2023 (7) TMI 1070 - AT - Customs

Levy of Penalty - import of Gold - allegation is that the importer through its authorized handler i.e. Appellants have deliberately contravened provisions introduced by the Government of India for regulating import of gold into India - HELD THAT - The facts are very clear that one Shree Ganesh Jewellery House (I) Private Limited imported five consignments of gold of 100 kgs each and five initial Bills of Entry for Ex-bond warehouse were filed by the importer through Appellant No.(2) and thereafter Appellant No.(1) filed five Ex-bond Bills of Entry for clearance of 80 kgs of gold each for home consumption on payment of duty. The gold was kept in private bonded warehouse of the importer and the Appellant No.(3) has provided service for safe custody of the gold which is on record. The gold was imported in terms of RBI Circular dated 14.08.2013. As per the said Circular 20% of every lot of import of gold imported to the country is exclusively made available for the purpose of exports and balance of domestic use which means out of total imported gold 80% can be cleared for home consumption which were assessed and allowed on payment of duty and 20% of the gold was cleared to the importer in terms of Notification No.56/2000Customs dated 05 .05.2000 wherein all the demand was exempted with the condition that the importer shall after processing the said gold reexport the same - The Appellant No.(1) (2) filed Ex-bond Bills of Entry and for home consumption after clearing the gold the job of the Appellant No.(1) (2) came to an end. They have nothing to do with the gold in question. As they have cleared the gold first to the importer on bonded warehouse and thereafter cleared for home consumption on payment of duty. These are not in dispute. In these set of facts there is no role of the Appellant No.(1) (2) to allege that they have made gold liable for confiscation for non-fulfillment of export obligation by the importer - Thus the penalties on the Appellant Nos.(1) (2) cannot be imposed under Section 112 of the Customs Act 1962. With regard to Appellant No.(3) the duty of the Appellant No.(3) is to safe custody of the imported gold which is a private bonded warehouse of the importer and while assessing the Bills of Entry for ex-bond warehouse the goods were allowed to be stored in the Bin provided by the appellant for safe custody of the gold. Thereafter the Appellant No.(3) has handed over 400 kgs of gold on duty paying documents by Appellant No.(1) i.e. not in dispute - It is the facts on record that the importer was nominated agency and the same was allowed to the importer for export production under exemption Notification No.56/2000-Customs dated 05.05.2000 under their own internal documents and it was the duty of the importer to submit a consolidated monthly account of the goods released exporter wise and duly duty involved while will be worked on the basis of effective rate of duty - thus it is very much clear that the job of the appellant is mainly safe custody of the gold in question and as per the agreement executed between the importer and the appellant from time to time the appellant s duty was assigned for storage of duty free gold and silver imported by the importer for export purposes. Thus it is very much clear that the appellant cleared the gold to the importer who provided Bin warehouse to the importer for further processing to export of the same. The allegation in the show-cause notice is that as the importer could not fulfill the export obligation therefore the appellant was responsible for diversion of the said gold into domestic market. There is no evidence available on record that how the appellant was involved in diversion of gold by the importer - the appellant being a duty assigned to keep safe custody of duty free gold in their Bin cannot be held liable for diversion of gold by the importer in domestic market and for non-fulfilment of export obligation. Therefore the penalty on the Appellant No.(3) is also not imposable. Penalties set aside - appeal allowed.

Summary

Issues Involved:
1. Imposition of penalties on the appellants.
2. Compliance with RBI Circular and Customs Notifications.
3. Alleged contravention by the importer and the appellants.
4. Validity of the adjudication process and penalties imposed.

Summary:

Issue 1: Imposition of Penalties on the Appellants
By the impugned order, penalties of Rs.40,00,000/- on Appellant No.(1), Rs.25,00,000/- on Appellant No.(2), and Rs.1,00,00,000/- on Appellant No.(3) were imposed. The penalties were based on the allegation that the importer, through its authorized handlers (the appellants), contravened provisions for regulating gold import into India, as per RBI Circular dated 14.08.2013.

Issue 2: Compliance with RBI Circular and Customs Notifications
The importer filed five in-bond Bills of Entry for 500 kgs of gold, clearing 400 kgs on payment of duty under RBI circulars, and the remaining 100 kgs without duty under Notification No.56/2000-Cus. The appellants acted as Customs Brokers and provided safe custody services. The show-cause notice alleged that the importer was not entitled to the benefit of the RBI circular and failed to submit export documents for the 100 kgs, leading to proposed confiscation and penalties.

Issue 3: Alleged Contravention by the Importer and the Appellants
The show-cause notice claimed deliberate contravention of RBI Circular provisions by the importer and appellants. However, the appellants argued that their role ended after handing over the cleared gold to the importer, and no specific contravention or abatement was detailed against them in the notice. The Tribunal found that the appellants' duties were limited to filing Bills of Entry and safe custody, with no involvement in the alleged contraventions.

Issue 4: Validity of the Adjudication Process and Penalties Imposed
The appellants contended that the adjudication authority exceeded the scope of the show-cause notice and relied on statements recorded post-hearing without issuing a corrigendum or granting further hearings. The Tribunal noted that the penalties were imposed beyond the six-month adjudication period stipulated in Section 28(9) of the Act, rendering the order invalid. Additionally, the Tribunal found no evidence of the appellants' involvement in the diversion of gold or non-fulfillment of export obligations by the importer.

Conclusion:
The Tribunal set aside the penalties imposed on all appellants, concluding that the appellants were not liable for the alleged contraventions and that the adjudication process was flawed. The appeals were allowed, and the penalties were quashed.