2000 (12) TMI 316 - AT - Customs

Issues Involved:
1. Duty demand and penalty on M/s. MMTC Ltd.
2. Penal action against M/s. MMTC Ltd.
3. Duty demand and penalty on individual units (M/s. Amit Jewellers, M/s. Goldex, M/s. Zevarth Overseas, and M/s. Unique Jewellery).
4. Appeal by the Revenue against the dropping of duty demand and penal action by the Commissioner of Customs.

Detailed Analysis:

1. Duty Demand and Penalty on M/s. MMTC Ltd.:
The core issue revolves around the import of gold by M/s. MMTC Ltd. under the Export and Import Policy and Customs Notification No. 177/94, which allowed duty-free import of gold for manufacturing and exporting gold jewellery. M/s. MMTC Ltd., a public sector undertaking, imported gold and supplied it to various jewellery manufacturing units in NOIDA EPZ. The units failed to utilize the gold for the intended purpose of manufacturing and exporting jewellery, violating the conditions of the notification and the EXIM Policy. Consequently, show cause notices were issued to M/s. MMTC Ltd. for the recovery of customs duty and imposition of penalties. The Tribunal held that M/s. MMTC Ltd., being the importer and supplier, was responsible for ensuring compliance with the conditions of the notification. Therefore, the duty demand against M/s. MMTC Ltd. was upheld, and penalties were imposed, though reduced considering the circumstances.

2. Penal Action Against M/s. MMTC Ltd.:
The Tribunal emphasized that M/s. MMTC Ltd. had a dual role as an importer-cum-supplier and was responsible for monitoring the activities of the exporting units to ensure compliance with the export obligations. Despite M/s. MMTC Ltd.'s argument that it was merely a supplier and not the importer, the Tribunal found that M/s. MMTC Ltd. had filed the bills of entry and executed bonds with NEPZ Customs, undertaking to ensure the utilization of the imported gold for export purposes. Therefore, penal action against M/s. MMTC Ltd. was warranted, but the penalties were reduced in consideration of the facts and circumstances.

3. Duty Demand and Penalty on Individual Units:
The individual units, namely M/s. Amit Jewellers, M/s. Goldex, M/s. Zevarth Overseas, and M/s. Unique Jewellery, were found to have failed in utilizing the imported gold for manufacturing and exporting jewellery, thus violating the conditions of the notification and the EXIM Policy. The Commissioner confirmed the duty demands and imposed penalties on these units. The Tribunal upheld these decisions, reiterating the units' failure to comply with the export obligations. Additionally, the penalty on Shri Manoj Kumar Soni, a partner of M/s. Unique Jewellers, was sustained but reduced to Rs. one lakh considering his role and the overall circumstances.

4. Appeal by the Revenue Against the Dropping of Duty Demand and Penal Action:
The Revenue's appeal concerned the dropping of proceedings against M/s. MMTC Ltd. for the import of 180 kgs of gold bars, where the Commissioner had previously dropped the duty demand of Rs. 7,07,01,428/- and the proposed penal action. The Tribunal found that the exemption from duty under Notification No. 3/88 was not applicable as the gold was not utilized for the intended purpose of manufacturing and exporting jewellery. Therefore, the Tribunal allowed the Revenue's appeal, confirming the duty demand and imposing a penalty of Rs. 25 lakhs on M/s. MMTC Ltd.

Conclusion:
The Tribunal upheld the duty demands and penalties on M/s. MMTC Ltd. and the individual units for failing to comply with the conditions of the notification and the EXIM Policy. The penalties on M/s. MMTC Ltd. and Shri Manoj Kumar Soni were reduced considering the circumstances. The Revenue's appeal was allowed, reinstating the duty demand and imposing a penalty on M/s. MMTC Ltd.

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