2021 (9) TMI 686 - AT - Customs

Demand against violation of bond conditions - Warehousing of goods imported - Gold Bars - N/N. 12/2012 dt. 17.3.2012 - Failure to furnish BRC or pay appropriate duty within 7 days of the stipulated period, also failed to monitor realisation of export proceeds - violation of Section 111 (j) of Customs Act, 1962 - invocation of liability under the bonds executed by the appellant - time limitation - HELD THAT - After the appellant furnished export details, the bonds executed have been cancelled. The bonds were cancelled only after due verification of the same. The undertaking as per the bond is to comply with conditions of the Notification. As discussed above, the public notice require the appellant to furnish proof of export only. The export is by a third person. As per Public Notice dt. 6.9.2013 it is specifically stated that in respect of export of gold jewellery and export of articles of gold, the Bank Realization Certificate shall not be insisted to be produced as proof of export. The appellant has furnished E.P copy of the shipping bill as proof of export. The appellant therefore has complied with conditions of notification read along with Circular / Public Notice / Hand Book of Procedure. The department accepted the same as fulfilment of obligations as per the bond executed by them - Being satisfied of the same, the bond has been cancelled, after which no demand can be raised alleging violation of conditions of bond. Similar issue was addressed by the Tribunal in the case of Bank of Nova Scotia 2008 (7) TMI 246 - CESTAT BANGALORE . The Tribunal also looked into the issue of non-production of BRC and held that the liability, if any, would be on the exporter. Time Limitation - HELD THAT - The SCNs have alleged suppression of fact with intent to evade Customs duty. The appellant-bank has furnished details of exports and the bond was cancelled by the department after verification of the same. On such score, the SCNs issued much later alleging suppression of facts is without any factual basis. The issue on limitation is also found in favour of appellant. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Obligation to furnish Bank Realization Certificate (BRC) as proof of export.
2. Compliance with conditions of Customs Notification No.12/2012.
3. Validity of demand for customs duty, interest, and penalties.
4. Allegation of suppression of facts and limitation period for issuing Show Cause Notices (SCNs).

Issue-wise Detailed Analysis:

1. Obligation to furnish Bank Realization Certificate (BRC) as proof of export:
The core issue revolves around whether the appellant, M/s. Bank of India, was obligated to furnish the Bank Realization Certificate (BRC) as part of the proof of export for the gold bars imported and subsequently converted into jewellery for export. The appellant argued that as per paragraph 4A.8(a) of the Handbook of Procedures and Circular No.34/2013-Customs dated 04.09.2013, only the Export Promotion (E.P.) copy of the shipping bill and customs attested invoice were required as proof of export. The Public Notice No.25/(RE-2013)/2009-2014 dated 06.09.2013 further relaxed the requirement for BRC in the case of export of gold jewellery. The Tribunal agreed with the appellant, stating that the public notice specifically mentioned that the BRC would not be insisted upon for proof of export, and thus, the respondent's insistence on BRC was unfounded.

2. Compliance with conditions of Customs Notification No.12/2012:
The appellant had executed bonds as per Customs Notification No.12/2012, binding them to comply with the conditions of the notification. The bonds were cancelled by the customs authorities after verifying the export documents provided by the appellant. The Tribunal noted that the customs authorities had already accepted the E.P. copy of the shipping bill and customs attested invoice as sufficient proof of export and had cancelled the bonds accordingly. Therefore, the Tribunal held that the respondent could not demand duty based on the cancelled bonds, as the appellant had complied with the conditions of the notification.

3. Validity of demand for customs duty, interest, and penalties:
The respondent issued SCNs demanding customs duty, interest, and penalties, alleging that the appellant failed to furnish the BRC and thus violated Section 111(j) of the Customs Act, 1962. The Tribunal, referencing the decision in the case of Bank of Nova Scotia Vs CCE (Adj.) Bangalore, held that the nominated agency (appellant) was not obligated to ensure the realization of foreign exchange for the exported goods. The Tribunal concluded that the demand for customs duty, interest, and penalties could not be sustained as the appellant had fulfilled their obligations under the customs notification and the relevant public notice.

4. Allegation of suppression of facts and limitation period for issuing SCNs:
The SCNs alleged suppression of facts with intent to evade duty, which the appellant contested. The Tribunal found that the appellant had provided all necessary export details, and the bonds were cancelled by the department after due verification. The SCNs were issued much later, and the Tribunal held that there was no factual basis for alleging suppression of facts. Consequently, the Tribunal found in favor of the appellant on the issue of limitation as well.

Conclusion:
The Tribunal set aside the impugned orders, allowing the appeals with consequential reliefs. The Tribunal emphasized that the appellant had complied with all necessary conditions and that the demand for duty, interest, and penalties was not justified. The operative part of the order was pronounced in court on 24.08.2021.