Custom, Excise & Service Tax Tribunal
Its My Name Pvt Ltd vs New Delhi(Air Cargo Export) on 13 November, 2019
1
Customs Miscellaneous application No. 51052 of 2019
(by the appellant)
and Customs Appeal No. 52593 of 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO. II
Customs Miscellaneous application No. 51052 of 2019 (by the
appellant) and Customs Appeal No. 52593 of 2019
(Arising out of order-in-original F. No. DRI Hqrs./24-B/Adjn./33-2019 dated
04.10.2019 passed by the Additional Director General (Adjn.) , DRI, New Delhi).
Its My Name Private Limited Appellant
th
C-1, 2, 3, 10 Floor, PP Tower
Netaji subhash Place, Pitampura
New Delhi.
VERSUS
Additional Director General (Adjudication) Respondent
Directorate of Revenue Room No. 214, New Custom House Near IGI Airport, New Delhi.
APPEARANCE:
Shri Akshay Anand, Shri Abhishek Malhotra & Ms. Ragini, Advocates for the appellant Shri Sunil Kumar, Authorised Representative for the respondent CORAM:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. C. L. MAHAR, MEMBER (TECHNICAL) FINAL ORDER NO. 51470/2019 DATE OF HEARING: 28.10.2019 DATE OF DECISON: 13.11.2019 ANIL CHOUDHARY:
This appeal is filed by the appellant against order dated 04.10.2019 rejecting the prayer for provisional release, by the learned Additional Director General (Adjudication).2
Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019
2. The brief facts are that the appellant is a manufacturer, exporter (MSME), a three star export house, operating under:
i) Advance Authorisation Scheme and
ii) Exhibition Export Scheme of FTP
3. The appellant have earned approximately 140 millions USD foreign exchange. Also possesses importer-exporter code. Under the Advance Authorisation Scheme, appellant is entitled to import upto 1,000 Kg. of gold. The appellant keeps proper records of its business transactions, which are subject to audit under various tax laws.
4. Advance Authorisation Scheme:
Under the Advance Authorisation Scheme, in terms of para 4.37 of FTP, Handbook of Procedure, 2015-20, read with Customs Notification No. 18/2015 dated 01.04.2015, appellant imports gold, wherein the gold bar(s) have unique identification Nos., which are mentioned in the packing list filed with the Bill of Entry. Out of last import of 50 Kgs. vide Bill of Entry No. 2873828 dated 17.04.2019, stock of 31.1 kg. have been detained by DRI, from the registered workshop cum business premises on 25.04.2019. the details of seizure are-
25,000 gms Gold bars (25 Nos.)
26,404 gms W.I.P. (gold bar pieces, gold dust, assorted
gold jewellery)
5. Out of above, it is urged that gold bars weighing 22 kg. (22 nos.) tallies with packing list forming part of bill of entry No. 2873828. Part 3 Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 of gold under the said bill of entry was used in manufacture of ornaments which were exported vide Export Invoice No. ITS/EXP/04 dated 20.04.2019.
It is further urged by appellant that due to continuous detention/ seizure of gold stock in trade, appellant could not complete their export obligation by the stipulated date 15.08.2019 (as required under the Scheme).
6. Under Exhibition Export Scheme:
Export of jewellery (from duty paid gold) under Exhibition Export Scheme is provided under para 4.80 of FTP read with Handbook of Procedures and Custom Notification No. 45/2017. After manufacture, prior approval of Gems & Jewellery Export Promotion Council is mandated, for participation in the Exhibition abroad. Manufactured jewellery is taken by preparing invoice, shipping bill is filed, jewellery is inspected by customs, photographs of jewellery is maintained under seal of customs. Re-import is permissible duty free, within 60 days of close of exhibition. Customs before permitting re-import of the exported jewellery for export verify the relevant particulars, including tallying with the photos with the details given in the export documents.
7. As clarified by CBIC vide Circular Nos. 21/2019-Cus. And 108/27/2019-GST dated 18.07.2019, the reimport of unsold jewellery is subject to Nil rate of customs duty. The details of the gold jewellery exported for Exhibition in recent past are as follows:
S.B. No. date Inv. No. date Gms. FoB value USD
117209 ITS/EXH/028 33,805.770 14,30,895.22
20.02.19
4
Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 20.2.19 117932 ITS/EXH/031 25,299.680 10,44,601.36 13.3.19 13.03.19 As per the investigations, the unsold quantity being re-imported, by Employee -Manager Amit Pal Singh, at IGI Airport against the exported quantities of jewellery as mentioned in the table above are as given below:
Gms. Date of Import Bill of Entry Status
25,400.060 24.4.19 Registered in advance
25,299.680 24.4.19 unregistered
8. Mr. Amit Pal Singh filed proper re-import declarations/ Bills of entry (at red channel) and post inspection and after proper assessment, inspection and verification by proper officer of customs (jewellery export appraiser), was given gate pass (out of charge). After crossing the customs post (red channel), the DRI intercepted Mr. A.P. Singh and seized all the gold jewellery, on the allegation of some procedural lapse. All the supporting documents such as assessed Bills of entry, packing list, export documents, photographs with gate-pass, relating to jewellery seized were available with Mr. A.P. Singh.
9. The appellant, pursuant to seizure on 24/25 April, 2019, applied to the Director General, DRI for release of detained goods on 08.05.2019. Again by application dated 31.07.2019 applied for provisional release, explaining in detail the source and licit possession. As the detained/ seized jewellery and bars etc. were not released, appellant moved before Hon‟ble Delhi High Court in W.P.(C) 5 Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 8707/2019. By order dated 09.08.2019 the Hon‟ble High Court directed the respondent authority to decide the representation dated 31.07.2019 for provisional release, within a period of four weeks. As the issue remained pending, the Hon‟ble High Court in Cont. case (C) 875/2019, by order dated 24.09.2019, directed the respondent authority to decide the issue of provisional release within further two weeks.
10. Thereafter the appellant on 30.09.2019 received notice for personal hearing in provisional release matter. On the same date they were also served with a show cause notice dated 26.09.2019 requiring to show cause, as to why not the seized jewellery, gold bars, etc. be not confiscated under Section 111(d),(j), (l) and (o) of the Customs Act.
11. That personal hearings were held in provisional release matter on the next day, i.e. 01.09.2019, followed by written submission on 03.10.2019.
12. That the learned respondent ADG (Adj) after reproducing the allegation in show cause notice have rejected the prayer for provisional release, with the following observations-
"7. The case of DRI laid out in show cause notice and detailed submissions by M/s Its My Name Pvt. Ltd., in support of their Provisional Release Application have been considered and it is stated as follows:
7.1 Sec.2(33) of the Customs Act, 1962, defines the "prohibited goods" as any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in 6 Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with.
73. The Hon'ble Madras High Court in its order in the case of Malabar diamond Gallery Pvt. Ltd. vs. Additional Director General, DRI, Chennai & Ors. Has stated as follows:
14. A careful look at Section 2(33) would show that even prohibited goods could be permitted to be imported or exported subject to some terms and conditions. The moment those conditions are complied with, those goods would cease to be prohibited goods. This is why the exclusion clause contained in the second part of Section 2(33) uses the expression "any such goods". Therefore, it appears that the Customs Act recognizes only two types of goods namely: (1) those that are prohibited; and (2) those that are not prohibited. The Act also recognizes the fact that even prohibited goods could be imported or exported subject to certain conditions. If those conditions are fulfilled, prohibited goods would automatically become non-prohibited goods.
86. If there is a fraudulent evasion of the restrictions imposed, under the Customs Act, 1962 or any other law for the time being in force, then import of gold, in contravention of the above, is prohibited.
7.3 In view of above mentioned citations on restricted and prohibited goods, it appears that it would be premature to arrive at any conclusion, about provisional release of seized goods, before completion of adjudication proceedings.
8. Accordingly, the application by M/s Its My Name Pvt. Ltd.
for provisional release of the seized goods is disallowed".
13. The learned Counsel for the appellant, assailing the impugned order urges that the impugned order is in violation of the provisions of Section 110A of the Customs Act, which provides that pending adjudication, the goods, documents, etc. be released to the owner on taking a bond from him with such security and conditions, as the adjudicating authority may require. The refusal to even consider provisional release before adjudication is arbitrary, without application 7 Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 of mind and at the same time in violation of the directive/ order(s) of Hon‟ble High Court of Delhi. Further the order is cryptic and non- speaking.
14. It is further urged that the seized goods have been prima facie explained, as regards its licit possession. The appellant is a manufacturer & exporter of jewellery, possessing proper licence and authorisation, etc.
15. It is further urged that „gold‟ is not a prohibited goods. Appellant had observed the stipulated procedures under the FTP, Handbook of Procedures, Notifications, etc. At best, the allegations of Revenue in the show cause notice, are for non-compliance of procedural aspect with respect to re-imported gold jewellery immaculately, which was taken out under Exhibition Scheme (in case of unregistered bill of entry). In respect to other seizures, the same is based on assumptions and presumptions only.
16. It is further urged that the show cause notice has been issued after about five months of detention/ seizure, and does not anywhere propose „Absolute confiscation‟ for good seized at the factory. Thus the goods are not prohibited, as per revenue also.
17. It is further urged that the Manager of appellant Mr. A. P. Singh produced various documents at the time of clearance at IGI airport before the Customs Officer on 24.04.2019 like -
i) Export invoice;
ii) Export-Exhibition shipping bill;
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Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019
iii) Export Declaration forms;
iv) Customs endorsed color photocopy of jewellery;
v) List of unsold items with value;
vii) Bill (s) of Entry
18. The Customs Officer, on being satisfied, had assessed the re- import for the Bills of entry for the jewellery and issued the „Gate- pass‟. None of the documents have been found fake or forged in the investigation. The only condition in clause (d) under Notification No. 45/2017 is that the goods need to be the same which were exported. The learned Advocate has contested that the assessing officer has issued necessary gate pass and assessed Bills of entry (which is a legal document) only after proper verification that the imported jewellery was same which have been exported.
19. Further urged that advance registration of bill of entry for re- import is not required as per para 3 of SOP dated 18.12.2018, which stipulates that the bill of entry has to be registered „preferably in Advance‟.
20. It has further been submitted that the imported seized jewellery have licitly been re-import after conclusion of jewellery exhibition abroad. There is not an iota of doubt or evidence to allege that the re- imported gold jewellery is not the same which have exported vide shipping bills dated 20.02.2017 and 13.3.2019. The learned Advocate has thus contested that seizure of India made gold jewellery, which was exported abroad for exhibition and being re-imported, is legally 9 Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 not tenable and therefore by no stretch of imagination same can be termed as „prohibited goods‟ and need to be released forthwith.
21. Further, urged that, so far gold bars and jewellery seized at the factory premises at Pitampura is concerned, the said premises is a bonded (with customs) premises. Thus, the gold & jewellery is to be properly accounted for, as regards receipt, usage, wastage, finished goods and export. There is no case of mismatch or discrepancy made out by Revenue. Out of 25 gold bars (1 kg. each), found at factory, I.D. No. of 22 bars matched with the import documents, 3 bars were purchased in DTA from „Shiv Shakti Overseas‟, under proper invoice. It is a common trade practice, when gold bars are resold in DTA, the I.D. nos. are defaced by sellor.
22. It is further urged that reliance by revenue on the ruling of Madras High Court in Malabar Diamond Gallery (P) Ltd. vs. A.G. & Ors. (infra) is misplaced. The facts are entirely different. Malabar D.G. case was one of outright smuggling of gold jewellery of Singapore origin, without filing any declaration and/or payment of applicable customs duty.
23. The learned Counsel have relied on the following rulings-
i) M. D. Overseas Ltd., vs. Union of India -2017 (355) ELT 185 (Del.)
ii) Mink Tradecom Pvt. Ltd. vs. Union of India -2018 (8) GSTL 129 (Del.) 10 Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019
iii) Union of India vs. Imtiaz Iqbal Pothiawala -2019 (365) ELT 167 (Bom)
iv) Horizon Ferro Alloys Pvt. Ltd. vs. Union of India -2016 (340) ELT 27 (P&H)
v) Worldline Tradex Pvt. Ltd. vs. Commissioner of Customs (Import) -2016 (340) ELT 174 (Del.) The learned Counsel prayed for release of the detained/seized goods on appropriate terms and conditions.
24. The learned Authorised Representative for the revenue relies on the impugned order. He also refers to the Show cause notice dated 26.09.2019 extensively. Further urges that appellant have erred in not pre registering (in advance) the other bill of Entry, thus failed to observe the procedure. He further relies on the following rulings-
(i) Malabar Diamond Gallery (P) Ltd. Vs. Addl. Dir. Gen., DRI 2016 (341)ELT 65 (Mad).
(ii) Jagdev Damodaran vs. D. C. Customs -2017 (352) ELT 5 (KER).
25. Having considered the rival contentions and perusal of the records, we find that there is no cogent reason given for refusal to release the goods provisionally. Rather the impugned order is non- speaking and cryptic. This is clearly a case of non exercise of discretion vested in him fairly, by the Revenue Authority, rendering the provision of Sec.110A of the Act, practically otiose.
26. We find that gold jewellery which have been seized at IGI Airport by Directorate of Revenue Intelligence, totaling weighing of 50699.74 gms. Is covered by two bill of entries: bill of entry No. 107190 dated 26 February 11 Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 2019 giving a job No. 109524 dated 26 February 2019 which covers a quantity of 25.4000 kg. of gold jewellery, same has been assessed by the Assessing Officer on 24 April 2019. There is another bill of entry which is without any bill of entry registration number and without any job number, however, same has also been assessed as per the learned Advocate for the appellant on 24 April 2019. This bill of entry also covers a gold jewellery weighing 25.209 kg. Thus, we find that importing person Shri Amit Pal Singh has presented the gold jewellery which was being imported on 24 April, 2019 to the Assessing Officer and has claimed that the gold jewellery is „India made‟ which is being re-imported after same had been exported for exhibition purpose vide shipping bill No. 117209 dated 20 April 2019 covering quantity of 33.805 kgs. and vide shipping bill No. 117932 dated 13 March 2019 under which jewellery weighing 25.299 kg. was exported. It is a matter of record that at the time of the re-import of balance quantities of the jewellery, the Assessing Officer was presented with necessary documents, such as, shipping bill alongwith invoices, permission for taking goods for exhibition, export declaration form of the appellant, custom endorsed colour photographs of jewellery, the bill of entries for re-import alongwith packing list covering details of jewellery items of import alongwith the photocopies of the jewellery. We find that authenticity of the goods being re-imported being same as had been exported by two shipping bills as mentioned above, has not been doubted by the Department. We find that the Department has not adduced any evidence to contradict the fact that the same jewellery has been imported by the appellant which had been exported for exhibition purpose. At this juncture, we are only examining whether the import of the subject seized gold jewellery was in violation of any of the provision of Customs Act, 1962 and Import-Export Policy of 2015-2020 or whether it was a legitimate re- import of exported goods. We find that the Assessing Officer after scrutiny of 12 Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 all the relevant documents and on satisfaction has allowed the clearance of re-imported gold jewellery and had endorsed that the imported gold jewellery was same which had been exported under the two shipping bills (as mentioned in preceding paras). We find that the Department has not adduced any evidence to establish that the re-imported gold jewellery is not which have been exported by the appellant for exhibition purpose. We also find that there might have been certain violations in following the procedure for proper importation of these goods, however, same will also not make the „Indian made‟ gold jewellery as prohibited goods as per the provision of Customs Act, 1962 read with the provisions of the Import-Export Policy 2015-2020.
27. It is also matter of record that documents as required for re-import of the exported goods as provided under Notification No. 45/2017 dated 30 June 2017, read with the clarification No. 21/2019 dated 24 April 2019 is that the goods should be same as has been exported for the exhibition purpose and in the present case it is not mentioned by the Department that re-imported goods are not the same which have been exported vide above-mentioned two shipping bills for the exhibition purpose. As per Section 2 (33) of the Customs Act 1962, the prohibited goods have been defined as follows :
"Prohibited goods mean any goods the import or export of which is subject to prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with".
When we analyse the seizure of „India made‟ gold jewellery at the IGI Airport in the light of above defition, we find that the gold jewellery was being re-imported after export of the same for exhibition purpose following the laid down procedure and standard operating procedure, barring a few minor lapses, and therefore the consignment of re- imported jewellery cannot be equated with import of prohibited goods. 13
Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 Thus, we find that the appellant has a strong case for provisional release of re-imported jewellery as per the provisions of Section 110A of Customs Act, 1962.
28. So far as the seizure of 25 gold bars (one kg. each) totaling weighing 25 kg. and cut pieces of gold bars, gold dust and assorted gold jewellery weighing 26404 gms. and certain silver bars and cut pieces weighing 44908 gms. is concerned, it has been shown to us by learned Advocate that out of the 25 gold bars weighing 1 kg. each is concerned, 22 gold bars have been imported by the appellant under Advance Authorization Scheme vide bill of entry No. 2873828 dated 17 April 2019. The bill of entry for import have been assessed at the nil rate of duty under Advance Authorization No. 0510409190 dated 4 January 2019 for import of gold bar having purity of 0.995. It‟s a matter of record that 50 gold bars had been imported by the appellant under bill of entry No. 2873288 dated 17 April 2019 which are having specific and unique bar number. On verification of the unique bar number of the seized gold bars with the gold bars imported vide above- mentioned bill of entry having packing list dated 15 April 2019 for the invoice H-3470, we find that 22 gold bars weighing 1 kg. each totaling weighing 22 kg., absolutely tallies with the gold bar numbers which was imported under the bill of entry No. 2873288. It is also a matter of record that the main „Karigar‟ of the appellant who was supervising manufacturing of gold jewellery has categorically mentioned that from the imported gold bars he has made jewellery of 7 kg. and certain other jewellery and certain quantities were „work-under progress‟ in the form of gold, dust and other pieces of jewellery at different stages of manufacturing. We also find that the appellant have also made certain purchases of the gold from the local market and for which he has necessary purchase invoices and this gold has also been used 14 Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 for manufacture of gold jewellery. We find that the seizure made by the Investigating Agency at the factory premises of the appellant does not explain in detail as to why the goods have been seized when the appellant have been working in the bonded premises and he has all the documents for legal possession of primary gold bars as well as gold jewellery. Prima facie, we do not find any ground to hold that the seized/ detained goods fall under the category of prohibited goods as the appellant prima facie has all the legal documents for rightful possession of the same.
29. The ruling of Madras H.C. in Malabar Diamond Gallery (Supra) is not applicable, the facts being entirely different, that being a case of non-declared gold jewellary of Singapore origin, amounting to smuggling. Such facts are not obtaining in this appeal, as the appellant duly declared the goods under re-import at the Customs post (Red Channel). After examination, was issued Gate-Pass. The ruling in the case of Jagdev Damodaran (Supra) is also not applicable, as in that case the passenger, NRI brought a „Drone‟ (Restricted item), for which license was required.
30. We also find that under the facts and circumstances, the appellant is an established business concern registered with the Customs dept, DGFT, Income Tax, GST, etc. Due to seizure of almost the whole working capital (Goods, raw material, W.I.P.), for over 6 months, the appellant is facing difficulty of livelihood, it‟s workmen, and others too. The appellant is also incurring regular fixed cost or establishment cost, unable to fulfill its time-bound export obligation, resulting in irreparable loss and civil consequences. The balance of 15 Customs Miscellaneous application No. 51052 of 2019 (by the appellant) and Customs Appeal No. 52593 of 2019 convenience lies in allowing provisional release in favour of the appellant. We thus allow provisional release on the following terms:-
(i) Bond for full value of the seized goods
(ii) The bond be backed by Bank Guarantee of Rs. 1.25 crores,
with auto renewal clause in favor of the revenue authority.
31. Subject to fulfilment of the stipulated conditions, the revenue Authority is directed to release the detained/seized goods forthwith, or within four working days of the appellant fulfilling the stipulated two conditions.
32. Thus, the appeal is allowed. The impugned order rejecting provisional release is set aside. The order be provided "Dasti" to the appellant. Misc. Application No. 51052/2019 also stands disposed off.
(Pronounced on 13.11.2019) (Anil Choudhary) Member (Judicial) (C. L. Mahar) Member (Technical) Pant