TaxTMI 
TaxTMI 
2026 (1) TMI 169
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....ICE DILIP GUPTA : Customs Appeal No. 55430 of 2023 has been filed by the department to assail that portion of the order dated 16.03.2023 passed by the Principal Commissioner that drops the demand of Customs duty proposed on the Bank of Nova Scotia [the Bank] and also refrains from imposing any penalty on the Bank under section 112(ii) of the Customs Act, 1962 [the Customs Act]. 2. Customs Appeal No. 55431 of 2023 has been filed by the department to assail that part of the order dated 16.03.2023 that has been passed by the Principal Commissioner refraining from imposing penalty upon M/s Derewala Industries Ltd [Derewal Industries] under section 112 (ii) of the Customs Act. 3. Customs Appeal No. 55432 of 2023 has been filed by the de....
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....m within a period of ninety days from the date of issue of gold/silver / platinum to the exporters, and binding himself to pay on demand duty on quantity of gold/silver/platinum representing the difference between the quantity issued and that contained in the exported jewellery or articles." (emphasis supplied) 6. In terms of the aforesaid Exemption Notification, the Bank imported duty free gold by executing the prescribed bond solely for the purpose of supplying such gold to eligible manufacturer-exporters, including Derewala Industries. 7. The dispute in the present appeal relates to gold supplied to Derewala Industries under the bullion agreements entered from time to time. Under these agreements, Derewala Industries was require....
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....en exported. For the residual quantity of 0.014 kgs, in respect of which Derewala Industries could not furnish proof of export, the Bank discharged the applicable customs duty with interest. Thus, the Bank complied with its obligations under the FTP/HBP framework as well as the terms governing duty-free gold supplied on a loan basis under the Exemption Notification. 10. In 2016, pursuant to a search conducted at the premises of Derewala Industries and the consequent investigation undertaken by the DRI, it was alleged that Derewala Industries had diverted and sold in the domestic market the duty-free gold amounting to 39.03 kgs procured under the Exemption Notification despite the condition that such gold was to be exclusively used for ma....
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.... the Custom authorities. The Nominated Agencies execute a bond to the Deputy/Assistant Commissioner of Customs binding themselves to (a) maintain accounts for the gold imported; and (b) to discharge the duty in the event of the exporter not fulfilling his export obligation within the period prescribed under the foreign trade policy. The discharge of duty is warranted if the exporter has failed to fulfill the export obligation within the period prescribed which is not the allegation against them in the impugned notice. 6.5 The noticee cited that CBIC vide Circular No. 23/2018, while addressing the problems being faced by the exporters when Customs call for one to one correlation between the gold procured d....
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....fiscation. Their role or the fact that they were aware that duty free gold was cleared in the domestic market by M/s DIL has not been brought on record. The notice has not invoked confiscation of impugned goods under Section 111 of the Act and thus the proposal to impose penalty under Section 112(b)(ii) of the Act is untenable. Besides penalty under Section 112 (ii) is invokable when there is a demand of duty as its quantum has been fixed in relation to duty sought to be evaded. Neither Section 111 has been invoked nor the duty is liable to be paid hence no penalty can be imposed under Section 112 of the Act." xxx xxx xxx 6.10. The notice proposes penalty under Section 112 (ii) of the Customs Act, 1962 on M/s DIL and Sh. Y....