TaxTMI 
TaxTMI 
2026 (7) TMI 176
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.... of duty as penalty under section 114A of the Customs Act, 1962, in terms of section 28(4) of the Customs Act read with Circular No.27/2016-Cus. 1.1. CUSTOMS APPEAL NO. 50196 OF 2020 has been filed by M/s. Venus Industries having its registered office at C-24, Lawrence Road, Industrial Area, Delhi-110035 (herein after referred to as 'Venus Industries') against the same Order-in-Original No.07/2019-20 dated 13.11.2019 read with Corrigendum dated 07.01.2020, wherein a penalty of Rs.36,81,066/- has been imposed on M/s. Venus Industries under Section 114 of the Customs Act, 1962. 1.2. CUSTOMS APPEAL NO. 50195 OF 2020 has been filed by Mr. Arun Kumar Agarwal against the penalty of Rs.25,00,000/- imposed on him vide the impugned order under Section 114AA of the Customs Act, 1962. 1.3. As all the three appeals have emanated from the same Order-in-Original, they are all taken up together for decision by a common order. 2. The facts of the case are that the appellant/STC is one of the nominated agencies of Government of India for import of Bullion into the country and supply the same to the domestic buyers and exporters of jewellery. M/s. Venus Industries is a registered manufac....
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.... fulfillment of the provision in the Foreign Trade Policy and Handbook of Procedures. It is pointed out by the appellant-STC that in the present case, they have sold gold to M/s. Venus industries under the Replenishment Scheme; that M/s. Venus Industries have purchased 144900 grams of gold jewellery having 0.916 purity, valued at Rs.40,06,34,886/-, under invoice No. 45 dated 25/01/2017 from Bullion line, Hyderabad; these articles of gold jewellery were manufactured by Bullion line with a job worker viz. Ghanshyamdas Jewellery at Hyderabad; M/s. Venus Industries have exported 144900 grams of gold jewellery through M/s NS Jewellery Trading Company Limited, Hongkong to their foreign buyer M/s MN Khan Jewellers (FZE), Sharjah, UAE, under 4 shipping bills filed at Air Cargo Delhi. It has also been submitted by them that all the Shipping bills were filed for export of articles of jewellery under replenishment scheme. Thus, it is the case of the appellant-STC that M/s. Venus Industries are eligible to purchase gold under the replenishment scheme. 7.1. The appellant-STC also submits that at the time of filing shipping bills for exporting the jewellery, M/s. Venus Industries have submitt....
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....that the payment of making charges of Rs.5 per gram and the quantity of gold jewellery made in one day are sufficient to establish that the jewellery were manufactured by mechanized process (paragraph 22). It is argued that the observations made by the Tribunal in the said case are equally applicable to the facts and circumstances of the present case also as the jewellery in this case was also manufactured by the same job worker, using the same machinery. 7.3. Furthermore, the appellant-STC submits that the entire gold purchased by M/s. Venus Industries have been exported by M/s. Venus Industries. As the department has not brought in any other violation other than the value addition, the demand of customs duty from them, as confirmed in the impugned order, is legally not sustainable. 7.4. On the basis of the submission that they have not violated any provisions of the Foreign Trade Policy and no demand of customs duty is sustainable against them, the appellant-STC also contended that no penalty can be imposed on them in the facts and circumstances of the case. 8. The co-appellants, M/s. Venus Industries and Mr. Arun Kumar Agarwal, submitted that the factual information sub....
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..../s. Venus Industries have achieved the value addition @2.05% only, they are not eligible for the purchase of duty free gold under the Replenishment Scheme against the above exports made by them. He also contends that as STC, being the nominated agency, imported duty free gold in terms of Customs Notification No.57/2000-Cus dated 08/05/2000 and Boards Circular No.27/2016 dated 10/06/2016 by executing a bond with a condition that they shall pay all duties and charges claimable on account of the goods under Customs Act, 1962 and Central Excise Act, 1944 and the rules made thereunder together with interest, they are liable to pay the customs duty demanded in this case; further that STC had also undertaken that they shall comply with the conditions and limitations as stipulated in the Foreign Trade Policy and Hand Book of Procedures as amended from time to time; they also declared that Government through the Commissioner of Customs/Central Excise may recover the sum due from them in the manner laid in the Customs Act, 1962 or Central Excise Act, 1944. Thus, he submits that duty has been rightly demanded from STC as they have not fulfilled the conditions stipulated in the Foreign Trade P....
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....a Limited came to be decided by the CESTAT at Hyderabad vide Final Order No. A/30054-30063/2024 dated 08.02.2024 [Customs Appeal No. 40654 of 2020 & ors. - CESTAT, Hyderabad]. We observe that the process undertaken by the job worker remained same in both the cases as evidenced from the observations available in paragraph 37.3 of the order of the CESTAT, Hyderabad in Diamond case and in paragraph 15.1 of the impugned order. For ready reference, the relevant paragraph from the said order of the CESTAT, Hyderabad, is reproduced below: "37.3. So far the issue regarding manufacturing processes is concerned, we find that the job worker has categorically stated that he has used machines and/or machine tools at each stage of the manufacturing process. Firstly, he has used electric furnace to melt the metal that is gold with the alloy. Thereafter, the alloyed gold was fed into rolling machine and the said machine gives flat sheets (patty) of about 1 inch width and thickness, which varies on the size of the Karra. Thereafter, the gold sheet so obtained is fed into the design printing machine and embossed sheets are obtained. Thereafter, cutting as per the required length for making ....
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....ns. Comparatively, making charges of Rs.5/gram and the quantity of gold jewellery made in one day by the mechanised process, justifies and supports the declaration of the Appellants M/s BL/JR that it was fully mechanized. Furthermore, any observation on reasonableness of the making charges, is beyond the jurisdiction of the Customs Law. It is impossible to make large quantity of gold kadas without machines in a short time span of 2-3 days, and the Adjudicating Authority has not disputed the submission that the job worker used to manufacture the gold Kadas in one or two days. It further supports the contentions of the Appellant M/s BL/JR. For example- Appellant BL sent 26 kg of gold plus 2 kg of alloy (approx), on 28.09.2016 vide challan No. 8 and received 28 kg of jewellery on 30.09.16." 11.3. As the facts of both the cases are identical and the processes carried out and the job charges paid were the same, we hold that the result of the said decision is equally applicable to the facts and circumstances of the instant case. We also find that the decision of CESTAT, Hyderabad, in the case of M/s. Diamond India Limited (supra) has been upheld by Hon'ble Telangana High Court. Thus, ....