Custom, Excise & Service Tax Tribunal
Mmtc Pamp India Pvt Ltd vs New Delhi -Acc Import on 13 May, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. I
CUSTOMS APPEAL NO. 54789 OF 2023
(Arising out of Order-in-Original No. 51/2022-23/S.J./Principal Commissioner dated
31.12.2022 passed by the Principal Commissioner of Customs, ACC (Import), New Delhi)
M/s MMTC Pamp India Pvt. Ltd. ...Appellant
Rojka-Meo Industrial Estate,
Tehsil Nuh
District- Mewat, Haryana- 122103
VERSUS
Principal Commissioner of Customs ...Respondent
Air Cargo Complex (Import),
New Customs House, Near IGI Airport
New Delhi- 110037
APPEARANCE:
Shri Tushar Jarwal, Shri Rahul Sateeja and Ms. Pakhi Jain, Advocates for the
Appellant
Shri Gurdeep Singh, Special Counsel for the Department and Shri Rakesh
Kumar, Authorized Representative for the Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P. V. SUBBA RAO, MEMBER (TECHNICAL)
Date of Hearing: 26.11.2024
Date of Decision: 13.05.2025
FINAL ORDER NO. 50639/2025
JUSTICE DILIP GUPTA:
M/s MMTC Pamp India Pvt. Ltd. 1 has sought quashing of the order
dated 31.12.2022 passed by the Principal Commissioner of Customs
House, New Delhi 2 insofar as it confirms the demand of differential
customs duty on the appellant to the extent of Rs. 164,75,70,456/- under
section 28(4) of the Customs Act, 1962 3 with interest under section 28AA
1. the appellant
2. the Principal Commissioner
3. the Customs Act
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of the Customs Act. The order also appropriates an amount of Rs.
152,22,81,144/- deposited by the appellant during investigation against
the aforesaid amount towards differential customs duty and an amount of
Rs. 54,52,09,459/- deposited by the appellant on account of interest. The
order also imposes a penalty of Rs. 164,75,70,456/- upon the appellant
under section 114A of the Customs Act.
2. The appellant asserts that it is engaged in gold and silver refining
and minting facilities and for performing these functions in India, the
appellant imports gold/silver dore bars under an actual user license
(import authorization) issued by the Directorate General of Foreign
Trade 4. The said dore bars are imported by the appellant from various
foreign suppliers, including International Bullion Banks, across the world
and for this purpose the appellant entered into separate contracts with
each of its supplier.
3. The list of suppliers and the contracts, as stated by the appellant,
is tabulated below:
S. No. Foreign Supplier Details of Agreements
1. M/s MKS, SA 5 Dore Sourcing Agreement 6 dated
02.02.2012 read with six
supplementary Agreements along with
supplemental Agreements
2. Standard Chartered Bank 7 Consignment, Safe keeping, Production
and Purchase Agreement for Precious
Metal dated 20.07.2012 8
3. Bank of Nova Scotia 9 Bullion Refining Agreement dated
05.12.2013 10
4. J.P. Morgan Ventures Energy Sale & Purchase Agreement of
Corporation 11 unrefined Gold Dore Bars dated
23.04.2018 12
4. DGFT
5. MKS
6. DSA
7. SCB
8. SCB Agreement
9. Scotia Bank
10. Nova Scotia Agreement
11. JP Morgan
12. JP Morgan Agreement
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4. On the basis of these Agreements, the modus operandi of the
imports, value finalization, and settlement effects by the appellant has
been explained by the appellant in the following manner:
(i) Supplier Assay and Shipping Invoice:
The appellant entered into DSA with MKS. In terms of this
Agreement MKS is, inter alia, responsible for sourcing the
gold and silver from various mines. In addition to directly
supplying dore bars to the appellant, MKS also
coordinates with the International Bullion Banks and
facilitates supply of dore bars through such banks. For this
purpose, the appellant pays MKS a fee of $1.75 per ounce
of gold content as Dore Procurement Charges. The two
suppliers, namely, International Bullion Banks and MKS
undertake assay tests in their manufacturing units.
Accordingly, the suppliers issue a provisional invoice
(titled, "Customs Invoice") mentioning the value of gold
and silver as the Packing List-cum- Assay Certificates. An
'assay' is the testing of a metal to determine the
ingredients and quality.
(ii) Assay and Determination of Value by Customs:
Post the importation of dore bars, they are cleared from
the customs charge, basis the provisional Bills of Entry.
The assessments are kept provisional against test bond
and are subsequently finalized, basis test reports received
from Central Revenue Control Laboratory 13.
(iii) The tests are undertaken by the Laboratory for the
purpose of allowing benefit under Serial No. 354 of
Notification No. 50/2017-Cus dated 30.06.2017 and S.
No. 318 of Notification No. 12/2012-Cus dated
17.03.2012 14. Both of these entries envisage the
fulfilment of condition of "Gold dore bar, having gold
content not exceeding 95%".
13. Laboratory
14. the Exemption Notifications
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(iv) Thereafter, the customs authorities match the results
from the Laboratory with the declaration made in the
provisional Bills of Entry. It is only after the above
confirmation that the provisional Bills of Entry are finalized
by the customs department. In this manner, the Bills of
Entry are finally assessed and cleared for home
consumption, after granting benefit under the Exemption
Notifications.
(v) Appellant's Assay:
The imported gold dore bars are taken to the factory of
the appellant, wherein they are weighed and melted to
form a homogenized solution. It is from such a solution
that multiple samples are drawn and sealed in the
presence of a representative appointed by individual
mining companies. One sample is assayed by a refinery
and another sample is sent to an overseas laboratory
nominated by the supplier. The two assay reports are
reconciled to agree on a final assay of gold/silver content
on the basis of which the final quantity of gold/silver is
determined. The settlement document called as "final
settlement report" becomes the final quantity. The
quantity mentioned in the aforementioned document is
one of the factors, basis which MKS or International
Bullion Banks issue the final supplier invoice capturing the
final quantity of gold and silver content in the dore bars.
(vi) Refining:
At the same time refining and manufacture of gold/ silver
alloys and gold/silver products as per the market
requirements are undertaken at the factory of the
appellant. The ownership, however, lies with the foreign
suppliers and the appellant merely acts as a bailee of the
goods.
(vii) Customer Invoicing and Settlement with Supplier:
Post the preparation of the settlement report for a given
Bill of Entry, the dore bars are refined and thereafter, a
customer is identified. For the purposes of purchase and
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subsequent sale, the value of the gold and silver post
refining is priced with the supplier back-to-back, i.e.,
when the finished gold or silver is priced with the
customers. Such pricing is done on the basis of the
prevalent international market rate for the value date
(i.e., date of remittance) for which the metal is being
priced.
(viii) Owing to the large quantity of dore bars, post the pricing
the supplier is informed regarding the LOT number against
which pricing is being done. In this manner, back to-back
invoicing and sale is undertaken by the appellant. Such
practice is being adopted by the appellant to insulate itself
from the resultant metal price and forex fluctuation during
the sales procedure.
5. The Directorate of Revenue Intelligence, Delhi Zonal Unit 15 initiated
an investigation against the appellant in the year 2016 in respect of the
aforesaid foreign supplier Agreement. During investigation, the appellant
paid the differential duty in respect of Dore Program Charges with interest
and penalty amounting to Rs. 12,18,87,864/- at the rate of 15% for the
period upto 12.04.2017.
6. Subsequently, the appellant deposited an amount of Rs.
161,80,45,988/- on 13.11.2020 towards the finalized 584 Bills of Entry for
the period 13.04.2017 to 18.12.2019. This included an amount of Rs.
1,25,91,83,119/- towards duty and an amount of Rs. 35,88,62,869/-
towards interest. The appellant also deposited an amount of Rs.
44,47,40,922 on 13.11.2020 towards the provisionally assessed 54 Bills
of Entry filed during 12.12.2017 to 15.07.2020 pending finalization.
7. A show cause notice dated 22.10.2021 was issued to the appellant.
The main allegations are:
15. DRI
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(i) For the purpose of verification of compliance of condition
set out in the Exemption Notifications all the Bills of Entry
of gold/silver dore bars were assessed provisionally
against test bond were finalized on the basis of the test
reports received from the Laboratory confirming that the
criteria laid in the Exemption Notifications that the gold
dore bars contained gold less than 95% was satisfied;
(ii) It was on 15.10.2020 that the importer submitted three
letters addressed to Deputy Commissioner stating therein
that during their internal review exercise, they noticed
certain inconsistencies in respect of the Bills of Entry
which had been finalized in the past. The importer pointed
out that the value declared in the invoices submitted at
the time of import was not the transaction value of import
and that it was finalized on the basis of invoices issued at
a later date by the supplier. It was further stated that
inconsistency took place as the Bills of Entry were
finalized on the basis of the provisional invoice instead of
the final invoice issued later by the supplier and further
that freight and Dore Procurement Charges 16 were also
paid based on provisional invoice as against the final
invoices;
(iii) At the time of commencement of import operations in the
year 2012 as well as at the time of reply to the
questionnaire in the year 2017, the appellant informed the
Customs that the declared value in the Bill of Entry was
the transaction value whereas it was provisional only
subject to finalization at a settlement date It also
16. DPC
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C/54789/2023
appeared that the importer did not disclose the facts
about the methodology of issuance of final invoices by
their foreign suppliers;
(iv) Prima-facie it appeared that the 'metal lease charges' and
the 'insurance premium' are includible in the assessable
value of imported goods in terms of section 14 of the
Customs Act read with the provisions of Customs
valuation Rules;
(v) To investigate the issue of outstanding remittances by the
importer to the various suppliers, a letter dated
13.05.2021 was sent to State Bank of India 17 with a
request to submit correspondences made with the
importer, Reserve Bank of India 18 or any other agency for
cases where remittances were made beyond 90 days from
the date of import. Upon perusal of the documents
received from SBI, it was found that the appellant had
made a representation dated 04.04.2019 to the said Bank
to settle the value of import of impugned goods within the
time stipulated by RBI (i.e. 90 days) so that the Bills of
Entry for the respective imports may be tagged to the
outward remittances in Import Data Processing and
Monitoring System 19 portal by Banks. Thereafter,
respective Bills of Entry could be closed in the IDPMS
portal as this portal required netting-off of Bills of Entry
with exact amount of remittance. The importer further
stated that due to several operational difficulties, it was
17. SBI
18. RBI
19. IDPMS
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not possible for them to remit the exact amount as
mentioned in the Bills of Entry;
(vi) While the investigation was in progress, the importer, by
a letter dated 31.08.2021, informed that it deposited an
amount of Rs 26,30,98,026/- towards differential duty for
the period 31.08.2016 to 12.04.2017 along with interest
amounting to Rs. 18,63,46,590/- vide TR6 Challan No
4128 dated 31.08.2021;
(vii) The importer approached the customs department only on
direction from the RBI to get the Bills of Entry revised or
to get a letter of confirmation from customs before
allowing the outstanding remittances. The said act of
approaching customs was not voluntary and all along the
importer misguided the customs that the value at the time
of imports was the transaction value, whereas the same
was provisional;
(viii) The fact of transaction value being provisional at the time
of import or the price actually paid each Bill of Entry wise
was not informed to the customs on 24.01.2012 when
they first informed their pricing mechanism nor during
filing of Bills of Entry or during finalization of the Bills of
Entry or in their submission during the investigation by
DRI or in their submission during the related party
enquiry by the Assessing Group. The Agreement
mentioned about an internal Agreement which was never
disclosed to the customs and by way of misrepresentation
of facts about the said internal arrangement or about
mutually accepted mechanism with their sellers, the
importer created a picture that mutually accepted
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mechanism / internal arrangement was that the price was
computed on the basis of London Bullion Market
Association 20 price a day before the handing over the
goods for import. The upward finalization of price at a
later date resulted in short payment of duty and huge loss
to the exchequer which needed to be demanded; and
(ix) It appeared that extended period of limitation provided
under sub-section (4) of section 28 of the Customs Act
was invokable for raising the demand against the importer
and, accordingly, the importer appeared to be liable to
pay the differential duty amounting to Rs.
152,22,81,895/- in respect of the imports of Gold Dore
Bars and Bills of Entry finalized during the period
24.10.2016 to 12.09.2020.
8. Regarding inclusion of Metal Lease Charges in the assessable value,
the show cause notice mentions:
"33.11 The authorized signatory of the importer vide
his statements dated 16.12.2021 and 10.02.2021
submitted that the metal lease charges are charged
by suppliers at applicable rates on daily outstanding
quantity of gold & silver multiplied with daily LBMA
rate. These charges were paid on a monthly basis
and it was not possible for them to compute the
metal lease charges for each Bill of Entry separately.
Therefore, in order to calculate the differential duty
on Metal Lease Charges, the monthly metal lease
charges (as provided by the importer) were added in
the assessable value of the Bills of Entry of
gold/silver dore bars cleared during the month on
pro-rata basis following it as a Best Judgment
method."
20. LBMA
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9. Thus, the differential duty amounting to Rs. 12,17,01,840/- not paid
on the amount of metal lease charges paid to the suppliers during the
period from 24.10.2016 to 12.09.2020 to appeared liable to be recovered
from the importer.
10. As regards the inclusion of Post Import Insurance Premium in the
assessable value, the show cause notice states:
"The importer did not disclose payment of insurance
premium on the imported goods as a condition to
sale and mis-represented that no amount was paid
to the foreign supplier as a condition to sale. As per
the details submitted by the importer, it was not
possible to calculate the insurance premium
separately for the imported precious metal owned by
the foreign suppliers and kept in the premises of the
importer as a bailee. Using the best judgment
method, the importer appeared liable to pay the
duty in the First Bill of Entry filed immediately after
the payment of insurance premium. Hence, it
appeared that the importer is liable to pay the
differential duty amounting to Rs. 35,86,722/- for
the period from 24.10.2016 to 12.09.2020 under
Section 28(4) of the Customs Act."
11. The appellant filed a reply to the show cause notice and denied the
allegations made therein.
12. The Principal Commissioner framed the followings issues to be
decided:
"i. Whether the assessable value declared by the
importer in the Bills of Entry as enlisted in the
Annexures to the show cause notice should be
computed in terms of final invoices submitted by
them and after addition of metal lease charges and
insurance premium in order to arrive at the true
transaction value in terms of Section 14 of the
Customs Act, 1962;
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C/54789/2023
ii. Whether the imported goods valued at Rs.
54563,18,86,790/- (Rupees Fifty Four Thousand
Five Hundred and Sixty Three Crores Eighteen
Lakhs Eighty Six Thousand and Seven Hundred
Ninety only) were liable for confiscation under
Section 111(m) of the Customs Act, 1962;
iii. Whether the differential Customs duty
amounting to Rs. 164,75,70,456/- ( Rupees One
Hundred Sixty Four Crores Seventy Five Lakhs
Seventy Thousand Four Hundred Fifty Six Only)
evaded/short paid by them was liable to be
demanded and recovered from the importer by
invoking the extended period of limitation as per
provisions of Section 28(4) of the Customs Act,
1962;
iv. Whether interest was liable to be demanded and
recovered from the importer on the aforesaid
evaded/short paid Customs duty in terms of section
28 AA of the Customs Act, 1962;
v. Whether importer was liable to face penal
consequences under Section 112(a)(ii) of the
Customs Act, 1962 for the act and omission
rendering the goods liable for confiscation;
vi. Whether importer was liable to face penal
consequences under Section 114A of the Customs
Act, 1962 for having short paid the duty by reason
of willful misstatement and suppression of facts;
vii. Whether Managing Directors, CFO and
Logistics Headwere liable to face penalty under
Section 112(a)(ii) of the Customs Act, 1962 for the
act and omission rendering the goods liable for
confiscation."
13. The Principal Commissioner held that the extended period of
limitation was correctly invoked for raising the demand and that the
importer was liable to pay penalty equal to the duty under section 114A of
the Customs Act. The Principal Commissioner also held that the appellant
was liable to pay differential duty amounting to Rs. 12,17,01,840/- not
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paid on account of metal lease charges and differential duty amounting to
Rs. 35,86,722/- on insurance premium.
14. Shri Tushar Jarwal, learned counsel for the appellant assisted by
Shri Rahul Sateeja and Ms. Pakhi Jain made the following submissions:
(i) The show cause notice dated 22.10.2020 should not have
been issued to the appellant in view of the provisions of
section 28(2) of the Customs Act since duty amounting to
Rs. 152,22,81,144/- with interest amounting to Rs.
54,52,09,459/- was paid by the appellant on 13.11.2020;
(ii) Re-assessment could not be initiated under section 17(4)
of the Customs Act after clearance of goods and in any
case once assessment was opened the appellant would
also be entitled to claim refund of Rs. 126,85,29,002/- in
respect of 853 Bills of Entry;
(iii) The extended period of limitation under section 28(4) of
the Customs Act could not have been invoked in the facts
and circumstances of the case;
(iv) Penalty under section 114A of the Customs Act; and
(v) The metal lease charges and insurance premium could not
have been included in the transaction value in terms of
section 14 of the Customs Act.
15. Shri Gurdeep Singh, learned special counsel assisted by Shri Rakesh
Kumar appearing for the department, however, supported the impugned
order and submitted that it does not call for any interference in this
appeal and made the following submissions:
(i) The department was justified in issuing the show cause
notice after invoking the extended period of limitation;
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C/54789/2023
(ii) The appellant is not justified in contenting that the show
cause notice could not have been issued to the appellant
in view of the provisions of section 28(2) of the Customs
Act as the appellant had deposited the amount prior to
the issuance of the show cause notice and informed the
department;
(iii) The Principal Commissioner was justified in imposing
penalty under section 114A of the Customs Act; and
(iv) The Principal Commissioner was justified in ordering for
inclusion of the metal lease charges and insurance
premium with the transaction value.
16. The submissions advanced by the learned counsel for the appellant
and the learned special counsel appearing for the department have been
considered.
17. The transaction value of the gold/silver dore bars imported by the
appellant has been rejected for the following reasons:
(i) The difference in value, basis the final invoice has to be
included in the assessable value;
(ii) Metal lease charges have to be included in the assessable
value; and
(iii) Post-import insurance premium has to be included in the
assessable value.
18. The order passed by the Principal Commissioner confirms
differential customs duty of Rs. 164,75,70,456/- and appropriates an
amount of Rs. 152,22,81,144/- deposited by the appellant during
investigation. The details are contained in the following chart:
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Sl. No. Particulars Amount
in Rs.
1. A Valuation of imported goods on the basis of 152,22,81,895/-
final invoices in respect of 714 Bill of Entires
finalized during the period from 24.10.2016
to 10.06.2020
B Differential duty paid on suo moto basis 152,22,81,144/-
C Differential duty payable (A-B) 750/-
2. A Metal Lease Charges in respect of 1567 Bill of 12,17,01,840/-
Entries finalized during the period from
24.10.2016 to 12.09.2020
3. A Insurance premium in respect of 4 Bill of 35,86,722/-
Entries finalized
4. Total differential value (1A+2A+3A) 164,75,70,456/-
5. Net total (1C+2A+3A) 12,52,89,312/-
19. It would be seen from the aforesaid chart that out of the total
differential value of Rs. 164,75,70,456/-, an amount of Rs.
152,22,81,144/- was suo moto deposited by the appellant before the
issuance of the show cause notice towards the valuation of goods on the
basis of final invoices. The balance amount of Rs. 12,52,89,312/- is
towards the metal lease charges and insurance premium.
20. The first issue that needs to be decided is whether the extended
period of limitation contemplated under section 28(4) of the Customs Act
could have been invoked in the facts and circumstances of the case and
whether penalty under section 114A of the Customs Act to the extent of
Rs. 164,75,70,456/- could have been imposed upon the appellant.
21. Sections 28(1) and 28(4) of the Customs Act are reproduced below:
"28. Recovery of duties not levied or not
paid or short-levied or short-paid or
erroneously refunded
(1) Where any duty has not been levied or not
paid or short-levied or short-paid or erroneously
refunded, or any interest payable has not been paid,
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part-paid or erroneously refunded, for any reason
other than the reasons of collusion or any willful mis-
statement or suppression of facts,-
(a) the proper officer shall, within two years
from the relevant date, serve notice on the
person chargeable with the duty or interest
which has not been so levied or paid or
which has been short-levied or short-paid or
to whom the refund has erroneously been
made, requiring him to show cause why he
should not pay the amount specified in the
notice;
Provided that before issuing notice, the proper
officer shall hold pre-notice consultation with the
person chargeable with duty or interest in such
manner as may be prescribed;
(b) the person chargeable with the duty or
interest, may pay before service of notice
under clause (a) on the basis of,-
(i) his own ascertainment of such duty; or
(ii) the duty ascertained by the proper officer,
the amount of duty along with the interest payable
thereon under section 28AA or the amount of
interest which has not been so paid or part-paid.
Provided that the proper officer shall not serve such
show cause notice, where the amount involved is
less than rupees one hundred.
*****
(4) Where any duty has not been 10[levied or not paid or has been short-levied or short-paid] or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of,-
(a) collusion; or
(b) any wilful mis-statement; or
(c) suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper 16 C/54789/2023 officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been 11[so levied or not paid] or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice."
22. The relevant portion of section 114A of the Customs Act under which penalty has been imposed upon the appellant is reproduced below:
"114A. Penalty for short-levy or non-levy of duty in certain cases Where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (2) of section 28 shall also be liable to pay a penalty equal to the duty or interest so determined:"
23. The conditions set out for invoking the extended period of limitation under section 28(4) and for imposing penalty under section 114A of the Customs Act are identical and, therefore, the two issues can be dealt with together.
24. Regarding the invocation of the extended period of limitation, the Principal Commissioner observed that the appellant approached the department only when it was asked by the Reserved Bank of India to do so and after placing reliance upon the decisions of the Tribunal in M/s. Sunbeam Light Weighing Solutions Pvt. Ltd. vs. CGST, Alwar 21; M/s. Aquatech Systems (Asia) Pvt. Ltd. vs. CC (Import),
21. 2022 (380) E.L.T. 215 (Tri. - Del.) 17 C/54789/2023 Mumbai 22; and the judgment of the Madras High Court in M/s. Maruthi Plastics vs. CCE, Chennai-I 23, observed that the extended period of limitation was correctly invoked.
25. Regarding the imposition of penalty under section 114A of the Customs Act, the Principal Commissioner observed:
"61.1 The Show Cause Notice also proposes to impose penalty upon the noticees under Section 112(a) and 114A of the Customs Act, 1962. The penal provisions in the statute book have been enacted with the intention as a deterrent measure to suppress the evil of defrauding revenue, to curb the evasion and un-lawful acts. The important distinguishing aspect of the penal provisions stated under Section 112 and 114A is that if it is proved beyond doubt that the noticees act of omission and commission by reason of collusion or any willful mis-statement or suppression of facts had resulted in the short levy/non-levy of the duty, in such cases penalty under Section 114A of the Customs Act, 1962 becomes imposable.
61.2 It has already been discussed above that the importer was aware that the value was not final and for the said omission to truthfully disclose the value at the time of filing of Bill of entry, the importer have rendered the said goods liable for confiscation and themselves liable for penalty Further, for the act of short payment of duty by way of willful mis- statement and suppression of facts and for which the duty has been demanded by invoking the provisions of sub section 4 of Section 28 of the Customs Act, the importer had rendered themselves liable to pay a penalty equal to the duty under Section 114A of the said Act.
61.3 The noticees has vehemently submitted that as far as differential duty was concerned this was paid by them suo moto. However their tall claim of suo motto payment has already
22. 2019 (369) E.L.T. 935 (Tri.-Mumbai)
23. 2019 (367) E.L.T. 43 (Mad.) 18 C/54789/2023 been negated in the paras above bringing to the fore the compelling circumstances under which the said payments were made. Further they have submitted that penalty was not imposable when the issue was one of interpretation of law. I find that the case is not of interpretation of law. It is a matter of fact wherein the importer has willfully submitted provisional invoice at the time of import in their Bill of Entry, but, remitted the amount as per the final invoice. In a commodity like gold which is an extremely price sensitive commodity, such non payment of duty on the final invoices has resulted to huge loss to the exchequer."
(emphasis supplied)
26. What has, therefore, to be determined is whether duty was short paid by reason of wilful statement or suppression of facts because this aspect will cover both the extended period of limitation and the imposition of penalty.
27. As noticed above, the appellant imports gold/silver dore bars from various foreign suppliers across the world on the basis of contracts entered with them. At the time of import, the suppliers issue a provisional invoice mentioning the value of gold and silver. The dore bars are cleared from the customs charges, basis the provisional Bills of Entry which are subsequently finalized, basis the test reports received from the Laboratory. The tests are undertaken by the Laboratory to ensure that the gold dore bars have a gold content not exceeding 95%. The customs authorities match the results from the Laboratory with the declaration made in the provisional Bills of Entry and thereafter the Bills of Entry were finalized.
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28. According to the appellant, the dore bars are then taken to the factory and melted to form a homogenous solution from which multiple samples are drawn and sealed in the presence of a representative appointed by the mining companies. One sample is assayed by the refinery and another sample is sent to an overseas laboratory nominated by the supplier. The two assay reports are reconciled so that a final assay of gold/silver content is arrived at on a basis of which the final quantity of gold/silver is determined. It is on this basis that a final supplier invoice is issued mentioning the final quantity of gold/silver content in the dore bars.
29. The contention of the appellant is that final quantity of gold/silver in the dore bars may either be more than that mentioned in the finalized Bills of Entry or equal to or less than that mentioned in them. The demand that has been confirmed is in cases where the gold content has been found to be more in the final supplier invoice as against the finalized Bills of Entry.
30. It is a fact that the gold content may vary in the final invoice and in cases where gold content is found to be more, the appellant would have short paid customs duty but in cases where the gold content has been found to be less, the appellant would have paid more customs duty. It is for this reason the appellant has claimed refund of the excess customs duty, which is clear from the following chart:
Details of differential duty refundable Period Total Differential duty in Rs. Normal period of limitation i.e. Bill of Entry - 10,72,09,917 finalized on or after 22.10.2019 Extended period of limitation i.e. Bills of - 1,16,13,19,835 Entry finalized before 22.10.2019 but on or after 22.10.2016 Total finalized Bill of Entries - 1,26,85,29,752 20 C/54789/2023
31. It is also a fact that the appellant had also claimed refund of customs duty to the extent of Rs. 113,97,35,837/- on 22.04.2024 on account of excess duty payment in respect of provisionally assessed 300 Bills of Entry filed from December 2019 to October 2023 and by an order dated 08.10.2024, the Assistant Commissioner (Refund) sanctioned refund. The relevant portion of the order is reproduced below:
"18. I find that in the past similar refund claims of the importer had been sanctioned vide A.O. No. 02/AKS/2022 dated 07.04.2022, 28/AKS/2022 dated 13.06.2022 and 344/UK/2022 dated 31.03.2023 issued by the then refund sanctioning authority. The Assistant Commissioner (Review) vide letter F. No. VIII(HQ)10/ACC/Import/Review/Misc./80/2020 dated 03.10.2024 has informed that the aforesaid orders have been accepted by the competent authority on 04.07.2022, 19.09.2022 and 23.06.2023 respectively.
19. I find that the importer has made their final submissions in the instant refund claim on 23.08.2024. As such the statutory period of three months in terms of Section 27A for grant of refund shall be counted from the aforesaid date i.e. 23.08.2024, when their refund application got completed in all respects. The subject refund claim is being granted before the expiry of mandated period of three months, therefore, the importer is not entitled for grant of any interest for the same.
*****
21. In view of the above discussion and findings, I pass the following order:
Order I hereby sanction a refund of Rs. 113,94,13,641/- (Rs. One Hundred Thirteen Crore Ninty Four Lakh Thirteen Thousand Six Hundred Forty One Only) to M/s MMTC-PAMP India Pvt. Ltd. situated at Rojkameo Industrial Estate Distt. -Nuh Haryana- 122103, payable by RTGS., under Section 27 of the 21 C/54789/2023 Customs Act, 1962 in their Bank Account No. 08222320000215, IFSC Code : HDFC0000822 in HDFC as per the information provided by them."
32. Similar refund orders were passed on 07.04.2022 and 31.03.2023.
33. In the present case, the appellant has claimed refund of Rs. 1,26,85,29,752/-. Even in other cases, as noticed above, the appellant had paid excess customs duty because the content of gold in the final invoice of the supplier was found to be less than mentioned in the finalized Bills of Entry. No motive can be attached to the appellant in suppressing the final invoice because the appellant has paid more customs duty than what was actually required to be paid in cases where the gold content is found to be lower than that mentioned in the finalized Bills of Entry. It cannot, therefore, be urged that the appellant had short paid duty on account of any wilful statement or suppression of facts. The extended period of limitation contemplated under section 28(4) of the Customs Act could not, therefore, have been invoked.
34. The appellant has provided a chart which indicates that the total duty confirmed for normal period of limitation is Rs. 60,33,73,436/- and for the extended period is Rs. 91,89,07,078/-. The chart is reproduced below:
Details of differential duty payable (as per customs department) Period Total different duty in Rs.
Normal period of limitation i.e. Bill of Entry 60,33,73,436 finalized on or after 22.10.2019 Extended period of limitation i.e. Bills of 91,89,07,708 Entry finalized before 22.10.2019 but on or after 22.10.2016 Total finalized Bill of Entries 1,52,22,81,144
35. Penalty under section 114A of the Customs Act could not have also been imposed upon the appellant because the grounds for imposing 22 C/54789/2023 penalty are similar to the grounds for invoking the extended period of limitation.
36. The second issue relates to metal lease charges. The Principal Commissioner did not accept the contention of the appellant that metal lease charges were towards interest paid on differed payment accruing post the importation of dore bars and the issuance of the final invoice by the supplier. According to the Principal Commissioner, it was clear from the Agreements entered into with the foreign suppliers that the title of ownership of the imported goods was not transferred to the importer at the time of importation and the appellant was treated as a bailee by the overseas supplier. The relevant findings are as follows:
"59.1.5 I find that there was no occasion for the foreign suppliers to charge interest for safekeeping/custody of their own goods. Looking at the nomenclature of 'bailee' for the importer, it is evident that the foreign suppliers had given the metal on lease to the importer for the period from the date of import to the date of purchase which takes place at the time of settlement based on LMBA rates of gold on the date of sale to the customers and these charges were therefore termed as 'Metal Lease Charges' in the balance sheets of the company."
(emphasis supplied)
37. The Principal Commissioner also found that before the RBI the appellant stated that no interest payment was made to the overseas supplier and, therefore, the appellant could not take up a case before the customs authority that interest was paid. The relevant findings recorded by the Principal Commissioner are as follows:
"59.1.7 I also find that RBI approved the payment of remittances to them against the import subject to the condition that "No 23 C/54789/2023 interest payment to the overseas suppliers is involved." This condition was specifically conveyed by SBI to the importer vide their letters dated 09.10.2019 and dated 20.10.2020. The importer vide letter dated 20.11.2020 confirmed that there was no penal/overdue interest being paid to the overseas suppliers. However, they admitted to payment of Lease Charges on the un-priced metal to their foreign suppliers for the duration from airway bill date to date of payment on the value determined on the basis of daily LBMA rate of gold. The importer reiterated the same stand of non-payment of interest but payment of Lease Charges in all their subsequent communications with SBI at the time of seeking approval for making remittances beyond the permissible limits and in the cases where the declared value in the Bill of Entry was in variance with the actual remittance. The importer has admitted that no interest was paid as a result of deferred payment but before the Customs in the present proceedings was referring the same as the charges for deferred payment. As discussed above, from the agreement between the importer and their foreign suppliers and their response to RBI, it is evident that the payment of metal lease charges was a condition to sale in the agreement and not in the nature of interest on deferred payment. There is a clear cut difference between a situation of deferred payment and situation of deferred pricing and the importer cannot use these terms as per their choice as I find being tried in this case. Once the invoice price was provisional and finalized on the settlement date much later than the date of importation, there was no rationale to notify such charges as post importation specially when their status till the settlement of invoice was of a bailee.
***** In the present case, after going through the agreement between the importer and their overseas suppliers, it is clear that 'Metal Lease 24 C/54789/2023 Charges' were paid as a condition of sale. There were no two separate agreements as cited in above case law. There was only one agreement and importation occurred as lease wherein the relationship between the overseas supplier importer was of bailer and bailee. Hence, the cited case laws do not support the narrative of the importer."
(emphasis supplied)
38. Learned counsel for the appellant reiterated the submissions that were advanced before the Principal Commissioner but could not dispute that the ownership of the imported goods was not transferred to the appellant at the time of importation of the goods. In view of the specific terms of the Agreement and the stand taken by the appellant before the RBI, it is clear that metal lease charges were not in the nature of interest. The Principal Commissioner, therefore, was justified in upholding the demand of differential duty on metal lease charges.
39. The third issue that arises for consideration is whether the insurance premium was liable to be added to the assessable value. The Principal Commissioner held that payment of insurance premium charges was a "condition of sale" and these charges would, therefore, be liable to be added in terms of rule 10(1)(e) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. In coming to this conclusion, the Principal Commissioner held that from the Agreements it was clear that importer was required to get the goods insured and insurance premium was required to be paid by the importer and the ownership of the goods remained with the respective foreign supplier the till the issuances of the final invoices, during which period the importer was merely a bailee of the goods.
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40. This finding recorded by the Principal Commissioner is based on the Agreement and does not suffer from any illegality as indeed the appellant was required to get the goods insured and pay insurance premium in terms of the Agreement as a bailee of the goods.
41. In view of the aforesaid discussion, the appeal is allowed in part. The invocation of the extended period of limitation and imposition of penalty under section 114A of the Customs Act is set aside. The inclusion of metal lease charges and premium insurance amount in the assessable value is upheld.
42. The order dated 31.12.2022 passed by the Principal Commissioner is, accordingly, set aside to the extent indicated above and the appeal is allowed in part with consequential relief(s), if any.
(Order pronounced on 13.05.2025) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Diksha, Shreya