Custom, Excise & Service Tax Tribunal
Indo Friends Agency vs -Kolkata(Admn Airport) on 25 July, 2023
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.2
Customs Appeal No.75558 of 2021
(On behalf of Appellant)
(Arising out of Order-in-Original No.Kol/Cus/Pr.Commissioner/AP/Admn./07/2021
dated 31.05.2021 passed by Commissioner of Customs (Airport & ACC), Kolkata)
(1) M/s Indo Friends Agency
7C, Kiran Shankar Roy Road, Hastings Chambers, Room No.1G, Kolkata-700001
Appellant
VERSUS
Commissioner of Customs (Airport & Admn.), Kolkata
15/1, Strand Road, Kolkata-700001
Respondent
WITH Customs Appeal No.75607 of 2021 Customs Appeal No.75659 of 2021 (On behalf of Appellant) (Arising out of Order-in-Original No.Kol/Cus/Pr.Commissioner/AP/Admn./07/2021 dated 31.05.2021 passed by Commissioner of Customs (Airport & ACC), Kolkata) (2) M/s Ocean Shipping & Clearing Agency 26, Karl Marx Sarani, 3rd Floor, Room No.9, Kolkata-700023 (3) M/s Brink's India Private Limited D-23, East Rajapur,P.O.-Santoshpur, P.S.-Survey Park, Kolkata-700075 Appellant VERSUS Commissioner of Customs (Airport & Admn.), Kolkata 15/1, Strand Road, Kolkata-700001 Respondent APPERANCE :
Dr.Samir Chakraborty, Sr.Advocate, Dr.S.K.Mahapatra, Shri Sudipta Ghosh & Shri Abhijit Biswas, all Advocates for M/s Indo Friends Agency & M/s Ocean Shipping & Clearing Agency Shri Prakash Sah for M/s Brink's India Private Limited Shri S.Chakraborty, Authorized Representative for the Respondent CORAM:
HON'BLE MR.ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE MR.K.ANPAZHAKAN, MEMBER (TECHNICAL) 2 Customs Appeal Nos.75558,75607,75659/2021 FINAL ORDER NO. 76153-76155/2023 DATE OF HEARING : 19 .06.2023 DATE OF PRONOUNCEMENT : 25.07.2023 Per Ashok Jindal :
All the appeals are arising out of a common order. Therefore, the same are being disposed off by a common order.
2. By way of impugned order, penalty of Rs.40,00,000/- was imposed on the Appellant No.(1), penalty of Rs.25,00,000/- was imposed on the Appellant No.(2) and penalty of Rs.1,00,00,000/- was imposed on the Appellant No.(3).
3. The facts of the case are that one Shree Ganesh Jewellery House (I) L imited (Importer) filed five in-bond Bills of Entry for import of 500 kgs of gold. It was alleged that the importer has filed five in-bond Bills of Entry and cleared 400 kgs of gold on payment of appropriate duty in terms of RBI circulars dated 14.08.2013, which provides a scheme of minimum of 20% of the imported gold was required to be exclusively made available for exports.
3.1 The remaining 100 kgs of gold was allowed to be cleared without payment of duty under Notification No.56/2000-Cus dated 05.05.2000. 500 kgs of imported gold was warehoused on Importer's private bonded warehouse, in which, the Appellant No.(3) has provided a "Bin". The Appellant No.(3) provided service of safe delivery of the gold to the importer and store in the Bin provided by the Appellant No.(3) in the private bonded warehouse of the importer.
3
Customs Appeal Nos.75558,75607,75659/2021 3.2 The Appellant Nos.(1) & (2) are the Customs Brokers. The importer filed Bills of Entry through the Appellant No.(2) in accordance with the prescribed procedure, the jurisdictional Customs Authorities allowed Into-Bond warehousing of the said consignments, whereupon the Appellant No.(2) warehoused the consignments in Customs Bonded Warehouse, on behalf of the importer.
3.3 The importer, thereafter, authorized the Appellant No.(1) licensed Customs Broker to file Ex-Bond of Bills of Entry for clearance of 80 kgs of gold against each of the said consignment. The Appellant No.(1) filed five Ex-bond Bills of entry for clearance of 80 Kgs of gold against 100 kgs of gold imported in each consignment on payment of duty of Customs thereon in terms of RBI Circular No.RBI/2013-14/187 A.P. (DIR Series) No.25 dated August 14, 2013 during the period 05.09.2014 to 01.12.2014.
3.4 The said Ex-Bond Bills of Entry was duly assessed to duty by the proper officer and on the duty so assessed being duty paid clearance thereof, were allowed by the jurisdictional Customs authorities. The Appellant No.(1) took delivery of the said goods authorized to be cleared by it i.e. 400 kgs. out of the 500 kgs imported through five consignments and handed over the same to the importer. 3.5 Thereafter, on 05.09.2019, a show-cause notice was issued to the appellant alleging that the importer was not entitled to benefit of RBI circular and could not have cleared 400 kgs. of gold for home consumption. The 400 kgs of gold was proposed to be confiscated and further it was alleged that non-submission of export documents for 4 Customs Appeal Nos.75558,75607,75659/2021 remaining 100 kgs of gold cleared under Notification No.56/2000-Cus indicates violation of the said Notification and loss of Government revenue. Thus duty was demanded on 100 kgs of gold and the same were proposed to be confiscated and penalties were proposed on the importer as well as the appellants.
3.6 The sole allegation in the show-cause notice was that the importer through its authorized handler i.e. Appellants have deliberately contravened provisions introduced by the Government of India for regulating import of gold into India. Paragraph 2 (b) of RBI Circular dated 14.08.2013 have been deliberately bypassed by the importer and condition laid down in Paragraph 3 of the said Circular has also been violated.
3.7 The matter was adjudicated and penalties on the Appellants were imposed.
3.8 Against the said order, the Appellants are before us.
4. Dr.Samir Chakraborty, Ld.Sr.Advocate appeared on behalf of the Appellant No.(1) & (2) and submitted that after clearance of the imported goods by handing over to the importer, the role of the Appellants comes to an end. He further submitted that the show-cause notice does not disclose the details of any contravention or infraction of the provisions of the Act by the Appellants and being vague thereunder including the impugned order, untenable and unsustainable. To support, he relied on the following case laws :
(i) Commissioner of Central Excise Vs. Brindavan Beverages (P) Ltd. : 2007 (213) ELT 487 (SC) ;5
Customs Appeal Nos.75558,75607,75659/2021
(ii) Delta International Limited Vs. Commissioner of Customs :
2012 (281) ELT 400 (Cal.) ;
(iii) Shilpi Enterprises Vs. Commissioner of Central Excise : 2017 (349) ELT 308 (T).
4.1 He further submitted that the allegation against the Appellants have been invented to arbitrarily, unreasonably and in a perverse manner, penalty has been imposed on the appellant. There is no such allegation against the appellant in the show-cause notice. Therefore, the adjudicating authority has travelled beyond the show-cause notice to impose penalty on the appellant.
4.2 He further submitted that Section 112 (a) of the Act, provides that any person who, in relation to any goods, does or omits to do any act, liable for confiscation under Section 111 of the Act or abets the doing or omission of such an act, shall be liable to penalize. The show- cause notice does not contain any allegation that in relation to the imported consignments cleared by the appellants, there has been any act on its parts or any omission on its part as a consequence thereof the imported goods had become liable to confiscation under Section 111 of the Act.
4.3 He further submitted that there is also no allegation of abatement on the part of the appellants doing or omitting to do such act, which would render the imported goods liable for confiscation. To support, he relied on the following decisions :
(i) Commissioner of Customs (Import) Vs. Trinetra Impex Private Limited : 2020 (372) ELT 332 (Del.) ;6
Customs Appeal Nos.75558,75607,75659/2021
(ii) M.S.Exim Services Vs. CC, Ludhiana : 2021 (377) ELT 615 (T).
5. Shri Prakash Shah, ld.Advocate appeared on behalf of the Appellant No.(3), submitted that the allegation in the show-cause notice is that the importer through its authorized handler i.e. the Appellants have deliberately contravened provisions introduced by the Government of India for regulating import of gold into India. He further submitted that there is no such allegation in the show-cause notice that the appellant rendered the imported gold liable to confiscation. It is his submission that the hearing was completed on 21.12.2020 and thereafter, further investigation was conducted and statements of Shri Atanu Banerjee were recorded on 17.03.2021 and without issuing any corrigendum to the show-cause notice and without granting any hearing post the recording of the statement of Shri Banerjee and without providing the copy of the statement, the ld.Adjudicating Authority, relied upon the statement of Shri Banerjee for imposition of penalty, which is beyond the scope of show-cause notice. He submitted that it is admitted fact that the appellants were allowed to clear 400 kgs of gold on payment of duty and the importer has claimed the benefit of 80:20 Scheme under RBI Circular. The Customs clearance was undertaken by the CHA. The Appellant No.(3) has a limited role of safe custody of gold into Bin provided in the private bonded warehouse of the importer. The gold was admittedly kept in the Bin and was delivered to the importer on its filing ex-bond Bills of Entry and payment of duty of Customs.The Department (Respondent herein) themselves allowed clearance of 400 7 Customs Appeal Nos.75558,75607,75659/2021 kgs of gold for home consumption for payment of duty and it was known to the Department of RBI and CBIC Circular on this issue. Therefore, the appellant was never involved in any manner in clearance of 400 kgs of gold allowed to be cleared on payment of duty by the Department. In any event, the gold was deposited in the private warehouse of the importer and the importer was responsible for clearance of the gold and compliance of Customs Act. 5.1 He further submitted that it was almost after five years after permitting clearance of 400 kgs of gold for home consumption on payment of duty and the Department issued show-cause notice alleging that the importer was not entitled to benefit of 80:20 Scheme as the importer was Premier Trading House and it could not have imported for itself and claim benefit of 80:20 Scheme. It means that there was no illicit removal of 400 kgs of gold, which was allowed for home consumption after proper assessment. Therefore, the gold cannot be liable for confiscation as it was allowed without any condition. It is his contention that there is no record to show that the appellant advised the importer to avail 80:20 Scheme. The appellant could not have as it was not part of its job.
5.2 He further submitted that in any case, the applicability of RBI & CBEC Circular is an interpretational issue and no penalty can be imposed in the facts and circumstances of the case. 5.3 With regard to 100 kgs of gold, it is his submission that admittedly the remaining 20% of the gold was allowed to be cleared by extending the exemption under Notification No.56/2000 against the 8 Customs Appeal Nos.75558,75607,75659/2021 acceptance of Bond and Bank Guarantee. There is no illicit removal. There can be no collusion by the appellant on clearance of 100 kgs of gold by either mis-use of private bonded warehouse facility or otherwise. The show-cause notice demanded the duty on 100 kgs of gold for non-submission of export documents. It is also his submission that failure to fulfill the post import condition, the appellants are responsible for safe custody of the gold. The appellant handed over the gold to the importer as the appellant was only responsible for safe keeping of the gold though the gold was admittedly cleared for home consumption by the Department and that could be only on filing of Ex-bond bill of Entry by the importer. In any case, without delivery of the gold by the appellant, no manufacturing of jewellery for exports could have happened. The submission of bond and BG is evident from the direction of the ld.Commissioner, whereby, he has directed to finalize/execute of bond and Bank Guarantee submitted by the importer undertaking to pay applicable duty.
5.4 He further submitted that there is no evasion of duty at the time of clearance for home consumption and this is no involvement of the appellant to allege evasion of duty. It is his submission that the findings of the Department that the appellant did not give information of warehousing of gold in its private warehouse is ex-facie contrary to the record. The bonded warehouse was of the importer. The appellant had no private bonded warehouse.
5.5 He further submitted that there is no deliberate and conscious attempt to hide facts about initial storage of gold and later 9 Customs Appeal Nos.75558,75607,75659/2021 clandestine/illegal removal of 100 kgs of gold from its vault. Admittedly, five in-bond Bills of Entry were filed for initial storage of gold in the private bonded warehouse of the importer and was later allowed for home consumption against Bond and Bank Guarantee. There was neither clandestine nor illicit removal of 100 kgs of gold. He submitted that the Customs Broker, to whom the delivery of the gold was given by the appellant, was engaged by the importer and the charge of Customs Brokers was paid by the appellant, which were reimbursed by the importer. It is his submission that the appellant did not deal with the gold in any manner, which rendered the gold liable for confiscation. In fact, no alleged act or omission on the part of the appellant could have rendered the 100 kgs gold liable for confiscation as it was allowed to be cleared for home consumption by the Department by extending the exemption.
5.6 He further submitted that the adjudication of the show-cause notice is contrary to Section 28(9) of the Act. Admittedly, the impugned order was passed beyond six months. Section 28 (4) of the Act is not applicable in the facts and circumstances of this case and at best, Section 28(1) can only apply in the facts of the present case as stated in Section 28 (4) of the Act are missing. The adjudication of the show- cause notice not having been completed within six months as provided in Section 28 (9) render the impugned adjudication order ex-facie invalid. Therefore, no penalty is imposable on the appellant.
6. On the other hand, the ld.A.R. for the Revenue, supported the impugned order and submitted that it is fact on record that the importer 10 Customs Appeal Nos.75558,75607,75659/2021 has not discharged their obligation of exporting jewellery against the imported gold and the appellants were involved in the clearance of the said gold. Therefore, penalties on the appellants have rightly been imposed.
7. Heard the parties and considered the submissions from both the sides.
8. We find that the facts are very clear that one Shree Ganesh Jewellery House (I) Private Limited imported five consignments of gold of 100 kgs each and five initial Bills of Entry for Ex-bond warehouse were filed by the importer through Appellant No.(2) and thereafter, Appellant No.(1) filed five Ex-bond Bills of Entry for clearance of 80 kgs of gold each for home consumption on payment of duty. The gold was kept in private bonded warehouse of the importer and the Appellant No.(3) has provided service for safe custody of the gold, which is on record.
9. We find that the gold was imported in terms of RBI Circular dated 14.08.2013. As per the said Circular , 20% of every lot of import of gold imported to the country is exclusively made available for the purpose of exports and balance of domestic use, which means out of total imported gold, 80% can be cleared for home consumption, which were assessed and allowed on payment of duty and 20% of the gold was cleared to the importer in terms of Notification No.56/2000- Customs dated 05 .05.2000 wherein all the demand was exempted with the condition that the importer shall, after processing the said gold, re- export the same. The Appellant No.(1) & (2) filed Ex-bond Bills of Entry 11 Customs Appeal Nos.75558,75607,75659/2021 and for home consumption, after clearing the gold, the job of the Appellant No.(1) & (2) came to an end. They have nothing to do with the gold in question. As they have cleared the gold first to the importer on bonded warehouse and thereafter, cleared for home consumption on payment of duty. These are not in dispute. In these set of facts, there is no role of the Appellant No.(1) & (2) to allege that they have made gold liable for confiscation for non-fulfillment of export obligation by the importer.
10. Therefore, penalties on the Appellant Nos.(1) & (2) cannot be imposed under Section 112 of the Customs Act, 1962.
11. With regard to Appellant No.(3), the duty of the Appellant No.(3) is to safe custody of the imported gold, which is a private bonded warehouse of the importer and while assessing the Bills of Entry for ex- bond warehouse, the goods were allowed to be stored in the Bin provided by the appellant for safe custody of the gold. Thereafter, the Appellant No.(3) has handed over 400 kgs of gold on duty paying documents by Appellant No.(1) i.e. not in dispute.
12. With regard to 100 kgs of gold, clarification has been given on 27.09.2013, which provides clearance of gold to exporters on internal documents of nominated agencies, which is as under :
"Clearance of gold to exporters on internal documents of nominated agencies : Representations have been received from stakeholders regarding difficulties to nominated agencies regarding filing of ex-bond Bill of Entry every time while supplying gold to exporters as provided under Para 4 (x) of the circular. It has been decided to permit the same and allow the Nominated 12 Customs Appeal Nos.75558,75607,75659/2021 Aencies clearance of the goods for export production under the relevant exemption notification under their own internal documents. The nominated agencies would submit a consolidated monthly account in format enclosed of the goods released exporter-wise and the duty involved which will be worked on the basis of effective rate of duty."
13. It is the facts on record that the importer was nominated agency and the same was allowed to the importer for export production under exemption Notification No.56/2000-Customs dated 05.05.2000 under their own internal documents and it was the duty of the importer to submit a consolidated monthly account of the goods released exporter- wise and duly duty involved while will be worked on the basis of effective rate of duty.
14. From the above, it is very much clear that the job of the appellant is mainly safe custody of the gold in question and as per the agreement executed between the importer and the appellant from time to time, the appellant's duty was assigned for storage of duty free gold and silver imported by the importer for export purposes.
15. Therefore, from the above facts, it is very much clear that the appellant cleared the gold to the importer, who provided Bin warehouse to the importer for further processing to export of the same. The allegation in the show-cause notice is that as the importer could not fulfill the export obligation, therefore, the appellant was responsible for diversion of the said gold into domestic market. There is no evidence 13 Customs Appeal Nos.75558,75607,75659/2021 available on record that how the appellant was involved in diversion of gold by the importer.
16. In that circumstances, we hold that the appellant being a duty assigned to keep safe custody of duty free gold in their Bin, cannot be held liable for diversion of gold by the importer in domestic market and for non-fulfilment of export obligation. Therefore, we hold that the penalty on the Appellant No.(3) is also not imposable.
17. In view of the above discussions, we set aside the impugned order quo imposing penalties on the appellants before us by allowing the appeals.
(Pronounced in the open court on 25.07.2023) Sd/ (Ashok Jindal) Member (Judicial) Sd/ (K.Anpazhakan) mm Member (Technical)