Custom, Excise & Service Tax Tribunal
Vasavi Gold And Bullion Pvt Ltd vs Commissioner Of Customs-Cc Air Cargo Ch ... on 16 January, 2026
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
Customs Appeal No.40426 of 2021
(Arising out of Order in Original No.915/2015-AIR dated 28.11.2015 passed by the
Principal Commissioner of Customs, Chennai)
Vasavi Gold and Bullion Pvt. Ltd. Appellant
No. 137, NSC Bose Road
Chennai - 600 079.
Vs.
Commissioner of Customs Respondent
Chennai VII Commissionerate Airport & Air Cargo Complex, New Customs House, Meenambakkam Chennai - 600 027.
APPEARANCE:
Shri B. Satish Sundar, Advocate for the Appellant Shri Anoop Singh, Authorised Representative for the Respondent CORAM Hon'ble Shri M. Ajit Kumar, Member (Technical) Hon'ble Shri Ajayan T.V., Member (Judicial) FINAL ORDER NO. 40097/2026 Date of Hearing :24.07.2025 Date of Decision: 16.01.2026 Per M. Ajit Kumar, This appeal is filed by the appellant against Order in Original No.915/2015-AIR dated 28.11.2015 passed by the Principal Commissioner of Customs, Chennai (impugned order).
2. The brief facts of the case are that the appellant, an IEC holder engaged in importing gold jewellery from Thailand, was subject to investigation by the Directorate of Revenue Intelligence (DRI) regarding its import activities. The DRI alleged that the appellant evaded customs duty through the misuse of exemption benefits under Notification No. 85/2004-Cus dated 31.08.2004, read with Notification 2 No. 01/2004-Cus (NT) dated 31.08.2004, across 48 bills of entry. Pursuant to a search of the business premises, the DRI discovered 15,245.800 grams of gold jewellery valued at Rs. 4,38,01,183/-, reportedly imported under the aforementioned exemption notifications. Following due legal process, the learned Adjudicating Authority denied the exemption benefits and demanded the payment of differential duty amounting to Rs. 19,03,19,798/- on goods cleared under the said bills of entry. Penalties were imposed pursuant to Sections 114AA and 112(a) of the Customs Act, 1962. Additionally, a penalty of Rs. 95,00,000/- was levied on Director Shri P. Seetharaman under Section 114AA of the Customs Act. The present appeal has arisen as a result of these proceedings.
3. The Ld. Counsel Shri B. Satish Sundar appeared for the appellant and Shri Anoop Singh, Ld. Authorized Representative appeared for the respondent.
3.1 Shri B. Satish Sundar the Ld. Counsel for the appellant submitted the following time chart of dates and events.
DATES EVENTS April 2011 to Appellant entity imported gold jewellery from October 2012 Thailand in 48 consignments availing benefit of
notification no.85/2044-Cus dated 31.08.2004 r/w notification no. 101/2004-Cus(NT) dated 31.08.2004 12.10.2012 The business premises of the appellant is searched DRI, Chennai Zonal Unit resulting in seizure of 15,245.800 grams of jewellery valued at Rs.4,38,01,183/-
15.10.2012 Statement is recorded under section 108 of the Customs Act, 1962 from P. Seetharam, the then director of the appellant entity. He states that there may be value addition of 4-5% as mentioned in the invoice and further addition may be in the form of making charges and 22% of the jewellery is required to be manufactured in Thailand and the rest procured from other sources from the supplier. 3 He also tenders copy of the write up dated 08.10.2012 along with a flow chart demonstrating the "Gold Jewellery Work Process" of MTS Gold issued by one of the suppliers, M/s. MTS Gold Company Ltd., Bangkok. He produces an email response of the said supplier.
20.11.2012 The appellant files a writ petition seeking for provisional release of the seized gold 05.12.2012 Show Cause Notice is issued by the office of the DRI, Chennai denying benefit of notification and making demand of differential duty to the tune of 19.03 Crores under section 28(4) / proviso to section 28(1) of the Customs Act, 1962 with interest n terms of section 28AA and 28AB. The Show Cause Notice also proposes confiscation of the seized goods in 111(m) and 111(o) as also goods imported and cleared under 47 Bills of Entry. The Show Cause Notice proposes that seized gold jewellery should be impounded as per rule 15 of Annexure B (Operational Certification Procedures for Interim rules of origin--- for early harvest scheme) of interim origin rules besides penalty under 112(a), 114A and 114AA. There was a proposal for a separate penalty against the director. 06.12.2012 The writ petition was disposed of by the Hon'ble High Court directing the office of the respondent to take a call on the application for provisional release. February, 2013 The appellant files a writ petition challenging the Show Cause Notice. The writ was admitted and stay granted. Subsequently, the writ petitions were disposed of with direction to participate in the adjudication to be conducted by the respondent. Further writ petitions to forbear the respondents from passing any orders in adjudication pending verification of the Certificates of Origins (COO) also disposed of.
25.01.2014 Reply to Show Cause Notice furnished 28.01.2014 Personal hearing held before the respondent (Page
95). Written submissions also filed on the same day on behalf of the appellant and others.
15.05.2014 The appellant furnishes bank guarantee to the tune of Rs.1,44,32,586/- and secures release of the seized goods and bond for Rs.4,38,01,183/-
18.11.2015 Further proceedings in adjudication is conducted by the respondent on change of adjudicating 4 authority. On the same day written submissions are filed.
28.11.2015 Order-in-Original passed by the respondent confirming the allegations and proposals in the Show Cause Notice.
February, 2016 Writ petition in W.P No.3418 of 2016 filed before the Hon'ble High Court, Madras assailing the aforesaid Order-in-Original 15.04.2021 The Hon'ble High Court, Madras disposes of the writ petitions giving leave to prefer a statutory appeal within 60 days from the date of receipt of the order and if so, the statutory appellate authority is directed to entertain the appeals without reference to period of limitation and on merits.
02.07.2021 The certified copy of the aforesaid order is obtained 07.07.2021 Appeal instituted before this Hon'ble Tribunal and numbered as C/40426/2021 23.10.2024 This Hon'ble Tribunal allows the early hearing application filed by the respondent department. The Ld. Counsel stated that;
A. The demand and its confirmation made under the SCN and OIO is premature as admittedly the Certificates Of Origin (COO) issued by the statutory authority had been questioned and a reference made to the designated authority of Kingdom of Thailand through Director General, DRI.
B. The proper officer of customs at the Aircargo Complex had verified all the import documents including the COO, which had not been questioned at the time of import. The 'Interim Rules of Origin' for preferential tariff concessions for trade between India and Thailand in terms of notification no. 101/2004-CUS(NT) is a complete code in itself an provides for a machinery to operationalise the origin of products eligible for preferential tariff concessions for early harvest scheme pursuant to framework agreement between the two countries. 5 Therefore, unless the respondent department is able to produce materials to discredit the COO, with respect to each consignment, the COO stands and benefit of notification extended cannot be said to be improper or not legal.
C. If a statute prescribes a particular manner of doing a thing it has to be done in that manner and by no other. The Rules of Interim Origin are statutory and the respondent cannot take recourse to any other manner to belittle the Certificate of origin and cannot be heard to contend otherwise. Reliance was placed on the following judgments:-
1. (1970) 2 SCC 355 - L. Hirday Narayan Vs ITO
2. (1980) 1 SCC 326 - State of Bihar Vs JAC Saldana
3. (1988) 3 SCC 26 - DN Taneja Vs Bhajan Lal D. When exemption is claimed on the basis of a certificate and such certificate is not been cancelled or revoked or modified, grant of exemption on the basis of such certificate cannot be side stepped or doubted.
4. 2007 (209) ELT 165 - CTO Udaipur Vs Rajasthan Tax Chem
5. 2008 (229) ELT 521 - Madurai Power Corp Vs DCEX Madurai E. When no steps are taken to initiate proceedings under the Interim Rules of Origin within the time limits specified for such retroactive check, the Customs authorities will not be justified to turnaround and contend that the Certificate of Origin produced at the time of the import is invalid.
6. 2015 (317) ELT 482 (Tri-Chen) -Commissioner of Customs Vs Sterilite Industries
7. 2016 (331) ELT 424 (AP) - Mahadev Metaliks Pvt Ltd Vs UOI 6
8. Final Order No.41308-41310 of 2024 dated 21.10.2024 in the case of Hyundai Motors Ltd Vs Commissioner of Customs (Para 8) F. It is submitted that the order in original specifically refers and relies on two materials namely international price of gold at para 3.55 and 3.56 to aver that price of gold mentioned in concerned invoices were almost the same of the price prevailing in the global market and LVAC done were by way of making charges which average 4-5% and not 22% as shown in COO. The order also refers to similar case of imports decided by the Commissioner of Customs CSIA Mumbai made in Order No.08/2014-15 dated 31.12.2014 at para 3.10.2. These materials surfaced for the first time in the impugned order and has not been put to the noticee/appellant in the Show Cause Notice and therefore the findings or atleast a part thereof are outside the scope of Show Cause Notice and hence violative of natural justice.
G. Major part of the demand is hit by limitation as extended period cannot be invoked in absence of any material to show collusion between the appellant and its supplier in obtaining the COO whose validity remains unimpeached and material to show wilful misstatement, suppression etc. H. Once demand cannot be sustained under the aforesaid provision, penalty under section 114A is not sustainable.
9. 2008 (225) ELT 3 (SC) - Commissioner of Customs, Mum Vs MMk Jewellers
10. Final Order No.70038 of 2024 dated 30.01.2024
11. 2024 (25) Centax 39 (Guj) - GAIL Vs UOI I. In any event penalty in terms of section 114AA cannot be imposed as no material has been brought on record to show use of any 7 false or forged documents in the clearances of the goods. The COO which has been produced was accepted at assessment and cannot be stated to be false or fabricated. In any event, sec.114AA can only be invoked in the case of fake exports and cannot be applied to importations which has been so held by this Tribunal in the case of Commissioner of Customs Vs Sri Krishna Lighting reported in 2019 (370) ELT 594 (Tri Mad) and Final Order No.58758 dated 01.10.2024 in the case AV Global Corporation Ltd Vs Commissioner of Customs, New Delhi.
J. The issue of DRI officers being 'proper officers' in terms of sections 17 and 28 of the CA, 1962, though raised in the appeal memorandum was not pressed at the bar, in the light of the subsequent judgment of the Hon'ble Supreme Court in the case of COMMISSIONER OF CUSTOMS Vs M/S CANON INDIA PVT. LTD., [REVIEW PETITION NO. 400 OF 2021 IN CIVIL APPEAL NO. 1827 OF 2018, Dated: 07.11. 2024].
For the cited reasons the Ld. Counsel stated that the impugned order is unsustainable in law and on facts and may be set aside with consequential reliefs.
3.1 Shri Anoop Singh, Ld. Authorized Representative submitted as follows:
A. The key issue to be decided is whether the gold jewellery imported from Thailand were eligible for exemption benefit in terms of Notification No. 85/2004-Cus dated 31.08.2004 read with Notification No. 101/2004-Cus dated 31.08.2004 and whether Conditions stipulated in said Notifications are fulfilled or otherwise. As per the five Judge Bench judgment of the Supreme Court in Commissioner of 8 Customs (Import), Mumbai Vs Dilip Kumar and Co. [2018 (7) TMI 1826 - Supreme Court (LB)], the burden of proving applicability of the exemption notification would be on the assessee. Moreso because the importation of gold into India is highly regulated and hence the proof must be strictly discharged. This is reflected in the fact that Section 123 of the CA, 1962 reverses the standard burden of proof in the case of gold, requiring the person possessing the gold to prove its licit import, failing which the goods are to be treated as prohibited goods under Section 2(33) of the CA, 1962. Secondly when the department adduces sufficient evidence, either direct or circumstantial, in respect of its contention, the onus of proof shift to the importer and adverse inference could be drawn against the importer if he failed to put before the Department material which was in his exclusive possession.
B. The letter dated 30.01.2013 from the Royal Thai Consulate General at Chennai, produced by the appellant, certifying the authenticity of the COO certificate appears irregular and not with proper authority as it is highly unusual for a Consulate to entertain and certify such a document, for which they are not the authorised channel and even more so to advice the Indian Customs on how the verification of the Certificate should be done.
C. The goods are exempt subject to the condition that the importer proves to the satisfaction of the proper officer that the goods are of Thailand Origin in accordance with the provisions of Rules of Origin in terms of Notification No. 101/2004 dated 31.08.2004. D. The imported goods do not meet the origin criteria of Local Value addition of not less than 20%. LVAC in COO has been shown as 22%. However, investigation concludes that the same is not correct and 9 relies upon invoices, statements and other documents for the same. The value addition is only 4-5% and same has been admitted by importer also. As per the judgment of the Gujarat High Court in. Trafigura India Private Limited Vs Union Of India [2023 [2023- TIOL-737-HC-AHM-CUS], where the details for arriving at RVC was misleading and there was suppression of due and correct facts, the importer became disentitled to the concessional rate of duty and preferential treatment under the notification and become liable to pay basic customs duty on the goods imported. The judgment has been cited with approval by the Bombay High Court recently in Purple Products Private Limited Vs UOI [WRIT PETITION NO. 2831 OF 2018, Dated: 13.06.2025] E. The theory of usage of scrap gold is a cooked-up story as stated at Para 4 of Show Cause Notice. The information available at the home page of M/s AA22 Gold shows that the value addition on gold jewellery is only 4% at international gold prices. The statement given by Shri P. Seetharaman Director of M/s Vasavi, Director also states that the value addition is only 4 to 5% as mentioned in the invoices and this addition is in the form of making charges and no other charges are added. F. Contradictions in submission about the Directors travels to Thailand and deletion of all emails, drafts and addresses from email ID on or before 13.10.2012 and also from his Mobile Phone are part of case records.
G. No retraction has been filed till date. Issue of denial of cross examination has been discussed at Para 3.8 of the OIO. The Ld. AR also referred to this Tribunals Order in Malaram Bishnoi Vs Commissioner of Customs [2024 (11) TMI 1354 - CESTAT CHENNAI 10 / FINAL ORDER NO. 41505/2024, Dated: 27.11.2024], in support of revenues stand.
H. Section 123 of Customs Act has also been invoked in SCN. Where any goods to which section 123 applies are seized on a reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on owner.
I. The department is left with no option but to issue the SCN and decide the matter within time limits if the details sought for from the overseas administration is not forth coming. The Ld. A. R. Hence prayed that the impugned order may be upheld.
4. We have heard the rival parties are perused the related documents.
5. The issue pertains to the import of gold jewellery from Thailand as per the procedure under notification 101/2004-Cus(N.T.), dated 31.08.2004, which provides for the 'Interim Rules of Origin', in determining the origin of products eligible for the preferential tariff concessions for the Early Harvest Scheme. This is pursuant to the Framework Agreement between the Republic of India and the Kingdom of Thailand. As per Notification No.85/2004-Customs dated 31.08.2004, availed by the appellant, duty concessions was extended to certain specified goods when imported into the country from Thailand subject to the condition that such goods are of the origin of Thailand in accordance with provisions of Interim Rules of Origin, as provided in Notification No.101/2004-Customs (N.T.) dated 31.8.2004.
6. The department has stated that to claim the benefit of the above notification the appellant submitted COO, in which the origin criteria was mentioned as "4 digit + 22%", indicating that the gold jewellery 11 was not wholly produced in Thailand and there has been a "change at 4 digit H.S. Level and a value addition of 22%", i.e. after the import of gold (non-originating gold ), into Thailand there has been a local value addition to the non-originating gold by 22% leading to a change in classification at the 4 digit level.
7. It is the departments case that a local value addition of 22% to the non-originating gold was not possible in the facts and circumstances revealed by their investigation into the matter. It was also not proved to the satisfaction of the Deputy Commissioner of Customs that the goods were of Thailand origin in accordance with the provisions of the Interim Rules of Origin and Notification No.85/2004- Customs. As per the five-judge bench of the Supreme Court in Dilip Kumar and Co. (supra), the burden of proving that the goods are eligible for the exemption are on the importer, which they have failed to do. Per Contra the appellant states that the Interim Rules of Origin formulated in terms of notification no. 101/2004-CUS(NT) is a complete code in itself and provides for a machinery to operationalise the origin of products eligible for preferential tariff concessions. Therefore, unless the respondent department is able to produce materials to discredit the COO, with respect to each consignment, the COO stands and benefit of notification extended cannot be said to be improper or not legal. When exemption is claimed on basis of a certificate which had been obtained on basis of all facts and such certificate is not been cancelled or revoked or modified grant of exemption on the basis of such certificate cannot be side stepped or doubted.
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8. We find that the goods in question are jewellery made of gold, the import of which has been a subject of special treatment both under the Customs Act and the Foreign Trade Policy. While in the normal case discharge of the burden of proof as regards the allegations made in the SCN vests with the department, in the case of availing an exemption notification, the burden shifts to the importer as per the Hon'ble Supreme Court's judgment in Dilip Kumar and Co. (supra). Further as pointed out by revenue the fact that Section 123 of the CA, 1962 reverses the standard burden of proof, on the person, in the case of gold, makes this burden even more strict. Further the department has also submitted that when sufficient evidence is adduced the onus of proof shifts to the importer and adverse inference could be drawn against them if they fail to substantiate their case.
9. We also note that it is the appellants case that the demand and its confirmation made under the SCN and OIO is premature as admittedly the COO issued by the statutory authority had been questioned and a reference made to the designated authority of Kingdom of Thailand through Director General, DRI. They have stated that if such documents have been received they have not been shared with the appellant, further certain material like Order No. 8/2014-15 dated 31.12.2014 and document showing the international price of gold etc, were not disclosed to them but have been cited in the OIO which is a violation of the principles of natural justice. While the department submits that it is left with no option but to issue the SCN and decide the matter within time limits if the details sought for from the overseas administration is not forth coming. Thus, there is a breach of the provisions of the principles of natural justice. This being a 13 curable defect it is felt that the matter requires to the decided afresh on merits. The SCN has also been issued in this matter so as to remove the hurdle of time bar protecting revenue's interest.
10. Tribunal being the final fact-finding authority, is expected to examine the facts in detail and come to a conclusion. [Standard Radiators Pvt. Ltd. Vs CCE, (2002) 10 SCC 740 = 2002 (143) E.L.T. 24 (S.C.)]. In the circumstances as discussed, we remand the matter to the Original Authority to re-examine the issue after making available the outcome of the reference made to the designated authority of kingdom of Thailand, as mentioned at para 1.6.1 of the impugned order, if any or state otherwise. Documents relied upon in the impugned order which the appellant lists and states have not been supplied to them, should be made available, if requested. This would help make all relevant facts available. We accordingly remand the matter to the Original Authority to decide the issue afresh in denovo proceedings after supplying the documents as stated above. The appellants are at liberty to advance arguments both orally and in writing on law and facts. The appellants should also co-operate with the adjudicating authority in completing the process expeditiously and in any case within ninety days of receipt of this order. The appeal is disposed of on the aforesaid terms.
(Order pronounced in open court on 16.01.2026) Sd/- Sd/-
(AJAYAN T.V.) (M. AJIT KUMAR) Member (Judicial) Member (Technical) Rex