Custom, Excise & Service Tax Tribunal
Ajit Exports vs Noida Customs on 31 January, 2022
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO. II
Customs Appeal No. 70243 OF 2021
(Arising out of order-in-original No. 28-30/COMMR/NOIDA-CUS/2018 dated 18.10.2018
passed by the Commissioner of Customs, ICD, Dadri, Greater Noida.).
M/s Ajit Exports Appellant
126, IInd Floor, Vaishali
Pitampura, New Delhi-110085.
VERSUS
Commissioner of Customs Respondent
Customs House, Noida AND Customs Appeal No. 70246 OF 2021 (Arising out of order-in-original No. 28-30/COMMR/NOIDA-CUS/2018 dated 18.10.2018 passed by the Commissioner of Customs, Greater Noida.).
Ajit Singh Appellant
126, IInd Floor, Vaishali
Pitampura, New Delhi-110085.
VERSUS
Commissioner of Customs Respondent
Customs House, Noida
APPEARANCE:
Shri Nishant Mishra, Advocate for the appellant
Shri Gyanendra Kumar Tripathi, Authorised Representative for the respondent CORAM:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER Nos. 70060-70061/2022 DATE OF HEARING: 03.08.2021 DATE OF DECISION: 31.01.2022 2 ANIL CHOUDHARY:
The appellants herein are the partnership firm and its partner (Ajit Singh) are in appeal against the demand of duty and penalty for alleged violation of the provisions of Customs Act and the Special Economic Zone Act. Further, there is also order of confiscation of gold jewellery, etc. seized from the appellants, both at the business premises and residence of the partner-Shri Ajit Singh.
2. The appellant partnership firm was constituted on 1.4.2005, wherein the appellant Shri Ajit Singh with 75% share and the other partner-Shri Kirti Jain having 25% share. The appellant firm is engaged in the manufacture and export of gold jewellery. In terms of the provisions of „Export Oriented Unit Scheme‟ (EOU) as envisaged under Export Import Policy/Handbook of Procedures, the appellant applied for permission to establish a new undertaking at Noida Export Processing Zone, Noida for the manufacture of plain gold jewellery, and vide letter of authorisation dated 16.05.2001 issued by Deputy Development Commissioner (at the relevant time, the appellant- Shri Ajit Singh was Proprietor of M/s Ajit Exports). The approval was for projected export turnover of US$ 64,26,000 in 5 years, subject to penal action, in case of failure to achieve minimum export performance. Accordingly, the appellant entered into an agreement/indemnity bond. Under the agreement, the appellant was 3 obliged to submit to the Deputy Development Commissioner, „quarterly performance report‟ and also „annual performance report‟ duly certified by a Chartered Accountant. Thereafter, the appellant established its business at premises SDF No.D-8, Noida EPZ, Noida by procuring Plant & Machinery such as wire machine, polishing unit and other tools etc. for the manufacture of gold jewellery. The appellant not only achieved the minimum export performance and minimum net Foreign Exchange earnings, but also regularly submitted quarterly and annual performance reports with the Authority. No objection was ever raised by the authority.
3. The appellant also applied for Import Export Code (IEC), which was issued to them on 11.03.2005 by the Assistant Director General of Foreign Trade being IEC No. 494 011094. In the year 2005, SEZ Act, 2005 was enacted to provide for the establishment, development and management of the „Special Economic Zones‟ for the promotion of exports and for the connected matters therewith and incidental thereto. Section 26 of the SEZ Act provides for exemption from duty of customs under the Customs Act, 1962/Customs Tariff Act, 1975 or any other law for the time being in force, on the goods imported into a SEZ Zone or a unit, thereunder, to carry on the various authorised operations. Section 26 also provides for exemption from the duty on the goods exported from a Special Economic Zone or a unit, to any place outside India.
4. During the year 2006, the appellant purchased Plot No.129G/9 at Noida SEZ; since the construction activity at the new plot 4 was taking sometime and the appellant was incurring expenses towards rent of the existing premises (SDF No. D-8), hence vide letter dated 7.12.2006, applied for permission of the competent authority for sharing of space at Plot No.197 & 198, which was at the relevant time occupied by M/s. Vee Ess Jewellers Pvt. Ltd. (Director -Mr. Komal Jain). That the Development Commissioner of NSEZ by letter dated 8.12.2006 conveyed the approval for sharing the space with M/s.Vee Ess Jewellers Pvt. Ltd. („VEJPL‟ for short) at the Plot No.197 & 198, subject to the following conditions:-
(i) Physical separation of space between the two units shall be carried out to the satisfaction of NSEZ Customs;
(ii) Separate entry and exit points shall be maintained subject to satisfaction of NSEZ Customs;
(iii) Self-certified layout plan of the building with proper earmarking of space amongst sharing units shall be submitted; &
(iv) Separate records and accounts shall be maintained by each unit and sharing of capital goods/raw materials/consumables etc., shall be subject to normal procedure.
5. Thereafter, the appellant shifted its manufacturing activities from the premises SDF No.D-8 to Plot No.197 & 198, Noida SEZ. Upon shifting, as directed, physical separation of space and separate entry and exit points were carried out and made, to the satisfaction of NSEZ Customs Authority as stipulated in the permission letter, self-certified layout plan of building was also submitted. The appellant also fulfilled the 5 other conditions, such as maintaining of separate records and accounting of transactions. The appellant was regularly achieving minimum export performance as prescribed in Foreign Exchange Earning (NFE) and was also making other statutory compliances. No objection in this regard was ever made by the jurisdictional authorities.
6. By letter dated 19.01.2005 issued by the Asstt. Development Commissioner, the appellant was granted approval for the following operations: -
(i) Plain gold jewellery;
(ii) Import of old/idle/outdated gold jewellery for melting and
remaking into finished products for export.
7. By letter dated 14.12.2006, the Assistant Development Commissioner, NSEZ, Noida conveyed permission to the appellant to manufacture the following items: -
(i) Plain Gold Jewellery;
(ii) Import of old/idle/outdated gold jewellery for melting and
remaking into finished product for export;
(iii) Studded gold jewellery & studded silver jewellery;
(iv) Import of mountings, semi-finished/outdated jewellery for
studding, assembling, Rhodium plating, re-making, refinishing into finished product for export.
8. The aforesaid approval was again revised vide letter dated 3.9.2007, for the following operations: -
(i) Plain gold jewellery;
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(ii) Import of old/idle/outdated goldjewellery for melting and
remaking into finished product for export;
(iii) Studded gold jewellery & studded silver jewellery;
(iv) Import of mountings, semi-finished/outdated jewellery for
studding, assembling, Rhodium plating, refinishing into finished product for export.
9. That in terms of the permission granted by the Assistant Development Commissioner, the appellant imported gold jewellery for melting and remaking and exported the finished product(s). The appellant also procured gold from Nova Scotia Bank and after manufacturing gold jewellery, exported the same. For these activities, the appellant not only procured the required machinery and tools but also engaged required workforce.
10. That as far as import of outdated/old/idle jewellery is concerned, the appellant procured the same from M/s Samrah Gold Factory, LLC, Sharjah, UAE (hereinafter referred to as „Samrah‟) and M/s Mahesh & Co. PTE Ltd., Singapore (hereinafter referred to as „Mahesh & Co.). The procedure for import was that after arrival of the import consignment accompanied by invoice of Samrahor Mahesh & Co., bill of entry declaring the complete details was filed by M/s Ajit Exports. Thereafter, the consignment was handed over by the Customs Department to Central Warehousing Corporation (hereinafter referred to as "CWC") for transportation to SEZ. At the time of entry into SEZ, the import consignment was physically checked by the Customs Department. Upon physical checking, the purity of gold was checked by preventive 7 officer on „karatometer‟ and thereafter the imported jewellery was „mutilated‟ and entry of the same was also made in the import register maintained by the appellant. A report to the said effect was also made by the jewellery appraiser i.e. Deputy Commissioner, Customs
11. That the export of gold jewellery was made under self- sealing/self-certification procedure. After preparing invoice, packing list and shipping bill (containing the details of import-corresponding bill of entry no.), the same was submitted at the customs office situated within SEZ. After checking that the gold jewellery sought to be exported is made out from the stock available in the corresponding bill of entry, as recorded in the import register, the documents were handed over back to the appellant. Export consignment along with invoice, packing list and shipping bill was then handed over to the Preventive officer, Customs and after preparation of report, the same was then handed over to the CWC, and then the same was cleared from exit gate of SEZ only after issuance of „discharge certificate‟ by customs. This procedure was in accordance with the provisions contained under Rule 46(2) of Special Economic Zone Rules, 2006.
12. That as explained above, the appellant was legally importing old/outdated/idle gold jewellery and the same was handed over to Appellant firm- M/s Ajit Exports, only after mutilation, inspection and recording in the import register. After remaking/refurnishing/manufacturing, the gold jewellery was exported by 8 the appellant under self-sealing/self-certification procedure, wherein the export consignment was always open for physical examination by the Customs Department. However, at no point of time, M/s Ajit Exports was ever found to have indulged in mis-declaration or violating any statutory provision.
13. That it is pertinent to point out that at no point of time, the export consignment was ever detained/seized by the customs authorities of United Arab Emirates and Republic of Singapore, i.e. where the goods were exported. At no point of time, customs authorities of India raised any objection regarding the description or valuation of exported goods.
14. That on 6.2.2009 and 10.02.2009, the officers of DRI, New Delhi (without jurisdiction) conducted search operations at appellant‟s and different premises, the details of which are as under:-
Date: 6.2.2009 A. Shared factory premises of Appellant-AE & VEJPL (Vee Ess Jeweller), at 197-198, NSEZ, Noida.
During the search operation, panchanama dated 6.2.2009 (RDU-1) was prepared, wherein it has been recorded that Sri Vikas Sharma, Shri Ashok Dhar (jewellery designer) and Sri Rajnanadan (watchman) were present during the search. Panchanama records that during the search some workers were found to be occupying the halls/rooms, but not manufacturing activity was noticed. Panchanama also records that a large number of documents related to exports & imports made by AE and VEJPL 9 were resumed. Panchanama further records that during search, 15 (fifteen) packages were found, out of which for export - 4 (four) packages pertained to invoice No.GSE/AE/NSEZ/Exp/107/ 2008-09 dated 4.2.2009, 05 (five) packages pertained to Invoice No.GSE/AE/NSEZ/Exp/108/2008- 09 dated 4.2.2009, 04 (four) packages pertained to Invoice No.GSE/AE/NSEZ/Exp/ 109/2008-09 dated 4.2.2009. As regards remaining 02 (two) packages, Panchanama records that Sri Vakas Sharm informed that the same were imported vide B/E No.BE/NSEZ/IMP/00622 dated 4.2.2009. Panchanama further records that Shri Vikas Sharma also produced complete set of documents relating to the 15 (fifteen) packages in question.
Panchanama also records that a detailed examination of the import & export consignment(s) was conducted by jewellery appraiser posted at J.J.C, Jhandewalan, New Delhi, vis-a-vis declaration appearing on the import & export consignments appearing in the relevant documents. Panchanama records that export consignments were found to contain either brass or iron scrap and the import consignment were found to contain brand new gold jewellery, including some branded jewellery, which does not require melting and re-melting, instead of „outdated gold jewellery for melting and re-making‟ as declared in the import documents. Panchnama also records seizure of i) 24,746 grams of gold jewellery (imported vide Bill of Entry No.00622/09 dated 4.2.2009) and ii) brass circles, iron scrap and brass scrap/cuttings weighing 193.676 Kg.
10B. Business premises of VEJPL at 2127/28, Gali No.48, Naiwala, Gurudwara Road, Karol Bagh, New Delhi.
During the course of search at business premises of VEJPL, the officers of DRI, New Delhi, seized assorted gold jewellery weighing 41,315.05 gm valued at Rs.5,57,75,277/- on the ground that no evidence documentary or otherwise, was produced for the licitpossession/ acquisition of the same.
C. Residential premises of appellant-Ajit Singh (Partner of AE) 127, 1st floor, Vaishali, Pitampura, New Delhi.
During the search, assorted gold jewellery consisting of 36 sets of ear tops & lockets and 109 pairs of ear tops, collectively weighing 822.17 gm was seized.
D. Business premises of one M/s Omkar Jewellers, 2502, Beadonpura, 2nd Floor, Gurudwara Road, Karol Bagh, New Delhi.
During the search gold bars/ pieces of gold of foreign origin weighing 8.905 kg. gold pieces weighing 1.357 kg. and mixed gold ornaments weighing 23.552 kg. collectively valued at Rs. 4,43,82,699/- and Indian currency of Rs. 36 lacs was seized.
E. Business premises of M/s Orbit Gold, Shop No. 97, L. K. Market, Zaveri Bazar, Mumbai.
During the search, assorted gold jewellery (imported) weighing 1,912.500 gm valued at Rs. 19,08,000/- gold bars and coins 11 weighing 5,207 gm valued at Rs. 73,50,000/- and Indian currency of Rs. 3,19,400/- was seized.
F. Residential premises of both brothers Shri Komal Jain (Director of VEJPL) and Shri Kirti Jain (Partner of AE), 134, Veer Nagar, Jain Colony, New Delhi.
During the search, one file was recovered and resumed.
15. That on 11.02.2009, an import consignment weighing 48.5 kg. declared to contain gold jewellery and „consigned to VEJPL‟ under Airway Bill No. 618 SIN 6672 0264 dated 5.2.2009 sent by Mahesh & Co. Was detained at Air Cargo Complex, IGI Airport, and on examination the same was found to contain brand new jewellery (plain and studded) of foreign origin. The said jewellery weighing 38,434.71 gm valuing Rs. 6,22,58,999/- was also seized vide panchanama dated 24.02.2009.
16. That during the course of investigation, searches were also conducted at the following places: -
(i) M/s Damasy Retail Jewellery P. Ltd., (DRJPL in short) Palm Spring Centre, Unit No. 518, 5tyh floor, Link Road, Malad (W), Mumbai on 27.04.2009 & 28.04.2009, during which certain documents were resumed vide panchnama dated 27.04.2009 & 28.04.2009.
(ii) Residential premises of Shri Irfan Munshi, Director of DRJPL on 27.04.2009, during which certain documents were resumed vide panchnama dt. 27.04.2009.
(iii) M/s MBS Impex P. Ltd., Plot No. 125, 1st floor, M. G. Road, Secunderabad, Andhra Pradesh on 20.04.2009, during which certain documents were resumed vide panchnama dated 27.04.2009.
(iv) Office premises of M/s G. Anantha& Co., No. 27, IInd floor, Elephant Rock Road, IIIrd Block, Jayanagar, Bangalore (C.A. of 12 DRJPL) on 29.04.2009, during which certain documents were resumed vide panchnama dated 29.04.2009.
17. That in respect of seizure of gold jewellery, brass circles and iron scrap from the shared premises of AE and VEJPL, ld. Commissioner of Customs, Air Cargo Exports, New Customs House, Near IGI Airport, New Delhi, vide O-I-O dated 30.07.2009 extended the period of show cause notice, and later on show cause notice dt. 02.02.2010 was issued to AE and others demanding customs during and cess amounting to Rs. 2,61,36,747/- and also proposing confiscation of seized goods and imposition of penalty.
18. That during investigation, statements of the following persons were also recorded: -
Sl.No Date Name
1 7.2.2009 Sri Bharat JamnadasJagda (Director of Shakti Jewellers &
8.6.2009 Partner of Omkar Jewellers)
14.1.2009
2 7.2.2009 Kamlesh Bhimraj Jain (alleged Purchaser of jewellery)
22.4.2009
3 22.4.2009 Shri Kiran Kumar Singhvi (alleged purchaser of Jewellery)
4 22.4.2009 Sri Hemraj C. Kothari (alleged purchaser of jewellery)
5 22.4.2009 Sri Ramesh Rathod (alleged purchaser of jewellery)
6 22.4.2009 Sri Nitesh Jain (alleged purchaser of jewellery)
7 7.2.2009 Sri Suresh Bhanwarlal Rathod (alleged purchaser of jewellery)
22.4.2009
8 7.2.2009 Sri DevilalSohanlal Jain (alleged purchaser of jewellery)
22.4.2009
9 23.4.2009 Sri SumitShivkumar Agarwal (person to whom Sri Bharat Jagda
allegedly made payments in cash on instructions of Sri Kishore Dhakan) 13 10 31.8.2009 Sri Mahesh Kumar Moolchand Kothari (Partner of Sri Bharat JamnadasJagda) 11 4.9.2009 Sri Mukesh Mahesh Kumar Kothari (son of Sri Mahesh Kothari 14.1.2010 and Proprietor of M/s Orbit Gold) 12 29.4.2009 Sri Rajesh Ratan Lal Pacheria (Senior Manager of DRJPL) 8.1.2010 13 4.5.2009 Mohd. Irfan Munshi (Head of DRUPL) 14 29.4.2009 Sri Jaison Simon Panakkal (Country Head - DRJPL) 11.9.2009 15.1.2010 15 5.10.2010 Sri John Joy (Manager - M/s Damas Jewellery P. Ltd.) 16 11.11.2009 Sri Sukesh Gupta (Director - M/s MBS Impex P. Ltd.) 8.11.2011 13.12.2011 17 8.1.2010 Sri Rajesh Kallaveetil (General Manager - M/s Fantasy Diamond Cuts P. Ltd.) 18 7.2.2009 Sri Vikas Sharma (alleged employee of appellant) 17.2.2009 6.1.2010 30.03.2011 19 7.2.2009 Sri Sunit Kumar Mishra (Employee of VEJPL) 16.2.2009 20 3.7.2009 Sri Naveen Sharma (Accountant of VEJPL) 21 20.4.2009 Sri Komal Jain (Director of VEJPL) 21.4.2009 6.7.2009 9.11.2011 14.11.2011 22 23.6.2009 Sri Sanjeev Varma (Director of VEJPL) 23 11.11.2009 Sri Ajit Singh (Partner of appellant) 12.11.2009 17.11.2011 24 6.2.2009 Sri Nagasatyam (Asst. Vice President of M/s Goldstone 17.2.2009 Infratech Ltd.,) 25 22.6.2009 Sri PVS Sharma (Director (Legal) of M/s Goldstone Infratech Ltd.,) 26 14.7.2009 Sri L.P. Shashi Kumar (Managing Director of M/s Goldstone Infratech Ltd.,) 27 19.5.2010 Smt. Tina Sanjeev Verma (Prop. of M/s Mahak Exports) 28 10.7.2010 Sri Kirti Jain (Partner of appellant) 2.9.2011 29 11.8.2010 Sri Kishore RatilalDhakan (Director - Deepu Jewellers, Dubai 12.8.2010 and Dicretor of M/s Samrah Gold Factory, Sharjah). 14
16.8.2010 17.8.2010 13.9.2010 29.10.2010
19. The following show cause notices were issued:-
Sl.No. Name SCN No./Date Remarks
1 M/s Ajit Exports, Shri Ajit DRI F. No. SCN issued to
Singh, Shri Komal Jain, 333/VI/3/2009- confiscate the
Shri Kirti Jain, M/s GI/PT/17 dt. seized goods.
Goldstone Exports Pvt. 02.02.2010.
Ltd.,
2 M/s Vee Ess Jewellers Pvt. DRI F. No. SCN issued to
Ltd., Shri Komal Jain, Shri 333/VI/3/2009- confiscate the
Sanjeev Verma. GI/PT/26 dt. seized goods.
03.02.2010.
3 M/s Vee Ess Jewellers Pvt. DRI F. No. Final SCN
Ltd., & thirty four others 333/VI/3/2009- issued to all
(including notices GI/PT dt. thirty five
mentioned at Sl. No. 1 & 2 12.11.2013. notices involved above). in the case.
20. It is relevant to mention that the show cause notice dated 12.11.2013 was issued to M/s.V.S. Jewellers and 34 co-noticees, which included the present appellants also, wherein show cause notice, inter alia , proposed or alleged the following :-
(i) The duty free gold jewellery imported by M/s. Ajit Exports, Noida during 2006 to February, 2009, by mis declaring and undervaluation, which were clandestinely removed from the SEZ unit as such, without carrying out any process, without payment of customs duties and delivered/sold to the buyers in the local market/DTA, should not be held liable for confiscation under Section 111(d), (j), (m) and (o) of the Customs Act, 1962.15
(ii) The duty-free primary gold/gold bars procured by M/s Ajit Exports, Noida from Bank of Nova Scoatia, New Delhi, which were clandestinely removed from the SEZ unit, as such, without carrying out any process, without payment of customs duties and delivered/sold to the buyers in the local market DTA, is liable for confiscation under Section 111(d), (j) and
(o) of the Customs Act, 1962.
(iii) The benefit of exemption granted under Section 26 of the SEZ Act, 2005 read with Rule 25, 27 and 34 of SEZ Rules, 2006 from duty of Customs under the Customs Act, 1962, should not be denied to them with regard to the goods mentioned in para (i) & (ii) above and the customs duties and cess amounting to Rs.52,61,59,594/- on gold jewellery imported free of duty by M/s Ajit Exports, Noida and duty free primary gold/gold bars procured by M/s Ajit Exports, Noida from the Bank of Nova Scotia, New Delhi, as per the details given in chart, which were clandestinely removed from the SEZ unit as such, without carrying out any process, payment of duty, and diverted /sold in the local market/DTA and/or exported as such in violation of the provisions of the SEZ Act and Rules and Customs Act, 1962, should not be demanded and recovered from them by enforcing the Bonds executed by them read with the provisions of Section 28 of the Customs Act, 1962 by invoking the provisions relating to extended period, on the ground of wilful mis-
statement and suppression of facts.
(iv) Interest payable on the amount of duty in terms of the provisions of
Section 27 AB of the Customs Act, 1962 should not be
demanded/recovered from them.
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(v) The amount of Rs.6,94,54,439/- (Rupees Six Crores Ninety Four
Lakh Four Thousand Four Hundred Thirty Nine Only) deposited voluntarily by the actual buyers in the DTA of duty free imported gold jewellery, as discussed above, which were clandestinely removed from the premises of M/s Ajit Exports, Noida, towards the customs duties and interest, deposited during the investigations should not be appropriated towards the customs duties, cess and interest demanded in para (i) above from M/s Ajit Exports, Noida.
(vi) The primary gold/gold bar/Indian made gold jewellery/scrap etc. declared in the shipping bills and export invoices issued by M/s Ajit Exports, Noida, which were found to be exported under „self-certification‟ by mis declaring the same as gold jewellery to fulfil the export obligation of duty free imported gold jewellery, should not be held liable for confiscation under Section 113(d) and (i) and (l) of Customs Act, 1962. Penalty under Sections 112, 114, 114 AA of Customs Act, 1962 was also proposed against appellant firm, Shri Ajit Singh (partner of the appellant), along with other persons.
21. Subsequent to issue of show cause notice, corrigendum dated 9.12.2015 was issued as to jurisdiction and making all the three show cause notices answerable to the Commissioner of Customs, ICD, CONCOR Complex, Greater Noida, U.P.
22. The allegations of the Revenue in the show cause notice(s) are as follows: -
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22.1 The appellant, M/s Ajit Exports appears to be exporting brass/iron scrap or brass jewellery by declaring the same to be gold jewellery. After having been authorised to manufacture and export in the SEZ, and the benefit of such exports was to flow to one M/s Gold Stone Exports Ltd. Thus, show cause notice proposed to impose penalty on Gold Stone Exports under various sections of the Act.
22.2. Out of 15 packages seized from the business premises of M/s Ajit Exports/Vee Ess Jewellery, 13 packages pertained to export consignments and remaining 2 packs pertained to import consignments.
The export packs were ready for exports dulysealed as per procedure. The documents/shipping bill have had already been filed with the SEZ Authority and the assessment was got done by the competent authority. However, on subsequent examination by Jewellery Appraiser (after seizure), the packages were found to contain iron scrap/brass circles/brass scrap/cuttings in rectangular forms weighing 193.676 kgs. (having negligible commercial value).
23. Two packages related to import consignments were found to contain finished assorted gold jewellery of Italian origin being of 18 carat /22 carat, both plain and studded weighing 24.746 kgs. valued at Rs.3,24,90,156/- which appeared to be brand new.
24. In the search of the residential premises of Shri Ajit Singh - the appellant, resulted in recovery of assorted gold jewellery viz. 36 set of ear tops and lockets and 109 pairs of ear tops, weighing 822.17 gmwhich 18 were seized under panchanama dated 6.2.2009. It appeared to the officers of DRI that the gold jewellery etc. seized from the factory premises of the appellants are brand new jewellery and ready for sale/marketing, as well as from the residential premises of Shri Ajit Singh was liable for confiscation.
25. In Gold Stone Exports Ltd., Shri Nagasatyam is Delhi Representative and Assistant Vice President, having its registered office at Sikandarabad, came in contact with the appellant - M/s Ajit Exports for export of gold jewellery as „third party exporter‟. Shri Nagasatyam met twice with Shri Ajit Singh and Komal Jain for this purpose, accordingly entered into a „memorandum of understanding‟ by way of expression of interest.
26. It is further alleged that accordingly M/s Ajit Exports prepared 13 packages for export and filed shipping bills without the knowledge of M/s Goldstone Exports Ltd., which were seized by the DRI on 6.2.2009.
27. Shri Ajit Singh, Partner of M/s Ajit Exports in his statement recorded on 11/12.11.2009, inter alia, stated that, as regards the bills of entry No.00622 dated 4.2.2009 (seized consignment) was of their firm, which has seal of M/s Ajit Exports but the same was not signed by him and the signature was forged. On being shown shipping bill no.1429, 1430 and 1431, all dated 4.2.2009 (seized consignment), he stated that the above-mentioned shipping bills and relevant documents were not signed by him, and he did not know who had signed the same. He further 19 stated that as per advice of Mr. Komal Jain, he had set up proprietorship concern in the name of M/s Ajit Exports as its Proprietor in 1994-95, for export of gold jewellery by making/manufacturing the said gold jewellery from the gold, which was purchased from MMTC for the purpose of export. The business of M/s Ajit Exports was mainly looked after /maintained by Mr. Komal Jain, who compensated him by paying some money for his expenses, that on the advice of Komal Jain, the firm - M/s Ajit Exports was converted into partnership firm by taking Mr. Kirti Jain as partner (younger brother of Komal Jain). The work of M/s Ajit Exports was continued to be looked after mainly by Mr. Komal Jain. This appellant is more or less a sleeping partner. That the idea of sharing premises of office with M/s Vee Ess Jewellers Pvt. Ltd. at 197-198, NSEZ, Noida, was also of Komal Jain and due permission was granted by the Assistant Development Commissioner, that M/s Ajit Exports is importing gold jewellery from Deepu Jewellers, Dubai (Director, Mr. Kishore Dhakan), M/s. Samrah Gold, Sharjah, and M/s. Mahesh & Co., Singapore (owner - Mahesh Kumar), that Komal Jain has got introduced him with the aforementioned persons. He further stated that he was not having documents relating to jewellery seized from his residence on 6.2.2009. He further stated that they were importing damaged and/or old jewellery for re-making, re-polishing, etc. and thereafter re-exporting the same, and he did not know much about the day-to-day business as the same was being looked after by Mr. Komal Jain as well as by Mr. Kirti Jain. 20
28. On being asked if the gold jewellery weighing 41,315.20 gm seized from the business premises of M/s. Vee Ess Jewellers, Karol Bagh on 6.2.2009, whether belonged to M/s Ajit Exports, he stated that the same belonged to M/s Ajit Exports, and he had also filed complain of theft with the Noida Police, against Mr. Komal Jain and Mr. Kirti Jain.
29. Shri Ajit Singh in his further statement recorded on 17.11.2011 by the DRI Authorities, inter alia, stated that he had been shown the statement of Shri Komal Jain dated 14.11.2011, and he stated that he did not agree with the statement of Shri Komal Jain and categorically stated that KomalJain was telling lies, that he had never told Shri Komal Jain to write the remarks on the file of M/s Ajit Exports, that Shri Komal Jain was looking after all the work.
30. That on scrutiny of Shipping Bill No.1429, 1430, 1431, all dated 4.2.2009, which were filed by M/s Ajit Exports, it appeared that M/s Ajit Exports were exporting the goods as „third party exporter‟ in the account of M/s.Goldstone Exports Ltd.
31. In his statement Shri Nagasatyam, Assistant Vice President of M/s. Goldstone Infratech Ltd., inter alia, stated that they were engaged in real estate activities and although they had come into contact with the M/s Ajit Exports, but they were yet to start business with them, nor they had signed any documents for export of gold jewellery with M/s Ajit Exports, nor they had purchased and sold any gold jewellery from or 21 to M/s Ajit Exports, although they had few meetings, but so far no material progress had happened.
32. In order to clarify the position, Director of M/s Goldstone Exports Ltd. was summoned and the statement of Shri P.V.S. Sharma, Director (Legal) was recorded on 22.06.2009, who, inter alia, stated that gold jewellery export was started in 1992. He further stated that he came to know M/s Ajit Exports when their Delhi Representative, Shri Naga Satyam, sent him a draft/MOU, which was about export of gold jewellery under „third party export procedure‟. That he had informed Mr. Sashi Kumar, their Ex-Director that he had received an email from Mr. Komal Jain requesting for supply of IEC code and authority letter in favour of M/s Ajit Exports. From the email, it appeared that Komal Jain was associated with the activities of M/s Ajit Exports and IEC code and authorisation were required for submission to the Customs Authorities for the purpose of exports. However, they had not provided any confirmed order to M/s Ajit Exports for export of gold jewellery, nor they had received any export realization on account of the exports made by M/s Ajit Exports. Further, stated that their company had not exported or sold any gold and gold jewellery, though the invoice was raised in their account. He further, stated that they did not have any business relations with M/s. Samrah Gold Factory, Sharjah and nor they had business relation with M/sMahesh and Company, PTE Ltd., Singapore.
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33. Similar statement was given by Shri Shashi Kumar, Managing Director of M/s. Goldstone Infratech Ltd.,
34. That Shri Ajit Singh, Partner of M/s Ajit Exports vide his letter dated 14.09.2009 addressed to DRI (Hqrs), New Delhi submitted that on 4.2.2009, he found some jewellery missing from his business premises at Plot No.197-198, First Floor, SEZ, Noida and consequently, on 8.2.2009 he lodged a complaint of theft at Police Station, Noida. That he had come to know that the said jewellery has been stolen from his business premises byShri Komal Jain (Director of Vee Ess Jewellers) with the help of his real brother - Shri Kirti Jain (Partner in M/s Ajit Exports), which has been found and seized by DRI officials from the business premises of Vee Ess Jewellers, Karol Bagh, New Delhi on 6.2.2009. He further stated that bills submitted by Shri Komal Jain purportedly issued by M/s Mahak Exports (Proprietor, Smt. Tina Verma wife of Partner, Shri Sanjeev Verma, another Director in M/s Vee Ess Jewellers), and by Damas Jewellery Pvt. Ltd., Mumbai dated 2.1.2009 and 3.10.2008 respectively, are bogus, forged and fabricated with the connivance of the issuing firms. Smt. Tina Verma is wife of Shri Sanjeev Verma, who in turn is a Director in M/s Vee Ess Jewellers. That the bills procured from Damas Retails Jewelleries are bogus and fabricated, as admittedly, no payment has ever been made for the alleged purchase.
35. Representation was also submitted by Shri Pradeep Jain, Advocate vide letter dated 5.11.2009 addressed to the Director General, 23 DRI, New Delhi on behalf of M/s Ajit Exports, inter alia, stating that gold jewellery weighing 41,315.02 gm seized from the Karol Bagh Office of M/s. Vee Ess Jewellery, was in fact stolen from the premises of M/s Ajit Exports, for which complain was lodged with Noida Police station on 8.2.2009. The aforementioned fact of forgery by presentation of bogus bills by Shri Komal Jain, was also mentioned.
36. Shri Kriti Jain, Partner of M/s Ajit Exports in his statement recorded under Section 108 of Customs Act, 1962 on 10.07.2010, inter alia, stated that he has joined his brother, Shri Komal Jain in his business in the year 2001-2002. That he has opened a shop in the name of M/s Gopal Sons Jewellers at Street No.8, Beadonpura, Karol Bagh, and that he was the proprietor of M/s Gopal Sons Jewellers and having a branch office in the same name at Gurdev Nagar, Ludhiana, which was opened in the year 2003-2004. That he got manufactured gold jewellery through job workers and sold the same in retail at Delhi and Ludhiana. In 2004-2005, he became the partner in M/s Ajit Exports having its factory at plot no.197-198, NSEZ, Noida. That Shri Ajit Singh was the other partner of M/s. Ajit Exports. That M/s Ajit Exports had also shown export of gold jewellery in the name of M/s.Gopal Sons Jewellers as third-party exporter. That he had been shown file No.163 of M/s Ajit Exports and a copy of shipping bill dated 19.01.2009(and as a token of having seen the same, he signed on these documents) and invoices in File No.164 seized from the M/s Ajit Exports, it appears that 15141 .310 gm of .920 fine gold 24 jewellery was exported to Mahesh & Company, Singapore by M/s Ajit Exports as third party exporter-manufacturer - Gopal Sons Jewellers.
37. He further stated that the day-to-day functioning of M/s Ajit Exports was looked after by Shri Ajit Singh and Shri Komal Jain. That he was aware that on many occasions, M/s. Ajit Exports had imported brand new gold jewellery and exported only metal scrap materials and primary gold. He further stated that on many occasions, he had forged the signature of Shri Ajit Singh and signed the documents of M/s Ajit Exports viz. invoices, shipping bill, packing list, bill of entry, etc. That pursuant to export vide shipping bill dated 20.01.2009, M/s. Mahesh & Co. PTE Ltd., Singapore remitted USD 4,10,490 in the account of M/s Gopal Sons & Jewellers. The said amount was remitted back to M/s Ajit Exports. Further, he submitted that he had not invested any money in M/s Ajit Exports. That his brother, Shri Komal Jain made him Partner in M/s Ajit Exports. He further stated that although he was entitled to 25% share in the profits of M/s Ajit Exports, but till date he has not received any money from the said firm. He further stated that the export of gold jewellery made by M/s Ajit Exports in the name of Gopal Sons Jewellers, as athird- party exporter, was made with his consent.
38. Shri Kirti Jain further stated that he knew Shri Kishore Dhakan, who used to send brand new gold jewellery from Dubai to India through M/s Ajit Exports and M/s. Vee Ess Jewellers Pvt. Ltd. That Shri Ajit Singh and Komal Jain used to hand over brand new gold jewellery 25 sent by Shri Kishore Dhakan to Shri Bharat Jaina Das Jagda, but he did not know the mode of payment in respect of such jewellery. But he has knowledge that Bharat Jagda, charges Rs.5/- per gram of gold as transportation charges for handing over the gold jewellery to the actual customer or consignee. That the export obligation was fulfilled on paper only, by declaring export of gold jewellery whereas in actual, scrap and primary gold was exported.
39. Statement of Shri Kishore Ratilal Dhakan (owner of Deepu Jewellers, Dubai) was recorded on various dates by the DRI, wherein, heinter aliastated that after learning the goldsmith‟s work, he migrated to UAE and started a workshop in the name of Samrah Gold Factory at Sharjah in UAE in 1982. He had deployed Indian workers to manufacture jewellery on his behalf. That in Samrah Gold Factory, Mr. Abdullah Ramdan, UAE National held 51% shares and he himself held 24% shares and Mr. Deepak Dhakan (his brother) held 25% shares. That they imported gold jewellery from various Indian firms. That apart from Indian firms, they also imported gold jewellery from Italy, Malaysia and Turkey. That the goods imported by them and also those made by their factory were sold by them locally and they also exported the same to various places. That they had also another company in the name and style of Deepu Jewellers situated at Dubai, which also exported gold jewellery. He further stated that Shri Komal Jain and Shri Ajit Singh had met him in Dubai in the year 2000 through reference of a common trader friend and they had requested for work of jewellery. That they had also carried 26 samples of jewellery manufactured by them. That they were sending outdated gold jewellery and also gold to M/s Ajit Exports and M/s Vee Ess Jewellers Pvt. Ltd., for making and finishing of jewellery in India and thereafter, for re-exporting the same to them. In the year 2006, Shri Ajit Singh and Komal Jain informed that they had started two units in the SEZ at Noida, which had facilities for refining, polishing, copper and rhodium finishing as well as repairing of jewellery. That they had also told him that their (M/s Ajit Singh and Komal Jain) prices would be more competitive as they would save income tax payable, by the units in the SEZ. That they used to get goods manufactured from M/s. Vee Ess Jewellers at Karol Bagh and also at SEZ, Noida as well as from M/s Ajit Exports, SEZ, Noida. Mr. Ajit Singh and Komal Jain used to tell him as to on which company, he had to place orders.That he also stated in the year 2006, Mr. Ajit Singh and Mr. Komal Jain suggested him that he could despatch old and used jewellery as they also had refining facility. They also told him that he could manage to send them high end branded jewellery, and in turn, they would replace the same with Indian make jewellery, to which he was agreed. While exporting outdated gold jewellery, they used to prepare packing list, invoice and airway bills. Thus, he was despatching old used gold jewellery and also high-end branded gold jewellery, and in turn, he used to receive Indian make finished jewellery from M/s Ajit Exports and Vee Ess Jewellery. He further stated that M/s. Damasay Retail Jewellery Pvt. Ltd., Mumbai and M/s. Damasay Jewellery Pvt. Ltd., Bangalore had requested him to supply jewellery. As both these were new companies in 27 India and were affiliated to Damas L.L.C., Dubai and Mr. Tawhid Abdullah, owner of Damas, LLC, Dubai was his good friend, hence, he agreed to supply gold jewellery from Dubai to them. The representatives from the above said two companies situated at Mumbai and Bangalore used to visit his shop-Deepu Jewellers at Dubai and placed orders for jewellery. He further stated that 18 and 22 carat gold new jewellery were sent vide invoice no.60017 dated 03.02.2009, issued by Deepu Jewelers, LLC to M/s Ajit Exports, by misdeclaring the same as outdated gold jewellery for melting and re-making. Actually, the same were to be diverted in the local market.
39.1 He further agreed to the statements and disclosures made by Shri Bharat Jagda, as to the fact that Mr. Kishore was sending finish jewellery from Dubai through the Appellant namely M/s Ajit Exports and V.S. Jewellers to India, to their Unit in Noida SEZ, such jewellery which was received by the Appellant and V.S. Jewellers was under the scheme of SEZ, required to be remade, refinished and, thereafter exported back for earning Foreign Exchange. But, in actuality, the Exporter from Dubai and Singapore also sent high ended finished jewellery, which was diverted to the local market and Indian made gold jewellery or jewellery made from gold procured in India was exported. Thus, there was loss of revenue as import customs duty on finished jewellery was evaded.
40. It appeared to Revenue from the evidences collected, mainly the statements of various persons recorded, seizure of foreign made 28 branded finished and new gold jewellery at various premises, the seizure of metal scrap from the export consignment of M/s Ajit Exports being exported under self-declaration/self-certification and declared as gold jewellery, as well as with respect to V.S. Jewellers Pvt Ltd, revealed that Shri Kishore Dhakan of Deepu Jewellers LLC Dubai and M/s Samrah Gold Factory LLC Sharjah, Shri Mahesh Kumar of Mahesh & Company, PTE, Singapore, Shri Komal Jain, the managing person of both V.S. Jewellers &M/s Ajit Exports, Noida, Shri Ajit Singh, entered into a conspiracy to smuggle high end foreign made branded, finished new jewellery into India from Dubai/Sharjah/Singapore in the guise of duty free import of raw materials through SEZ route, on the pretext of using the same for manufacture of gold jewellery to be exported, but it appears have diverted the same clandestinely in the local market. Both Appellant and V.S. Jewellers were SEZ units located at the same premises at Noida SEZ. Both the SEZ units were permitted to import duty free semi-finished or old/ outdated gold jewellery for assembling/ plating /refinishing and/or remaking, and thereafter the same was required to be re-exported after completing the process required to be carried out, as per the direction of the Supplier (as declared in the bill of entry/packing list at the time of importation). The details of the process to be carried out on the imported gold jewellery as declared in the import documents clearly indicate that the same jewellery was required to be exported, as the major portion of such jewellery was being imported for carrying the process, which did not amount to change of shape and design.
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41. However, the Appellant M/s Ajit Exports & M/s V.S. Jewellers appeared to have clandestinely removed the foreign made branded- finished new jewellery which was imported in their Unit situated in Noida SEZ without payment of custom duty, and diverted the same in the local market as per directions of Shri Kishore Dhakan, Dubai and/or Mahesh Kumar of Singapore. The Shippers used to convey the name/identity of the person/firm to whom the finished imported gold jewellery was to be handed over in India under code names. The said jewellery used to be delivered through Shri Bharat J. Jagda on receipt of instructions from Shri Kishore Dhakan. To fulfil the export obligations, the appellant & M/s V.S. Jewellers both working under self-declaration/self-certification procedure have actually exported primary gold/gold bar/Indian made gold jewellery from the gold procured mainly from Bank of Nova Scotia/local market. It also appeared that sometimes the Appellant & V.S. Jewellers instead of exporting gold jewellery were exporting metal like brass or iron made jewellery etc. in the garb of gold jewellery. This fact became evident from the seized consignment, which was meant for export at the time of search.
42. The procurement of primary gold and gold jewellery from the domestic tariff area (DTA) has not been reflected in the statutory books of accounts of the SEZ Unit. However, such purchases have been reflected in the private records, correspondences etc. 30
43. It further appeared from the seized files maintained by the Appellant M/s Ajit Exports and V.S. Jewellers, that they were maintaining the record of import and export, consignment wise. The seized files contained copy of export invoice, packing list, shipping bill, other miscellaneous documents pertaining to the said consignment. In the export invoice/shipping bill, the declaration included the details of bill of entry vide which the goods being exported had been imported, free of customs duty; contact No. under which duty-free primary gold was procured from the Bank of Nova Scotia as raw material. The file also contained remarks written on the file cover showing the receipt of primary gold/gold jewellery from the local market /DTA and the actual nature of goods exported under the respective export documents.
44. Thus, it appeared that the Appellant M/s Ajit Exports in collusion with V.S. Jewellers, as both the firms/company were controlled by Mr. Komal Jain, in collusion with others have imported new branded jewellery or finished jewellery which they were diverting in the DTA, thus evading customs duty on import in the garb of reprocessing in their Unit situated at Noida SEZ, and were re-exporting Indian made jewellery etc., which was violation of the scheme under the SEZ Act and the notification thereunder. Most of the files found/seized from the business premises of M/s Ajit Exports and V.S. Jewellers regarding the export and import, bore some remarks on the file cover indicating the actual nature of goods procured from the local market and exported in that particular 31 consignment. Copies of the export documents are available in the particular file. Such remarks on the files are also corroborated by the fax messages received from the local supplier of the goods namely M/s Shakti Jewellers Pvt Ltd., Mumbai and handwritten calculation on papers found available in the file. Such handwritten calculations were in the handwriting of Mr. Komal Jain of V.S. Jewellers, who during the course of investigation was found to be looking after the entire day to day working of both M/s Ajit Exports & V.S. Jewellers. Mr. Komal Jain in the course of his statement tendered before the authority have admitted that such remarks/calculations were written by him. On being asked to explain the remarks and calculations, he gave an evasive reply with intent to conceal the real nature of such remarks/calculations. Mr. Ajit Singh partner of M/s Ajit Exports in his statement deposed that he was not knowing the exact nature of such notes which were prepared by Mr. Komal Jain who was looking after the day-to-day affairs. It appeared to Revenue that such notes/remarks were written on the file cover in the normal course of day- to-day business with an intent to keep private record/account of the exact nature like purity, weight of gold jewellery, primary gold procured locally and thereafter exported under the self-declaration/self-sealing procedure. Such handwritten notes/calculations made on loose slips or file cover were not relatable with the seized statutory books of accounts and also appeared to have been concealed in the export documents presented before the customs authority. The receipt/export of such gold jewellery/primary gold from the DTA or local market have not been 32 reflected in the statutory books of accounts of the SEZ Units.
45. It further appeared to Revenue that such mis-declaration could not have been detected by the customs authority in the normal course of inspection of the packages, because of the fact that these export consignments were cleared under self-certification/self-declaration procedure and since the quantum/details of the declaration on the export documents was fraudulently declared to have been manufactured out of particular consignment of gold jewellery imported free of duty as raw material. Thus, it appeared that the appellant and M/s V.S. Jewellers have evaded custom duty which had been foregone at the time of importation of the said jewellery, as the SEZ Units did not fulfil the export obligation under the SEZ Scheme.
46. By the impugned order-in-original dated 18.10.2018, all the aforesaid show cause notices dated 02.02.2010, 03.02.2010 and 12.11.2013 have been adjudicated, and the proposals made in the show cause notices were confirmed. Thus, gold jewellery weighing 24.746 gm and 822.17 gm seized from the factory premises and the residence of Shri Ajit Singh respectively, had been ordered to be confiscated, duty foregone at the time of import of duty free gold jewellery and seized gold jewellery have been directed to be recovered under Section 28 of the Customs Act, the declared transaction value of duty free imported gold jewellery (including past imports) has been rejected under Customs Valuation Rules, duty free gold jewellery and gold bars alleged to be clandestinely 33 removed into DTA have been confiscated, exemption available under Section 26 of SEZ Act has been denied and the exempted amount of Custom duty has been directed to be recovered under Section 28 of the Act, the amount deposited during investigation have been appropriated and penalties have been imposed upon the appellants and others.
47. The impugned order-in-original (in earlier round) was challenged in separate appeals by these appellants, as well as nine other appellants/ co-noticees before this Tribunal. The appeal of these appellants was allowed by way of remand in the earlier round of litigation by this Tribunal, in view of the jurisdiction issue as clarified by Delhi High Court in the case of Mangli Impex vs. Union of India. Thereafter, in the re-adjudication proceedings the present order-in-original dated 18.10.2018 have been passed.
48. The appeal of the other co-appellants before CESTAT being Customs Appeal Nos. 70148/2019 and others (total nine in number) and also the appeal filed by Revenue being Customs Appeal No. 70318/2019, were heard and disposed of vide Final Order No. 71733-71742/2019 dated 09.07.2019. The appeals filed by the co-noticees/ appellants were allowed with consequential relief, and the appeal filed by Revenue was dismissed.
49. So far these appellants are concerned, the impugned order was served upon them only on 16.03.2020, when they came to know about the impugned order and Final Order of this Tribunal from other co- 34 appellants/ co-noticees. Thereafter, these appellants took steps and in spite of the disturbances of covid pandemic have filed their appeals on 22.06.2020. This Tribunal vide order dated 02.08.2021 have held that both these appeals have been filed within time as per statute.
50. Learned Counsel for the appellants assailing the impugned order, have taken us to the allegations in the show cause notices, findings recorded in the impugned order, the grounds of appeal and also the submissions made in the written arguments. The contention of the learned Counsel for the appellants is as follows: -
"It is urged that there is no mis-declaration either in import or export consignments. During the entire period in dispute i.e. December, 2006 to February, 2009, no instance of mis- declaration was ever detected by the proper officer of Customs/ NSEZ either at the time of import or at the time of export, while allowing the clearance of goods for home consumption under Section 47 or allowing clearance of goods for exportation under Section 51 of the Customs Act. It is nowhere the case of the Revenue that the appellants were in collusion with any of the proper officer of Customs or of the Special Economic Zone. On the contrary, the procedure for import and export prescribed under Rule 28 and 46 of the SEZ Rules were strictly followed. On receipt of the imported goods, the same were duly examined, purity of gold was checked on the karatometer and thereafter the imported jewellery was mutilated by the authorized / preventive officer. The procedure prescribed for export also does not bar examination of export goods and merely because the appellant was working under self- certificationprocedure, allegation of mis-declaration is only presumptive, not corroborated by any material.
51. Vide approvals dated 14.12.2006 and 03.09.2007 by the Competent Officer of Noida Special Economic Zone, the appellant‟s firm 35 was authorized to import old/ idle/ outdated gold jewellery for melting and re-making into finished product for export. Thus, import of not only old jewellery but also outdated or out of fashion jewellery was permitted. Since the goods or imported jewellery was outdated in the country of origin (Dubai and Singapore), hence the same was declared as outdated gold jewellery, also at times such jewellery appears, to be new. Therefore, the report of jewellery appraiser that the imported consignments seized from the SEZ Unit,contained new jewellery, does not in any manner support the case of Revenue.
52. Learned Counsel further urges that the allegation of clandestine removal of imported jewellery from the SEZ Unit is incorrect, presumptive and not supported by any evidence.
53. Movement of goods from SEZ to DTA is restricted and is only possible after checking by and with the prior permission of the authorized officer (Officers of the Customs). For obtaining such permission, it is required to submit import license (Rule 47 (a) of SEZ Rules) and presentation of Bill of Entry by the DTA buyer (Rule 48(1) of SEZ Rules). Therefore, alleged clandestine clearance of 3,568.385 kg. of gold jewellery and 181 kg. of gold bars is impossible without the connivance of the authorised Officers of the SEZ / Customs, which is not the case of Revenue, nor there is a whisper of connivance in the show cause notice.
54. The entire case set up by the Revenue alleging clandestine removal of the imported jewellery is based on statements of various 36 persons, who were neither offered for cross-examination, nor examined in the adjudication proceedings. Further, Section 138B of the Customs Act, has not been invoked in respect of such persons. At any rate, confessional statement of one co-accused cannot be relied upon as substantive piece of evidence against the other co-accused. It has been so held by the Hon‟ble Supreme Court in the case of Vinod Solanki vs. Union of India
55. The material in support of allegation of clandestine clearance is only against M/s V.S. Jewellers Pvt. Limited, with whom the appellant was only sharing space under the permission granted by the Development Commissioner of the Special Economic Zone. In the case of this appellant, show cause notice only relied upon following evidences: -
(a) One fax message sent by overseas supplier M/s Mahesh & Co.
TTE Ltd., Singapore, which does not corroborate with the corresponding shipping bill and hence cannot be relied upon.
(b) Five fax messages sent by M/s Shakti Jewelers Pvt. Ltd., in respect of which adverse inference has not been drawn in para 8 of the precedent final order of this Tribunal dated 12.09.2020 (in case of co- noticees/ appellants).
(c) Two invoices alleged to be parallel invoice which were prepared by the appellant but cancelled due to necessary correction, which does not lead anywhere in absence of corroborative evidence.
(d) Noting made in the private record such as „B‟, „C‟, „D‟ etc., which was made to co-relate the name of the head karigar / artisan, under whose supervision jewelry was melted or remade and remarks made on private records, the erroneous view has been presumed by the Adjudicating Authority on the basis of Section 139 of the Act, which can be invoked only in prosecution proceedings, that too before a Court. Whereas the proceedings before the Adjudicating Authority where 37 adjudication proceedings and were not prosecution proceedings. Further, the Adjudicating Authority is also not a Court.
55.1 It is further urged that rejection of declared value under the Customs Valuation Rules read with Section 14 is illegal and bad. The value of the imported goods declared by the importer can be rejected under Section 14 of the Act read with Rule 12 of the Valuation Rules, only if -
(i) the Proper Officer has reason to belief or doubt the truth or accuracy of the value declared or;
(ii) on request of the importer. Once the allegation of mis- declaration at the time of import are not sustainable, then the proper Officer cannot have any reason to doubt the truth or accuracy of the value declared and there was also no such request from the appellant‟s firm.
55.2 It is further urged that the Officers of DRI (who issued the show cause notice) and the Adjudicating Authority are not competent to deny the exemption under Section 26 of the Special Economic Zone Act.
56. The Special Economic Zone Act being a special law (having overriding effect on other tax laws etc.), the jurisdiction to deny benefit / exemption under Section 26 and thereafter demand duty under Section 30 is conferred on the specified Officer posted in the Special Economic Zone alone. Whereas, the Officers of Customs - DRI and the jurisdictional Custom Commissionerate has been authorized to carry inspection, search or seizure only after issuance of Notification Nos. 2665, 2666 and 2667 all dated 05.08.2016. Thus, prior to 05.08.2016, the 38 Officers of DRI - Customs have no jurisdiction to conduct investigation and issue show cause notice, denying the benefits under Section 26 of the Special Economic Zone Act. Since the show cause notice is the foundation on which the case of Revenue was based and the show cause notices dated 12.11.2013 and other (issued prior to 05.08.2016), itself is bad in law, thus, the demand made pursuant to adjudication of such show cause notice(s) is also bad and wholly without jurisdiction. The impugned order is fit to be set aside on this score alone.
57. Once the case made by Revenue regarding clandestine removal and mis-declaration in export goods is not sustainable, then benefit of exemption under Section 26 of the SEZ Act cannot be denied and demand of duty under Section 30 of the said Act cannot be raised or demanded, as there is no evidence that imported goods were not used by the appellant for the authorized operation, but were clandestinely removed.
58. The present show cause notices issued by the Additional Director General of DRI, Customs are wholly without jurisdiction. The Additional Director General, DRI, not being „the proper Officer‟, was not competent to issue show cause notice and hence the adjudication of the show cause notices in question is itself bad in law in view of the ruling of the Hon‟ble Supreme Court in the case of Canon India Pvt. Limited vs. Commissioner of Customs - 2021 SCC ONLINE SC 200. Similar view was also taken by the Hon‟ble Delhi High Court in the case of Mangli 39 Impex (supra). The appeal of Revenue was admitted by the Hon‟ble Supreme Court against the order of Delhi High Court. However, no stay was allowed. Similar view has also been reiterated by Hon‟ble Supreme Court in the case of CC vs/ M/s Agarwal Metals and Alloys, Order dated 31.08.2021 in C.A No. 3411/2020 reported at 2021-TIOL- 233-SC-CUS.LB.
59. Thus, seizure and confiscation of gold jewellery from the unit of appellant situated in Noida Special Economic Zone and from the residence of its Partner Shri Ajit Singh is illegal. On the date of seizure (06.02.2009) 24,746 gm of gold jewellery (recently imported) from the SEZ unit was made by the officer of DRI, whereas the power of seizure was vested in such DRI Officers vide Notification No. 2666 dt. 05.08.2016, and thus the seizure itself is patently illegal. Prior to 05.08.2016 such powers of inspection and seizure was vested only on the specified Officer (by Notification) under Section 20 and/or 21 of the Special Economic Zone Act read with the Customs Act.
60. The confiscation of aforementioned jewellery under Section 111 (j) and (o) is illegal as the two imported consignments were allowed to be cleared for processing/ manufacture in the SEZ unit by the proper Officer, and there was no occasion for the appellant not to observe the conditions for exemption. That is, using the imported goods/ gold jewellery in re-making of gold jewellery for export. Further, the two 40 consignments in question were seized even before the same were opened or inspected.
60.1 The confiscation of 822.17 gm of gold jewellery from the residence of Shri Ajit Singh (appellant) is also illegal, inasmuch as it was alleged by the revenue that the same was seized on the reasonable belief that it was manufactured out of clandestinely cleared imported gold jewellery, whereas Revenue have failed to prove its allegation of clandestinely clearance.
60.2 It is further urged that imposition of penalties is bad and illegal and the same is done in a mechanical manner without application of mind. The whole show cause notice is presumptive based on assumptions and presumptions. There is no evidence to suggest that goods were improperly imported or attempted to be improperly exported. Therefore, there is no question of imposition of any penalty under Section 112 or 114 or any other Sections. Since the demand of duty itself is not sustainable, hence there is no question of imposition of penalty under Section 114A. The appellant have also not used any incorrect or false material, hence, there is no question of imposition of penalty under Section 114AA.
60.3 Even assuming that the appellant‟s firm being a unit in the SEZ have committed the alleged contravention / offence, for which penalty under the aforementioned Section is attracted, then also no 41 penalty can be imposed for any alleged offence in the show cause notice, prior to issue of Notification dated 05.08.2016, for want of jurisdiction. 60.4 It is further urged that adverse inference cannot be drawn from the seizure of thirteen packages meant for export. The appellant firm as well as M/s V.S. Jewellers Pvt. Limited were operating from the same premises, for which due permission have been granted by the Development Commissioner, upon satisfaction of condition(s) such as separate demarcation of premises, separate account, separate entry and exit etc. which have been admittedly fulfilled by the appellant. 60.5 Two days prior to the date of search i.e. on 04.02.2009, gold jewellery weighing 41,315.02 gm was stolen from the premises of the appellant firm, which the appellant came to know only when the thirteen packages meant for export were opened by the Officer(s) conducting the search. The documents relating to this package were prepared by Shri Vikas Sharma, employee of M/s V.S. Jewellers Pvt. Limited, who admitted forging of signature of the Partner of the firm Shri Ajit Singh for preparing export documents of the 13 packages. Same quantity or matching quantity of jewellery was seized from the office of M/s V.S. Jewellers Pvt. Limited situated at Karol Bagh, New Delhi. The Directors and employee of M/s V.S. Jewellers Pvt. Limited could not give any cogent explanation regarding the source of jewellery seized on 06.02.2009 at their Karol Bagh Office. It is the case of these appellants that such jewellery was stolen from the premises of the appellant firm by Shri Komal Jain in 42 collusion with his brother Shri Kirti Jain and the staff of their company Shri Vikas Sharma. After stealing, these persons replaced the gold jewellery with brass jewellery/ scrap. These appellants have also filed FIR before the Police at Noida of such theft committed bythe named persons, being FIR dated 08.02.2009.
60.6 Even if adverse inference is drawn in respect of 13 export packages, then also the offence can only be that of mis-declaration, for which penalty under Section 114 can be imposed. Since iron scrap and iron are not prohibited goods, hence quantum of penalty cannot exceed 10% of duty sought to be evaded or Rs. 5,000/-, whichever is higher. As no duty was payable, hence, the quantum of penalty cannot exceed Rs. 5,000/-.
61. Opposing the appeals, learned Authorised Representative appearing for the Revenue relied upon the findings recorded by the Adjudicating Authority in the impugned order. He further urged that there is mis-declaration in the import consignments and as per the statement of person(s) brought on record during investigation, the imported new gold jewellery was to be diverted clandestinely in the local market and the appellants met their export obligation by exporting Indian made jewellery, etc. Therefore, the demand of duty, interest and penalty has been rightly confirmed against these appellants and the seized gold jewellery have been rightly confiscated.
43
62. Having considered the rival contentions, we deal with the issues as follows-
62.1 The first issue which arises for consideration is whether denial of exemption under Section 26 of the Special Economic Zone Act is sustainable and whether the amount of duty exempted can be recovered under Section 24 of the Act.
62.2 We have perused the records and we find that the denial of exemption is primarily based on the allegations that the appellant‟s firm have imported brand new gold jewellery by declaring the same as old /outdated gold jewellery and have clandestinely diverted the same to local market and thereafter have re-exported Indian made gold jewellery manufactured by the appellant or by third parties.Thus, the appellant have failed to fulfil their export obligation as required under the scheme of the Special Economic Zone.
62.3 We notice that the allegation of Revenue that the appellant has mis-declared the import consignments inasmuch as they have imported fully finished or high-end gold jewellery which did not require any further processing and have mis-declared the same as old/ outdated gold jewellery. Such allegation is based on the report of the Departmental jewellery appraiser, who in his report have stated that, the jewellery under import which were seized pursuant to inspection on 06.02.2009, appears to be new jewellery. On the basis of this report, 44 Revenue concluded that brand new jewellery was imported under the guise of old/ outdated jewellery and thereafter such jewellery was diverted in the local market. However, we find from the letters of approval dated 14.12.2006 and subsequent renewal dated 03.09.2007, issued by the competent authority of the Special Economic Zone, not only authorized the import of old/ outdated jewellery but also idle and outdated / out of fashion jewellery for melting and re-making into finished product/ new jewellery, for the purpose of export. Thus, the appellant‟s firm was evidently authorized to import old/ outdated jewellery or damaged jewellery for melting and re-making into finished product for export. Such outdated jewellery or out of fashion jewellery may also appear at times to be new.Once this is so,we fail to understand how the report of jewellery appraiser supports the allegation of mis-declaration. The report of jewellery appraiser nowhere states that the jewellery was not outdated, but it states that the jewellery was appearing as new. Thus, all that glitters is gold. Thus,we hold that the report of jewellery appraiser does not advance or support the allegations of Revenue. 62.4 Further, it is admitted case on facts that during the period in question, the proper Officer of Customs / Special Economic Zone regularly assessed the Bills of Entry filed by these appellants and on finding the same to be tallying with the declaration made in the Bill of Entry allowed the import, each and every time. Never before any mis-declaration was found. There is no allegation by Revenue that these appellants were in collusion with such proper Officer of the Customs / Special Economic 45 Zone. Once this is so then the allegations in the case set up by Revenue regarding mis-declaration in the import consignments is clearly presumptive and not based on any cogent evidence.
62.5 We are also benefited by the findings of the Coordinate Bench of this Tribunal at Allahabad and reproduce the findings recorded in para 20 and 30 of the Final Order dated 09.07.2019, which reads as under: -
"20. In any case and in any view of the matter, we note that the Revenue's allegation and findings are to the effect that the said appellant has sent brand new jewelry under the garb of old jewelry and has received back gold bar and other Indian jewelry from the SEZ unit. We note that the Customs Authorities are required to examine the goods at the time of import as well as export of the same. Admittedly the imported old jewelry was cleared by the SEZ units on presentation of documents, which were verified by the Customs Authorities. Similarly, export has taken place by filing the documents with the Customs Authorities who have verified and assessed the same. At the time of assessing bill of entries as also shipping bills, Customs are expected to do the examination of the goods which in the absence of any evidence to the contrary, can be presumed to have been done by the Customs. Revenue has not brought any incident on record or to our knowledge that such examination has resulted in identification of the goods other than the one declared in the documents. We really fail to understand that when the jewelry was imported by the SEZ units and when the same was subsequently exported, the declarations filed by the two SEZ units in the bills of entries as also in the shipping bills were found to be correct by the Customs Authorities, how could Revenue allege to the contrary based upon only the statements recorded during the investigation.
30. We further note that as per the findings of the Adjudicating Authority, the two SEZ units were importing the brand-newjewelry in the guise of old jewelry for the purpose of remaking, re-polishing etc. of the same and then exporting the gold bars or gold jewelry locally procured by them. In terms of the provisions of the Customs Act, the goods imported as well as at the time of export are required to be examined by the Customs Authority and it is only thereafter the goods are allowed clearance either for export or for import. It is reasonably expected that the Customs Authority must have done their job and must have examined the goods at the time of import as well as at the time of export. There is nothing on record to show that any discrepancy was found either in the import or export consignment of the two SEZ units. Neither it is Revenue's case that the Customs Officers 46 connived with the SEZ units who clear their consignment for import or export without examination. The assessment having been done by the Customs at the time of import of gold jewelry from Dubai, Singapore or other countries and at the time of the export of remade jewelries to the said countries and having not been revoked by the proper officer under the provisions of Customs Act, we really fail to understand as to how Revenue can allege to the contrary and impose penalties upon the appellants".
62.6 In view of our findings recorded hereinabove which are also fortified by the findings by the Coordinate Bench at Allahabad, on the allegations or issue of mis-declaration, we hold that the question of rejection of transaction value also does not survive against the appellants. We further find that the Bills of Entry were duly assessed by the proper Officer of Customs in accordance with law and such order of assessment have not been reviewed or challenged by the Revenue.
63. Now coming to the next issue as regards the allegation of clandestine removal of imported jewellery to the local market, learned Counsel for the appellants has submitted that the show cause notice refers to various materials, but the same are related to M/s V.S. Jewellers Pvt Limited (who were sharing the premises with the appellants in the Special Economic Zone), and no material evidence is available against the appellant‟s firm. It is further urged that on the basis of contents of some fax messages etc., which have been presumed be correct by the Adjudicating Authority, by applying Section 139 of the Customs Act. We have examined the evidence as referred to in the show cause notice, as well as in the impugned order, and we find the submissions to be correct. The material which has been presumed to be correct under Section 139 of 47 the Customs Act is one fax message of M/s Mukesh & Co. PTE Ltd., Singapore, five fax messages of M/s Shakti Jewellers Pvt. Ltd., two sets of parallel invoices and noting in private records such as „B‟, „C‟, „D‟.
64. As far as the invocation of Section 139 by the Adjudicating Authority is concerned, a plain reading of this provision shows that it creates the presumption, only when any document is seized from the custody or control of any person, is tendered in prosecution in evidence against him before a Court. In the present case, the proceedings in question are adjudication proceedings and not that of prosecution and also the Adjudicating Authority is clearly not a Court, but a Quasi-Judicial Authority. Thus, Section 139 does not have any application in the facts of the present adjudication proceedings. In our conclusion, we are fortified by the ruling of Hon‟ble Bombay High Court in Ballarpur Industries vs. Union of India - 1991 (51) ELT 13 (Bom.). Thus, we hold that the Adjudicating Authority have erred in presuming the contents of fax message, parallel invoices and the notings in private records, as reliable by applying the provision of Section 139 of the Customs Act. However, as learned AR have vehemently relied upon the contents of the fax messages, parallel invoices and the notings in private records, hence, we are dealing with the same in details in the following paragraphs. 64.1 The fax message sent by M/s Mahesh & Co. PTE Ltd., Singapore shows receipt of 32,834.02 gm, which matches with the quantity disclosed in export consignments, and hence we fail to 48 understand how the fax messages supports the case of clandestine removal in the local market, when the fax message was sent by a person from outside the country. At best, the same may lead to inference that the appellant firm exported goods of M/s V.S. Jewellers Pvt. Limited against its export invoices, but the same does not prove the charge of clandestine removal of imported gold jewellery in the local market. 64.2 As far as the fax messages allegedly sent by M/s Shakti Jewellers Pvt. Ltd., are concerned, the Coordinate Bench of this Tribunal in its Final Order dated 12.09.2019 have already held that the same were not related to M/s Shakti Jewellers Pvt. Limited. On the face of this finding such fax message cannot be relied upon against these appellants, when the person who sent these fax messages and the contents thereof, are not established by the Revenue. The fax machine was also being used by other / neighbours, as stated in the statement of the Director of M/s Shakti Jewellers.
64.3 Now coming to the alleged parallel invoices, we find that the show cause notice alleges only two sets of export invoices, as parallel invoices. In respect of these, the explanation given by the appellant‟s firm is that the two invoices were initially prepared and thereafter subsequently cancelled, due to necessary correction. First set of invoice shows export of 27,888 gm of jewellery instead of 28000 gm whereas the second set of invoice shows export of 27,254.60 gm of jewellery instead of 27000 gm Even if the allegation of parallel invoices is accepted, on one 49 occasion the appellant firm can be said to be guilty of exporting less quantity and on the other occasion excess quantity, which leads us to nowhere, as export was duty free. Further, we find that such excess quantity is nominal and an invoice may be revised for clerical errors, which does not invite any adverse inference, unless there are other supporting reasons for the same. This nominal shortage and/ excess in export of goods, which is only on two occasions cannot form the basis for the charge of clandestine removal of 27,888.50 gm and 22,254 gm of gold jewellery in the domestic market. There is virtually no evidence in support of the charge of clandestine removal, and in absence of any cogent evidence on record, we hold that the charge of clandestine removal cannot be sustained.
64.4 As regards the noting „B‟, „C‟, „D‟ etc., Revenue have alleged that the same refers to the name of buyers of clandestinely cleared gold jewellery, whereas the explanation furnished by the appellant is that the same refers to the names of the head karigars under whose supervision jewellery was melted or remade and remarks made in the private records. We find that other than statement of various persons, the Revenue have not brought on record any corroborative evidence to show as to who are „B‟, „C‟, and „D‟ and what was the consideration received by the appellant from them.
64.5 Further, Revenue has also not produced the person before the Adjudicating Authority for examination and consequent cross- 50 examination, whose statements have been relied upon in support of the allegations by Revenue, for cross-examination. Therefore, in our opinion all such statements cannot be read as evidence against the appellant, being in violation of the provisions of Section 138B of the Customs Act. The Adjudicating Authority have not stated any of the exception as provided in Section 138B, for not examining the witnesses of Revenue. We further find that these appellants have made specific prayer for examination of the witnesses including cross-examination, which have been rejected without any cogent reason or order. Therefore, we hold that all these statements recorded during investigation have to be ignored and the same cannot be read as evidence in support of the allegation, in the show cause notice. We refer to the similar views taken by the coordinate Bench at Allahabad in the aforementioned Final Order dated 09.07.2019, we reproduce para 27 from the said order: -
"27. At this state we may refer to certain precedent decisions on the issue of the findings of clandestine activities based upon the statements of various deponents, who have not been allowed cross- examination. The Hon'ble Supreme Court in the case of Andaman Timber Industries v. Commissioner of C. Ex. Kolkata-II reported as MANU/SC/1250/2015, while dealing with the cross-examination of the witnesses observed that not allowing the assessee the cross-examination of witnesses is a serious flaw which makes the order nullity inasmuch as the same amounts to violation of principles of natural justice because of which the assessee was adversely affected. The Hon'ble Supreme Court further observed that when the assessee disputed the correctness of the statements and wanted to cross-examine and such opportunity was not given, the rejection of this plea is totally untenable. It is not for the adjudicating authority to have guess work as to for what purposes the appellant wanted to cross-examine. It was not for the adjudicating authority to pre-suppose as to what could be the subject matter of the cross-examination. By observing so, the order impugned before the Hon'ble Supreme Court was set aside.51
Similarly in the case of M/s Modern Polythene v. Commissioner of Trade Tax, U.P. Lucknow the Hon'ble Supreme Court observed that when the taxing authority choose to levy tax or conclude that payment of tax has been evaded on the basis of statements of the individuals, the assessee must necessarily be granted an opportunity to cross-examine. Such adverse material can neither be introduced, nor form the foundation for the imposition of additional tax without an opportunity being afforded to the assessee to challenge the statements in cross- examination. Accordingly, the order impugned before the Hon'ble Supreme Court was set aside.
Similarly, the Hon'ble Allahabad High Court in the case of Commissioner of Central Excise v. Parmarth Iron Pvt. Ltd., reported as MANU/UP/2113/2010 by referring to various precedent decisions held that if the Revenue chooses not to examine any witness in adjudication, their statements cannot be considered as evidence. If the Revenue chooses to rely on the statements, then in that event the persons, whose statements are relied upon have to be made available for cross- examination for the evidence or statements to be considered. The said decision in the case of M/s Parmarth Steel was subsequently followed by the Hon'ble Allahabad High Court in the case of Commissioner of Central Excise, Lucknow vs. M/s Shyam Traders reported as 2016 (333) ELT 389 (All.) a reference was made to the same and the Hon'ble Supreme court decision in the case of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata reported at 2015 (324) ELT 641 (SC), the Tribunal's decision allowing cross-examination of the witnesses was upheld."
64.6 Once the statement(s) recorded during investigation are ignored and the other material relied upon against the appellant have been held to be insufficient, we find there is no other evidence to support the charge of mis-declaration and clandestine removal. We further take note of the admitted facts that the movement of goods in and out of the SEZ, or from the SEZ to the domestic tariff area restricted subject to approval. It is also not the case of the Revenue that the appellants have connived that the Officer of the Customs or the Special Economic Zone who were monitoring the movement of the goods. In absence of any 52 cogent evidence and any allegation of connivance, we hold that the allegations of clandestine removal are clearly presumptive. We further observe that the charge of clandestine removal is a serious charge and the same cannot be upheld merely on the basis of assumption and presumption. Applying this principal, the demand confirmed in the impugned order under Section 28 of the Act, by denying the exemption under Section 26 of the SEZ Act cannot be sustained and accordingly we set aside the same.
64.7 Once the allegation of mis-declaration, clandestine clearance, denial of exemption under Section 26 being set aside and decided in favour of the appellants, we hold that the imposition of penalties against these appellants also cannot be sustained. Accordingly, we set aside all the penalties imposed on the appellants.
65. Now, we take up the issue of confiscation of gold jewellery from the shared factory premises and the residence of Shri Ajit Singh. We note that confiscation under clauses (j) and (o) of Section 111 is attracted if any dutiable / prohibited goods are removed from the Customs area/ warehouse without the permission of the proper Officer or contrary to such permission, and/or, where condition of exemption is not observed. It is an admitted fact in this case that the two import consignments seized from the factory premises at the time of search, had been cleared by the proper Officer of Customs for reprocessing in the Special Economic Zone, in the unit of the appellant. As such, it cannot be 53 said or held that such goods were removed from the Custom area or warehouse without the permission of the proper Officer. Further, these two consignments were seized even before the said consignment could have been opened by the appellant, and hence there was no occasion for the appellant not to observe the conditions of exemption, i.e., export of manufactured jewellery after processing/ remaking. Therefore, we hold that both the clauses (j) and (o) of Section 111 are not attracted in the facts of the present case.
66. Further, as regards gold jewellery seized from the residence of Shri Ajit Singh (appellant) on the ground that the same was manufactured out of the clandestinely cleared imported gold jewellery. Once the charge of clandestine clearance of imported jewellery has been held to be not sustainable, then confiscation on this ground can also not be sustained. Therefore, we set aside the confiscation of 24,746 gm and 822.17gm of gold jewellery.
67. As regards the ground taken - there being lack of jurisdiction on the part of Custom Officers including the Officers of DRI, we take notice that the Hon‟ble Supreme Court in its ruling in Canon India Pvt. Limited vs. Commissioner of Customs -2021 SCC ONLINE SC 200 hasheld that Notification No. 40/2012 dt. 02.05.2012 appointing the Officers of DRI as proper Officer (under Customs Act), having been issued by an Authority which has no power to do so in purported exercise of power under a Section, which does not confer such power. We reproduce 54 the findings of Hon‟ble Supreme Court in para 22 of the order, which reads as follows: -
"22. If it was intended that officers of the Directorate of Revenue Intelligence whoare officers of Central Government should be entrusted with functions of the Customsofficers, it was imperative that the Central Government should have done so inexercise of its power under Section 6 of the Act. The reason why such a power isconferred on the Central Government is obvious and that is because the CentralGovernment is the authority which appoints both the officers of the Directorate ofRevenue Intelligence which is set up under the Notification dated 04.12.1957 issuedby the Ministry of Finance and Customs officers who, till 11.5.2002, were appointed bythe Central Government. The notification which purports to entrust functions as properofficer under the Customs Act has been issued by the Central Board of Excise andCustoms in exercise of non-existing power under Section 2(34) of the Customs Act.The notification is obviously invalid having been issued by an authority which had nopower to do so in purported exercise of powers under a section which does not conferany such power."
68. We further note that in the present case, it is the officer of DRI, who has issued the show cause notice demanding duty and penalty under Section 28 of the Customs Act, which power can be exercised only by „the proper Officer‟. Once the Additional Directorate General of DRI is not „a proper Officer‟, we have no hesitation to hold that the show cause notice itself is wholly without jurisdiction, and any demand based on such show cause notice(s) cannot be sustained.
69. We further find that the Additional Director General, DRI have been authorised to investigate offences relating to Customs, and the Additional Director General of DGCEI to investigate offences relating to Central Excise and Service Tax committed in the SEZ, have been conferred on them - including the power of inspection, investigation, search or seizure, for the first time vide Notification No. 2666(E)(M.C. and 55 I.) (D.C.) dated 05.08.2016. Thus, evidently the whole exercise of inspection, search & seizure and investigation in the present case, which was admittedly done prior to the aforementioned Notification dt. 05.08.2016, we hold that it is wholly without jurisdiction. Accordingly, we hold that the show cause notices which have been adjudicated in the impugned order-in-original for the purpose of demand of duty and consequential confiscation of goods are wholly without jurisdiction. Accordingly, the impugned order is fit to be set aside on this score alone.
70. Since we have held that the show cause notices are without jurisdiction in view of the Notification dated 05.08.2016, mentioned hereinabove and also relying on the ruling of Hon‟ble Supreme Court in the case of Canon India (supra), as well as on merits, the impugned orders are set aside and the appeals are allowed.
71. Accordingly, we set aside the impugned orders so far it relates to the present appellants and the appeals are allowed with consequential benefits to these appellants, including the return of confiscated gold jewellery alongwith amount appropriated under the impugned order. 56
72. Thus, the appeals are allowed in the aforementioned terms (Pronounced on 31.01.2022).
(ANIL CHOUDHARY) Member (Judicial) (P. ANJANI KUMAR) Member (Technical) Pant