviso to the notification and we are reproducing the said notification. "Provided that in the case of import of gold/silver/platinum as replenishment under the scheme for 'Export through Exhibitions/ Export Promotion Tours/Export of Branded Jewellery', the importer undertakes to fulfill the conditions of Export and Import Policy and relevant provisions of the Handbook of Procedures, Volume-I and produces such documents as stipulated in the Export and Import Policy and the Handbook of Procedures, Volume-I and produces such proof of exports made through exhibitions/export promotion tours etc., as may be required by the Assistant Commissioner of Customs or the Deputy Commissioner of Customs to satisfy himself with regard to eligibility of the importer for the duty free import of replenishment material" 17. A close reading of the above proviso shows that the nominated agency who is the importer, executes a bond undertaking to export the jewellery containing gold equal to the imported gold. In case, the jewellery is not exported within the stipulated period, the importer is under an obligation to pay the Customs dutie....
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....el;" 18. A close reading of the above provision shows that nowhere it is stated that non-realization of sale proceeds will result in demand of Customs duty foregone from the nominated agency. 19. It should be borne in mind that even though the first appellant is the importer, the exporter is different. In this case, the exporter is the second appellant. All goods exported from India result in realization of foreign exchange as sale proceeds. Matters relating to foreign exchange are governed by Foreign Exchange Management Act (FEMA). The Customs Authorities are not enforcing the provisions relating to non-realization of foreign exchange. If at all there is violation of FEMA and the related regulations, the liability would be on the exporter, suitable action lies with the enforcement authorities and Reserve Bank of India. With regard to the violations of exim policy, adjudication can be done only by authorities notified under Section 13 of Foreign Trade (Development & Regulation Act) 1992. The first appellant imported the goods and warehoused the same. Duty can be demanded from the first appellant only in respect of the situations enumerated in Section 72 of the Customs Act. Re....