Indian Kanoon - Search engine for Indian Law

Kallarakkal Jewellery was recorded and the Revenue had also recovered gold ornaments weighing 11095.90 grams. Similar statements of Shri Jackson A.T., Manager of M/s. Southern Gold Pvt. Ltd. and Shri M.K. Babu, owner of M/s. Smijo Gold were recorded. Thereafter, Revenue examined various firms and has recorded statements under Section 108 of the accountable persons of the above firms. 1.2 In the show-cause notice, the allegation based on the above statements are, inter-alia, that AGPL had violated various provisions / rules of SEZ, the Customs appeal No.21358, 21357, 21286, 21296, 21297,21329,21331, 21332 of 2016 Customs Appeal No.20099 of 2017 scope of the subject offence was not limited to the one within SEZ but also an offence of smuggling dutiable goods from a territory outside India into the Indian Customs territory; that by its activities, AGPL had imported 385512.5 grams of gold bars of 995 purity between 05/04/2012 to 08/08/2014; that the total export of ornaments by AGPL was 336727.464 grams (of 995 purity); that there was a shortage of 48785.036 grams of imported gold; that during search, neither the stock of gold was found nor was any permission for removal produced, nor did AGPL give any satisfactory explanation; that statements of various persons recorded under Section 108 revealed that the above 48785.036 grams of imported gold found short was smuggled out of the unit by the said Shri Sanjay Subrao Nikam, Managing Director of the AGPL which was also corroborated by the letter dt. 15/09/2014 of the Specified Officer, Cochin Special Economic Zone (CSEZ, for short) and that various searches had resulted in the recovery of gold/gold ornaments to the extent of 27598.711 grams. It was therefore Customs appeal No.21358, 21357, 21286, 21296, 21297,21329,21331, 21332 of 2016 Customs Appeal No.20099 of 2017 alleged in the show-cause notice that the above gold/gold ornaments recovered were liable for confiscation under Section 120 of the Customs Act, 1962 read with Ss. 111(b), (d), (j), (k) and (o) of the Act ibid, apart from the gold sold to M/s. Joyalukkas (I) Pvt. Ltd. which was liable for confiscation under Section 121 of the Customs Act, 1962 read with Section Section/s 111(b) and (o) ibid. 1.3 It has also been alleged that 4 kgs. of gold bars lying at the Air Cargo Complex, Nedumbassery consigned to the AGPL was also liable for confiscation under Section 111(d) and (o) ibid on the ground that the same was consigned to the non- functioning unit at CSEZ, imported into India with an intention of diversion from CSEZ, which appears to have been purchased and consigned to India from the sale proceeds of ornaments exported in the name of M/s. Ashwin Gold Pvt. Ltd. Consequently, it was proposed to recover duties of customs under Section 29(1) apart from penalties under Section 112(a) and 114A of the Customs Act, 1962 on the Managing Customs appeal No.21358, 21357, 21286, 21296, 21297,21329,21331, 21332 of 2016 Customs Appeal No.20099 of 2017 Director of M/s. Ashwin Gold Pvt. Ltd., penalty under Section 112 ibid on Shri K.O. Anto, Proprietor of M/s. Kallarakkal Jewellery, Shri Jeeson Davis, employee of M/s. Kallarakkal Jewellers, Shri B. Jayakumar, Consultant, Shri T.R. Saji, Assistant to Shri B. Jayakumar, Shri C.A. Collins, Director of M/s. Southern Gold Pvt. Ltd. and Shri M.K. Babu, Proprietor of M/s. Smijo Gold, M/s. Ajay & Co., M/s. Leo's Angel Gold, Trichur, Shri K. Venugopalan, Accountant for M/s. Kallarakkal Jewellery and S/Shri Ujval Jose, Joemon and Happy Kurien, Partners of M/s. Awesome Jewel Concepts, Trichur under Section 112(b) of Customs Act, 1962. 2.1. To, cut it short, AGPL and its MD Shri Sanjay Subrao Nikam were directed to show-cause as to why:

4. When the matter was taken up for hearing, Shri P.A. Augustian, Ld. Advocate appeared for the Customs appeal No.21358, 21357, 21286, 21296, 21297,21329,21331, 21332 of 2016 Customs Appeal No.20099 of 2017 appellants M/s. Ashwin Gold Pvt. Ltd. and Shri Sanjay Subrao Nikam; and Shri K. Bindusaran, Ld. Consultant appeared for Shri B. Jayakumar, Shri T.R. Saji, Shri M.K. Babu, Shri K.O. Anto, Shri Jeeson Davis, Shri K.Venugopalan, while M/s. Joyalukkas India Pvt. Ltd. remained unrepresented. On the other hand, Smt. D.S. Sangeetha, learned Addl. Commissioner (AR) appeared for the Revenue. We have heard the rival contentions and we have carefully considered the documents placed on record as well as various case law that were relied upon by both sides during the course of hearing. 5.1. Statements of Managing Director of AGPL Shri Sanjay Subrao Nikam have been recorded on 7 different dates right from the date of search and admittedly based on his statements alone, the consequential searches were initiated on 12-08- 2014. In the earliest statement dated 11-08-2014 it is recorded inter alia that 10.5 kgs. of gold was received at his CSEZ unit on the Friday night on being cleared by the Customs on Friday, the Customs appeal No.21358, 21357, 21286, 21296, 21297,21329,21331, 21332 of 2016 Customs Appeal No.20099 of 2017 clearance related work was done by his CHA viz. M/s. Sorabji & Company Pvt. Ltd., Cochin and that on Saturday at around 9 O'clock, he took the above 10.5 kgs. of gold in his Activa scooter out of the SEZ without obtaining the permission of the authorities when a person named Jeeson, a staff of M/s. Kallarackal Jwellery came there in a white car with another person, to whom the above 10.5 kgs. of gold was given. In his next statement dated 13-08-2014, it is recorded that his confession made on 11-08- 2014 that 10.5 kgs. of imported gold was handed over to the employee of Kallarackal Jewelry was a mistake and that 6.5 kgs. of gold was handed over by him on Fright night itself to M/s. Smijo Gold, Trichur, and on the same night he had given 4kgs. of gold to another gold manufacturing unit at Trichur. Interestingly, this statement dt. 13/08/2014, which is placed on record, has various corrections made but, no care is taken to ensure that the maker of the statement was aware of such corrections. This is a serious lapse which could Customs appeal No.21358, 21357, 21286, 21296, 21297,21329,21331, 21332 of 2016 Customs Appeal No.20099 of 2017 affect the veracity and consequently the evidentiary value of statement itself.

"8. Moreover, in terms of the Section 53(1) of the SEZ Act, 2005, the SEZ is deemed to be territory outside the Customs Territory of India, and the goods imported were meant for the unit in SEZ Noida. In our view, the Commissioner of Customs, Air Cargo, New Customs appeal No.21358, 21357, 21286, 21296, 21297,21329,21331, 21332 of 2016 Customs Appeal No.20099 of 2017 Customs House, New Delhi had no jurisdiction to confiscate these goods and impose penalty on the appellant and it is only the Joint/Dy. Commissioner/Asst. Commissioner of Customs, in Noida SEZ Unit, who had the jurisdiction to take necessary action. For this reason also, the impugned order are not sustainable.

.

.

.

89.2 From the above observations, it can be safely concluded that for any removals of the goods from SEZ area to DTA or within SEZ area under Customs appeal No.21358, 21357, 21286, 21296, 21297,21329,21331, 21332 of 2016 Customs Appeal No.20099 of 2017 intimation/approval of the appropriate authorities, if not properly accounted for or not brought back within the stipulated period, adequate recovery machinery exists under the SEZ Act, 2005 and SEZ Rules, 2006 to recover Customs/Central Excise dues. Accordingly, for all the situations mentioned at (i), (ii) and (iii) of Para 89.1 above, if approvals have been given by the SEZ authorities, the operations have to be treated as 'Authorized Operations' defined in Section 2(c) of the SEZ Act, 2005. Even if some of the removals/operations undertaken by the appellants are not authorized, but done with the approval/under intimation to the SEZ authorities, then also the power to demand/recover duties of Customs/Central Excise from SEZ, is vested with the authorities created under the SEZ Act, 2005 and SEZ Rules, 2006. This view is also fortified by the 'Statements of Objects and Reasons' given before the beginning of the SEZ Act, 2005. The spirit of these Objects and Reasons and the SEZ Act, 2005 is that SEZ and its units are required to be delicately handled to achieve the desired goals and SEZ/units cannot be exposed in their day to day Customs appeal No.21358, 21357, 21286, 21296, 21297,21329,21331, 21332 of 2016 Customs Appeal No.20099 of 2017 working to the strict scrutiny of the Customs Act, 1962 wherein an act or omission may make the goods liable to confiscation under Section 111 and Section 113 and that act or omission as amounting to 'smuggling' as per Section 2(39) of Customs Act, 1962. Having said that, however, a situation as per situation (iv) of Para 89.1 above, may still exist where strict action against a defaulter could be required. 89.3 ..............In case, Revenue was of the opinion that action under the Customs Act, 1962 was required then there was a need for discussions between the appropriate authorities created under the SEZ Act, 2005 and the investigating agency as per the provisions contained in the First Proviso to Section 22, read with Section 51 of the SEZ Act, 2005. This aspect of consultation with the Development Commissioner/Officer has also been touched upon by Member (Technical) in Para 80 of his reasoning that such removals could have been regularized by Development Officer and that Customs officers could have waited before proceeding further. In the absence of any approval taken by investigating agency under Customs appeal No.21358, 21357, 21286, 21296, 21297,21329,21331, 21332 of 2016 Customs Appeal No.20099 of 2017 Section 22 and due to the fact that all operations undertaken by the appellants was after approvals and intimations to the appropriate authorities under the SEZ Act, Customs Officers had no jurisdiction to investigate this case and demand duty under Customs Act, 1962 when the entire proceedings relate back to 19-4-2006........." 10.5. From the above well founded orders/decisions, we have to accept that the benefit of the interpretations, drawn consistently by various Benches, are in favour of the tax payer/ appellants herein, in these batch of cases, including the decision of the Hon'ble Gujarat High Court in Bharti Gandhi's case (supra) which, both parties before us agree, has attained finality.