AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 122
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....ellants including the main appellant (1) M/s. Ashwin Gold Pvt. Ltd. along with (2) Shri. Sanjay Subrao Nikam Managing Director of M/s. Ashwin Gold Pvt. Ltd. functioning at the Special Economic Zone, Kakkanad, Cochin, (3). Shri. K.O. Anto of Kallarackal Jewellers (KJ) along with (4). Shri. Jeeson Davis and (5). K. Venugopalan. In addition, (6). Shri. T.R. Saji, (7). B. Jayakumar, (8). Shri. Baiju AL Salam Jewellery and (9). M/s. Southern Gold Pvt. Ltd. and (10). M/s. Joyalukkas India Pvt. Ltd. against common Order-in-Original No. COC-CUSTM-PRV-COM-01-16-17 dated 30.05.2016 passed by the Commissioner of Customs (Preventive), Cochin. 2. The Main appellant M/s. Ashwin Gold Pvt. Ltd. is a unit working under the provisions of Special Economic Zone (SEZ) Act, 2005 and is permitted to import primary gold for manufacture of gold ornaments intended solely for export. On the basis of specific information that the gold imported by the appellant had been clandestinely removed to the Domestic Tariff Area (DTA) in violation of the provisions of the SEZ Act, 2005 and Rules made thereunder, detailed investigations were carried on. Investigations revealed that the appellant had imported a total q....
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....r (Judicial)." 89.1 The jurisdiction of a Customs officer to investigate and demand the duty from the appellants has to be examined in the light of the provisions contained in the SEZ Act, 2005, read with the SEZ Rules, 2006 and the provisions of the Customs Act, 1962.............. ...... 10.5. From the above well-founded orders/decisions, we have to accept that the benefit of the interpretations, drawn consistently by various Benches, are in favour of the tax payer/ appellants herein, in these batch of cases, including the decision of the Hon'ble Gujarat High Court in Bharti Gandhi's case (supra) which, both parties before us agree, has attained finality. 10.6 On this score alone, all the appeals should succeed and hence, we set aside the impugned order and the demands and penalties raised therein, against all the appellants before us". 4. Aggrieved by this order, the respondents filed an appeal before the Hon'ble High Court of Kerala and the Hon'ble High Court of Kerala in Customs Appeal Nos.9/2022, 10/2022, 11/2022, 12/2022, 13/2022, 14/2022, 15/2022, W.P.(C) Nos.9058/2022 & 27835/2021 dated 22.12.2022 observed as follows: "8. We h....
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....he Development Commissioner etc., would have jurisdiction on the establishment and continuance of a unit in an SEZ and for importing goods/gold into DTA without paying customs duty, the Customs Department have jurisdiction on the information gathered in a DTA in the search carried by them. The CESTAT reasons that when two interpretations are possible, the interpretation favourable to a taxpayer must be accepted is entirely out of context. Jurisdiction, in fact, or law, irrespective of the nature of the enactment, has different manifestations. The CESTAT ought to have noticed the subtility of the area of operation in appreciating the competence or jurisdiction of Officers of the Customs Department on the one hand and the Development Commissioner on the other. For the above reasoning, we are convinced and accordingly hold that in the case on hand, for the circumstances noted above, the search and seizure have occasioned in DTA. Therefore, the Officers of the Customs Department, vis-à-vis the alleged illegality noted against both the importer and the individuals who handled the gold moved out of SEZ, have jurisdiction under Act 1962. The denial of jurisdiction to the Officers o....
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....aments from the date of importing the gold into SEZ. But the respondent started investigation on 11.08.2014 which resulted in suspension of the LoA on 19.08.2014 by the Development Commissioner of CSEZ, hence the entire proceedings are premature. C. Further it is submitted that the finding to the effect that the remaining quantity of 11186.325 gms gold could not be recovered is also unsustainable and against the norms laid down by the HBP to FTP. If it is admitted that entire gold was brought by Appellant, total import of gold is 385.512 Kg and had exported 378.501 Kg of gold ornaments equivalent to 336.727 kgs, after deducting wastage as per existing norms, out of 48785.0300 grams of gold in possession, Appellant is entitled to deduct 13237.0545 grams and net gold available for export before the due date of 6 months from 30.01.2015 to 08.02.15 is only 35547.9775 grams as per the chart given below: Chart 1 Sl. No. Description Grams 1. Import of gold 385512.5000 2. Export 336727.4640 3. Difference (As per Ext P-10 order) 48785.0300 4. Less wastage (as per wastage norms) For plain gold@ 2.5% is 5688.016 grams. For studded gold jew....
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....sons under section 125 of the Chart 3 Sl. No. From whom the gold seized Quantity (grams) Market value (Rs) Applicable customs duty paid RF (Rs) 1. M/s. Kallarackal Jewellers 11901.958 3,21,82,894 12,00,000 2. M/s. Kallarackal Jewellers 4850.840 1,31,16,671 5,00,000 3. M/s. Smijo Gold 6499.300 1,75,73,377 6,50,000 4. M/s. Southern Gold (Released to respondent) 4346.890 1,17,53,990 4,00,000 5. M/s. Joyalukkas 10000.000 2,84,50,000 10,00,000 Total 37598.988 37,50,000 F. Penalty imposed under Section 114A relates to 11186.325 grams of gold improperly cleared from SEZ to DTA but not recovered during investigation is not applicable in the present case because as per the wastage norms, the total balance of gold available for export is 35547.9775 grams only after deducting the wastage of 13237.0545 grams of gold. Hence the penalty imposed under section 114A of the Customs Act, 1962 is unsustainable. G. Penalty imposed under Section 112(a) relates to 4 Kg gold, this Hon'ble Tribunal while setting aside the impugned order, ordered to release the said 4 K....
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....consider and pass orders with regard to release of gold. On 25.05.2017 was asked to provide any objections, if any, to release the confiscated gold to M/s. Ashwin Gold Pvt. Ltd., and the appellant M/s. Southern Gold Pvt. Ltd., vide letter dated 08.06.2017 stated that they do not have any claim on the seized gold and thereby the liability of duty, interest and redemption fine is to be borne by M/s. Ashwin Gold Pvt. Ltd. Since the gold was released to M/s. Ashwin Gold, the appellant M/s. Southern Gold Pvt. Ltd. is contesting only on penalty imposed on them under Section 112 of the Customs Act, 1962. Referring to the provisions of Section 112(b), it is submitted that they have not violated any of the conditions that are mentioned in the above Section. M/s. Southern Gold Pvt. Ltd. had received gold from the SEZ unit with a bona fide belief that it is of legal nature in the same way as was done by the job workers of Kallarackal Jewellers. The Commissioner in the impugned order had not imposed any penalty on the above job workers, therefore, the question of imposing any penalty on the M/s. Southern Gold Pvt. Ltd. does not arise. Moreover, since M/s. Ashwin Gold Pvt. Ltd., received the go....
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....d Co. TOTAL 27,598.718 gms Table B Sl. No. Party Quantity of gold confiscated (in grams) Value of gold (Rs.) Redemption fine imposed (Rs.) Duty of customs demanded (Rs.) Penalty imposed (Rs.) 1 M/s.Kallarackal Jewellers, Angamaly 11095.90 3,00,03,313 12,00,000 5,00,000 2 M/s Ajay & Co (Supplied by M/s. Kallarackal for job work) 4581.581 1,52,96,252 5,00,000/- 3 M/s Leo's Angel Gold (Supplied by M/s. Kallarackal for job work) 1075.317 4 M/s Smijo Gold, Trichur (Shri. M.K.Babu, Proprietor) 6499.030 1,75,73,377 6,50,000 1,00,000 5 M/s Southern Gold (P) Ltd., Trichur 4346.890 1,17,53,990 4,00,000 1,00,000 6 M/s Joyalukkas (I) (P) Ltd. 10 Kgs 2,85,00,000 10,00,000 7 M/s Ashwin Gold. 11186.325 30,86,721 8 Shri. Sanjay Nikam 30,86,721 1,00,00,000 9 K.O. Anto 10,00,000 10 M/s Joyalukkas &....
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.... investigations conducted in this regard revealed that Shri Sanjay Subrao Nikam is the person who organized the said clandestine removal of gold from the said SEZ unit to DTA. Shri Sanjay Subrao Nikam in his statements before the Customs Officers under Section 108 of the Customs Act, 1962 on 11.08.2014; 13.08.2014; 27.08.2014; 07.11.2014; 13.01.2015 and 16.01.2015 admitted the fact of removal of gold without valid documents and without payment of duty and has explained in detail the duty-free imported gold given to others and how he was assisted in these transactions. This has been corroborated by the statements given by the following persons: (i) Shri K.O. Anto, the proprietor of M/s Kallarackal Jewellers vide his statements dated 16.09.2014; 17.10.2014 and 23.10.2014. (ii) Shri Jeeson Davis, employee of Shri K.O. Anto vide his statements dated 13.08.2014 and 27.08.2014. (iii) Shri A.T. Jackson, Manager of M/s Southern Gold (P) Ltd., dated 12.08.2014. (iv) Shri B. Jayakumar who was looking after clearing and forwarding work along with documentation work of M/s Kallarackal Jewellers vide his statements dated 12.08.2014 and 13.08.2014. (v....
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....ts recorded. 10.6 With respect to the ownership of the seized gold, it is submitted that the adjudicating authority had clearly held that the seized gold belonged to the entities from whom it was seized as there was conclusive evidence that they had either paid or supplied gold ornaments in return for the gold transferred to their DTA units from the SEZ unit of M/s. Ashwin Gold Pvt Ltd. The gold seized from the various jewellers and units in the DTA were found to be liable for confiscation and allowed redemption on payment of fine, penalty and applicable duty by the Adjudicating Authority. The main appellant M/s. Ashwin Gold Pvt. Ltd. had never claimed the ownership of the gold seized from M/s. Smijo Gold, M/s. Joyalukkas, M/s. Ajay & Co. and M/s. Leo's Angel Gold neither during the course of investigation nor during the submissions made before the adjudicating authority in reply to the show-cause notice. With regard to the seizure of gold from the premises of M/s. Southern Gold, it is submitted that after the issuance of Order-in-Original No.01/2016 dated 30.05.2016, when M/s. Southern Gold requested for redemption of the 4346.890 grams of gold seized from their premises, S....
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....against M/s. Southern Gold and redeemed the seized gold. It is significant that the main appellant M/s. Ashwin Gold Pvt. Ltd. did not claim the goods related to M/s. Kallarackal Jewellers and M/s. Smijo Gold even in the High Court of Kerala when they petitioned for redemption of gold seized from M/s. Southern Gold claiming ownership of the same. Hence, it can be seen that M/s. Ashwin Gold Pvt. Ltd. never claimed ownership of the goods confiscated from M/s. Kallarackal Jewellers, M/s. Smijo Gold, M/s. Joyalukkas, M/s. Ajay & Co., and M/s. Leo's Angel Gold. The seized gold was confiscated and allowed redemption by the adjudicating authority, for which the parties paid the redemption fine, penalty and applicable duty. For the 11186.325 grams of gold which could not be recovered, M/s. Ashwin Gold is liable to pay duty under Section 28(8) of the Customs Act 1962. Hene, he requested for dismissing the appeals and upholding the impugned order. 11. Heard both sides. In the impugned order, the learned Commissioner had ordered for confiscation of gold ornaments/articles as shown below: (i) Confiscation of 11095.90 gms. of gold ornaments seized from M/s. Kallarackal Jewellery,....
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....,000 grams of gold): Table-1 Sl. No. Description Grams 1 Import of gold 3,85,512.5000 2 Export 3,36,727.4640 3 Difference (As per Ext P-10 order) 48,785.0300 Table-2 Sl. No. From whom the gold seized Quantity (grams) Market value (Rs) In addition to applicable customs duty paid RF (Rs) 1. M/s. Kallarackal Jewellers 11901.958 3,21,82,894 12,00,000 2. M/s. Kallarackal Jewellers 4850.840 1,31,16,671 5,00,000 3. M/s. Smijo Gold 6499.300 1,75,73,377 6,50,000 4. M/s. Southern Gold (Released to respondent) 4346.890 1,17,53,990 4,00,000 Total 37598.988 37,50,000 14. The main appellant M/s. Ashwini Gold admits to the fact that the gold was not available at their premises at the time of investigation. Their only argument is that based on the permission given by the DGFT, they had removed the gold to the job worker for conversion into gold articles which is legally allowed. The letter dated 4.10.2011 issued by the Development Commissioner, Cochin Special Economic Zone, allowed the appellant to import gold and for conversion of gold orna....
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....ument having exported 3,78,501.493 grams and the permissible wastage which is normally allowed for manufacturing of ornaments cannot be extended to a person who had indulged in illegal removal of gold outside CSEZ. The Development Commissioner had also disputed the inward remittances of foreign exchange for the exports undertaken by the appellant. The Development Commissioner in the order referred supra also observed as follows: "As records prove, the above defence put up by the Noticee is factually untrue. After examining the Shipping Bill and Bills of Entry (BoE) filed by the Noticee for the years 2012-13, 2013-14 and 201415 and upon cross verification of the same with Annual Performance Reports for the years 2012-13 and 2013-14, it is inferred that the information regarding the data of Exports/Import contained in the APRs filed before this office by the Noticee was at large variance with the authentic data gathered from the Shipping Bills and the Bill of Entries of the actual Export/Imports undertaken by the Noticee. He has not produced any document to prove that he had exported 378,501.493 grams. It is legally untenable that the Noticee claims an advantage of permissib....
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....old seized from the premises of the M/s. Southern Gold Pvt. Ltd. Trichur (4,346.890 grams of gold articles), thus, clearly admitting that the gold was diverted to this unit which was legally not permitted by the authorities concerned. The undisputed fact is that the Main appellant M/s. Ashwin Gold Pvt. Ltd. is a unit working under the provisions of Special Economic Zone (SEZ) Act, 2005 and is permitted to import primary gold for manufacture of gold ornaments intended solely for export and who is authorised to send the gold only to those job-workers permitted by DGFT within the stipulated time. The Letter of Approval No: 09/16/2011-IL/CSEZ ("LoA") dated 04.10.2011 issued by the Development Commissioner, CSEZ. The LOA was valid till 25.04.2017 and the conditions stipulated in the LOA was: a) export the goods manufactured/ goods imported/procured for trading and services, including items of trading, as per provisions of the Special Economic Zones Act, 2005 ("SEZ Act, 2005") and Rules made there-under. b) execute a Bond-cum-Legal Undertaking as prescribed under the Special Economic Zone Rules, 2006 ("SEZ Rules, 2006"). c) achieve positive Net Foreign Exchange....
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.... should not be liberally construed and beneficiary must fall within the ambit of the exemption and fulfil the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication. 8.1 It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the Court to ignore the conditions prescribed in the relevant policy and the exemption notifications issued in that regard. 8.2 The exemption notification should be strictly construed and given a meaning according to legislative intendment. The Statutory provisions providing for exemption have to be interpreted in light of the words employed in them and there cannot be any addition or subtraction from the statutory provisions. 8.3 As per the law laid down by this Court in a catena of decisions, in a taxing statute, it is the plain language of the provision that has to be preferred, where l....
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....rmally all entries are made in one handwriting except three one entry on Page 55 dated 3.6.14 and two entries on page 61 dated 11.6.14 and 12.6.14. Shri. Venugopalan, Accountant of Kallarackal Jewellers had in his statement under Section 108 of Customs Act, 1962, stated that he was the person who made the entries in the said register at the request of Shri. Jeeson, an employee of Kallarackal Jewellers. Shri. Venugopalan also admitted that he made these entries on 11.8.14 when he reached Angamally on some work; that normally entries in the said register were made by his staff Ms. Kairali and hence the difference in handwriting. It is pertinent to note that the search at the premises of Ashwin Gold took place on 11.8.14 and the entries made on the same day by the accountant in the register giving a back date only indicates the action taken by Kallarackal Jewellers to cover up for their actions involving non receipt of the gold removed from CSEZ and non-accounting of gold ornaments received from job workers". These facts have not been disputed except to state that it was a mistake committed by their accountant Venugopalan who had entered the date wrongly. 15.2 The Commissioner furt....
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....upporting documents, it can be concluded that this quantity of 20 Kg gold that was received by Kallarackal Jewellers on 22/4/2014 was only from M/s. Ashwin Gold and the further entries made in register on 11.8.14 were made only to cover up for their activities". 15.3 Therefore, the above facts clearly establish that the Angamalay unit of Kallarackal Jewellers had received 20 kg. of gold on 22.04.2014, which was sent to their job workers, which was not accounted for and this 20 kg. of gold was handed over by M/s. Ashwini Gold from their SEZ unit. The above 20 Kg. of gold received by them has not been explained and the fact that there is clear admission for receipt of 10 kg. of gold by Shri. K.O. Anto of M/s. Kallarackal Jewellers is proved beyond doubt in view of the statements given by both Mr. Sanjay Subrao Nikam of M/s. Ashwini Gold and Mr. K.O. Anto of M/s. Kallarackal Jewellers. Even before us, the learned counsel has not been able to explain or account for the 20 Kg. of gold recovered from their premises. The counsel has harped jurisdiction issue which already stands settled by the Hon'ble High Court of Kerala and also the issues on validity of the show-cause notice does no....
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....aykumar who had handed over 10 Kg. of gold at the premises of M/s. Kallarackal Jewellers. In his statement Shri T.R. Saji stated that he was working under Shri Jaykumar, the Export Consultant and he was not aware of any of these illegal activities but on the instructions of his employer Shri Jaykumar, he had handed over a packet which consisted of 4 bars of gold to the employee of M/s. Kallarackal Jewellers. Taking into consideration that Shri T.R. Saji was an Assistant to Shri Jaykumar and since he had retracted his statement in his reply to the notice that he was not aware of the illegal nature of the handing over the gold on the instructions of his employer, the penalty on him is set aside. But since Shri Jaykumar was a person who had handed over the gold and was aware of the activities being an Export Consultant, the penalty on him is reduced to Rs.25,000/- (Rupees Twenty-Five Thousand Only). 18. With regard to 10 Kgs of gold sold to M/s. Joyalukkas, there is no confiscation of gold as it was not available for confiscation. The Commissioner in the impugned order observes that an "invoice no. 7 was found issued by M/s. Ashwini Gold Pvt. Ltd. which was confirmed by the Purchas....
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....goods, the saleproceeds thereof shall be liable to confiscation. 18.3 In the instance case, since we are dealing with diversion of gold from SEZ unit, the gold in question which is not available for confiscation and the diversion is by M/s. Ashwin Gold, therefore, they are liable to pay the customs duty along with interest. Since, the goods have been sold to M/s. Joyalukkas as per the invoice shown above, no irregularity can be alleged against the buyer and these goods also cannot be deemed to be smuggled goods since they have been legally imported by the SEZ unit. Therefore, provisions of Section 121 of the Customs Act, 1962 cannot be invoked. Accordingly, the imposition of redemption fine and penalty on M/s. Joyalukkas also cannot be justified. 19. Taking into consideration that the gold seized is liable to duty and redemption fine and penalty wherever it is found to be legally justified, we reduce the penalties imposed on Shri Jeeson Davis, M/s. Kallarackal Jewellery, Shri. B. Jayakumar (Consultant), M/s. Southern Gold to Rs. 25,000/- (Rupees Twenty-Five Thousand Only) each; and penalty on Shri Venugopalan, Accountant, M/s. Kallarackal Jewellery is reduced to Rs.10,000/- (....