TaxTMI 
TaxTMI 
2026 (7) TMI 335
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....ed under the Foreign Trade Policy, 2015-20, the Hand Book of Procedures, 2015-20 and Customs Notification No. 18/2015-Cus dated 01.04.2015, as amended. 2. The lead appellant, M/s. Noor Jewel Impex (hereinafter referred to as "NJI"), is a partnership firm having its Head Office at Chennai and a branch office at Kolkata. The firm is engaged in the business of importing duty-free gold under Advance Authorisations issued by the Directorate General of Foreign Trade (DGFT) for manufacture and export of plain gold jewellery of 21/22 carat as well as studded gold jewellery. Since NJI admittedly did not possess its own manufacturing facility, it carried out the manufacturing activity through supporting manufacturers/job workers whose names were endorsed in the Advance Authorisation, and, according to the appellants, in certain instances, owing to business exigencies and production commitments, certain additional supporting manufacturers/job workers were engaged before their formal inclusion in the licence. 3. The present proceedings relate to Advance Authorisation No. 0410166578 dated 03.03.2020 issued by the DGFT, Chennai, whereby NJI was permitted to import 10,00,000 grams of gold o....
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....repared in the name of supporting manufacturer M/s. Dipika Jana 10,000.000 grams (iii) Diversion of gold by Supporting Manufacturer M/s. Manoj Enterprises to unauthorised job workers 6,999.180 grams (iv) Imported gold allegedly not shown to have been distributed either to Supporting Manufacturers or any authorised job workers 12,000.000 grams (v) Shortage detected during reconciliation between primary gold distributed and jewellery received back from Supporting Manufacturers 10,708.825 grams (vi) Quantity allegedly not received by Supporting Manufacturers namely Sk. Riyajul, Manoj Enterprises and Dipika Jana, based on their statements 42,000.000 grams (vii) Primary gold content allegedly representing non-existing stock of finished jewellery detected during stock verification 19,708.443 grams 6. Based upon the aforesaid allegations, the Revenue alleged that NJI had violated the Actual User condition under the Advance Authorisation Scheme by diverting duty-free imported gold to unauthorised job workers, by utilising non-supporting manufacturers without prior endorsement in the licence, by maintaining incorrect records relating to mov....
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....No. 18/2015-Cus. dated 01.04.2015 as well as the provisions of the Foreign Trade Policy by transferring duty-free imported gold to job workers who were not endorsed as supporting manufacturers at the relevant point of time. While observing that the imported gold had not been sold or otherwise disposed of in the domestic market and that the non-listed job workers had subsequently been regularised by the DGFT, the adjudicating authority nevertheless concluded that the initial transfer itself constituted violation of the statutory conditions attached to the Advance Authorisation. Consequently, the adjudicating authority ordered confiscation of 2,66,619.708 grams of primary gold under Section 111(o) of the Customs Act, 1962 with an option to redeem the same on payment of redemption fine of Rs.50,00,000/-, ordered absolute confiscation of the remaining 1,796.740 grams of gold, confiscated 4,083.900 grams of gold jewellery under Section 113(h) of the Act with redemption fine of Rs.17,00,000/-, confirmed customs duty of Rs.12,48,302/- together with applicable interest in respect of the aforesaid quantity of 1,796.740 grams, imposed penalties upon M/s. Noor Jewel Impex and the remaining no....
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....nt. (v) Regarding absolute confiscation of 1796.740 grams of gold the reconciliation statement at Para 36.1.6 of the O/O clearly shows to the effect that this gold was part of the 769000 grams of gold imported by them on 07.07.2021 against AA Licence No. 0410166578 and after fulfilment of export obligation in respect of 767203.27 grams of gold this amount of 1796.740 grams of gold was left behind against which export obligation could not be completed by that time and because of seizure made by DRI officials on 10.07.2021 such quantity was subjected to absolute confiscation by the Ld. Adjudicator they could not fulfil the export obligation in respect of jewellery which ought to have been made for subsequent export towards fulfilment of export obligation as per the AA. It is mention-worthy that the time limit of export obligation of jewellery ought to have been manufactured out of such quantity of gold was not over. The same would have otherwise normally expired on 03.09.2021 [i.e. 18 months from the date of AA i.e. 03.03.2020] but because of advent of COVID-19 such prescribed time limit also did not apply in their case. In short, they could have exported the gold jewellery ....
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....bservation to the same effect [Page 179 of the Paper Book] in as much as he had accepted the reasoning provided by them against occurrence of such mistake and in fact he has admitted that 'there appears to be no pecuniary benefit to the AA holder and no mala-fide intent as they were neither found to exporting gold jewellery of either less quantity nor inferior quality and the Ld. Adjudicator has also made observation that the noticee after realising the mistake on the night itself during reconciliation would have asked the CHA for revision of the export documents but because of interception by the DRI officers they could not do so. However, surprisingly in the same breath the Ld. Adjudicator has observed that whatever be the circumstances they were found to be exporting a mis-declared consignment of gold jewellery of a quantity of 4083.900 grams more than the declared quantity. (iii) In this very context, it is being asserted by them that they were exporting excess quantity of 4083.900 grams of gold jewellery is not true or correct in as much as they had the intention of getting such mistake rectified through their CHA but could not get the opportunity because of intercept....
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....) and also on the alleged ground of attempted illegal export. The discussions in the preceeding paragraphs make it clear that no such attempt of illegal export to Dubai (from where the gold was imported) was made since there could not be any monetary gain from such export. (E) Penalty of Rs. 10,00,000/- u/s 112(a)(i) of the CA,1962 and penalty of Rs. 5,00,000/- u/s 114(iii) of the said Act were imposed upon Md. Kaiser. (i) Md. Kaiser happens to be brother of Md. Azhar (Partner of M/s. Noor Jewel Impex). Allegations were made that he had approached some job workers engaged in manufacture of gold jewellery out of the gold imported from Dubai and he was instrumental in the scheme of diverting duty free gold into local market as conceptualised by Md. Azhar (Partner of M/s. Noor Jewel Impex), J.N. Shabeer Ahamed (Operation manager of Noor Jewel Impex) and Sk. Pintu (Employee of Noor Jewel Impex). (ii) The entire case of the Department has been based on certain procedural infractions like sending of imported gold to unlisted job workers. But the conclusions are solely based on presumptions and assumptions to the effect that such type of gold jewellery would be ....
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....ct on the above-mentioned respective persons or entities. But actually, no concrete or conclusive evidence could be brought by the Department and no material evidence supporting such charges have been brought by the Department. In fact, penalties have been imposed on the basis of certain assumption and presumption which did not culminate into the actual commission of offence under the Customs Act attracting penalty. 11.1. In light of the above submission, the Ld. Counsel for the appellants prayed that the Order-in-Original No. KOL/CUS/A&A/Pr. Commissioner/ADJN/20/2024 dated 01.07.2024 be set aside in full, granting consequential reliefs to the appellants, and also for releasing the Bond/Bank Guarantee with immediate effect. 12. On the other hand, the Ld. Authorized Representative of the Revenue appearing before us supported the impugned order. 13. Heard the parties and considered their submissions. 14. On going through the arguments advanced by both the sides, we find that the appellants have challenged the impugned order on the following grounds/issues: - (A) Seizure of 266619.708 grams of gold for alleged violation of 'Actual User Condition' as prescribed und....
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....act that the appellants had also applied for necessary addition of these supporting manufacturers in their Advance Authorization and subsequently, the same has also been allowed/permitted by the DGFT. However, since the gold found with these supporting manufacturers were not entered in the Advance Authorization during the material period, the same was seized during the course of investigation by the DRI on 08.07.2021. As it is a fact on record that the above said supporting manufacturers, whose names were not enlisted in the Advance Authorization, were later found to have been entered in the Advance Authorization by the DGFT, in these circumstances, we are of the opinion that not entering the names of these supporting manufacturers in the Advance Authorization before sending the gold to them is only a procedural lapse, which can be cured. It is a fact on record that DGFT had later endorsed these supporting manufacturers also in the Advance Authorization and regularised the same. Therefore, in the facts and circumstances of the case, it cannot be held that the appellants had diverted the said gold to unauthorized entities in violation of the 'Actual User Condition'. Thus, we observe....
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....onsidering the above circumstances, we are of the opinion that no mens rea can be attached to the appellants for such quantity of gold jewellery found in excess. 17.2. Furthermore, in this regard, we observe that in the impugned order, the ld. adjudicating authority has also recorded the following: - "In this regard, I find that the reason provided by the Noticees appears to be plausible because exporting more than the declared quantity would not have benefitted the authorization holder. There appears to be no pecuniary benefit to the AA holder in the current scenario by exporting more than the declared quantity. Moreover, there appears to be no malafide intent as they were neither found to be exporting gold jewellery of either less quantity nor inferior quality thus there was no mensrea to evade government duty; in that case the explanation of Noticees that they had realized the mistake on the night itself during reconciliation and accordingly would have asked the CHA for revision of the export documents but could not do so owing to the interception by DRI seems to be plausible. Considering the prevailing circumstances of the case, it appears to be cogently explained, ....