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2019 (12) TMI 295 - AT - CustomsBenefit of exemption - misdeclaration of goods - import of Natural Gold Ore Concentrate - SCN was issued alleging that the appellants had not imported the Natural Gold Ore Concentrate but had artificially mixed gold and various materials like mud, cement etc to artificially create something that could be camouflaged as Natural Gold Ore Concentrate - HELD THAT - The appellants are claiming benefit of Notification No. 12/2012-CE and the notification exempts Ores falling under heading 2601 to 2617 from Central Excise duty. Note-2 of the Chapter 26 defines the scope of the term ore for the purpose of this chapter. It is apparent that there is no minimum or maximum percentage specified for gold content in gold ore. Different literature may suggest different values, however, this fact has no significance in the present proceedings as term Ore is defined in the tariff itself. The said definition does not contain any maximum or minimum value of metal or non-metal. Learned Counsel further raised the issue regarding use of word usually at various places in the report of Professor at IIT, Bombay. It needs to be appreciated that Ore is naturally occurring substance and therefore cannot be any specific parameter for Ore . The composition of ore and contents of various materials in gold ore may vary from place to place and content to content. Therefore, the term usually appearing in the report of the Professor of IIT is not incorrect and we need to appreciate that variation in the proportions of contents is noticed in naturally occurring minerals from place to place. The quality of composition of Ores cannot be standardized as they are naturally occurring substances. Moreover the tariff/HSN does not prescribe any minimum or maximum limit in the definition of Ore . Even if the samples answered to all physical and chemical parameter of Ore , the same does not qualify to be ore for the purpose of the Tariff or the notification Confiscation - imposition of Redemption fine and penalty - HELD THAT - The confiscation has been ordered under section 111(d) and (m) of the Customs Act 1962. Confiscation upheld - Redemption fine of ₹ 60 lakhs has been imposed on the goods of declared value of ₹ 1.32 Crores - Considering the facts and circumstances of the case and the fact that duty evaded in this consignment is approximately 18 lakhs, we reduce the said fine to ₹ 15 lakhs. The penalty of ₹ 10 lakhs, imposed under 112(a) in respect of the confiscated consignment is also upheld. Time Limitation - HELD THAT - Taking of samples of previous consignment, if any, for chemical/physical testing or valuation purposes, does not help the case of the appellant, if the fact that the said goods were produced in a workshop by mixing gold, sand and other materials is suppressed. Thus the fact that samples were taken of earlier consignments or not, does not affect the outcome of this case. Even if those samples were taken and tested it might not have been possible to detect that the same were produced in a workshop and were not of natural origin. In view of the fact that an elaborate mechanism for hoodwinking Customs was devised by the appellant the intention to evade the customs duty cannot be doubted - This is a case involving fraudulent intentions and actions. In view of above the demand of duty and interest on past consignments is also upheld. The penalty under section 114A, of the Customs Act 1962, in respect of past consignments is also upheld. Penalty u/s 114A of CA imposed on Shri Sanjay Patel - HELD THAT - Hon ble High Court of Gujarat, in the case of Jai Prakash Motwani 2009 (1) TMI 501 - GUJARAT HIGH COURT , has held that when penalty has been imposed on the firm, separate penalty on partner cannot be imposed - Penalty set aside. Appeal allowed in part.
Issues Involved:
1. Classification of imported goods as 'Natural Gold Ore Concentrate' versus 'Gold'. 2. Admissibility of benefit under Notification No. 12/2012-CE. 3. Validity of evidence including WhatsApp messages and expert reports. 4. Confiscation of goods and imposition of penalties. 5. Limitation period for demanding differential duty. Issue-wise Detailed Analysis: 1. Classification of Imported Goods: The appellants imported goods declared as 'Natural Gold Ore Concentrate' under Customs Tariff Heading 26169010, claiming a basic Customs duty rate of 2.5% and nil CVD under Notification No. 12/2012-CE. The Directorate of Revenue Intelligence (DRI) seized the 16th consignment based on intelligence suggesting mis-declaration and artificial mixing of gold with other materials to create a product resembling 'Natural Gold Ore Concentrate'. The investigation revealed that the goods were actually 'Gold' classifiable under CTH 71081300, not eligible for the claimed exemption. 2. Admissibility of Benefit under Notification No. 12/2012-CE: The notification exempts 'Ores' falling under Chapter 2601 to 2617 from excise duty. The Tribunal examined the definition of 'ore' as per Note 2 to Chapter 26 and HSN notes, concluding that only naturally occurring materials qualify as 'ore'. Artificially created substances, even if they meet physical/chemical parameters of 'ores', do not qualify. The Tribunal upheld the reclassification of the goods under CTH 71081300. 3. Validity of Evidence: The Tribunal relied on multiple pieces of evidence: - WhatsApp Messages: Detailed instructions from the appellant’s partner to the supplier on creating the artificial mixture were retrieved and corroborated with import documents and statements. - Expert Report: The report from IIT Bombay indicated that the samples tested did not resemble naturally occurring gold ore. Despite some errors and cross-examination discrepancies, the Tribunal found the report credible. - Cost Sheet: A document recovered from the appellant’s premises detailed the materials and costs involved in creating the artificial mixture, supporting the allegations. 4. Confiscation of Goods and Imposition of Penalties: The Tribunal upheld the confiscation of goods under section 111(d) and (m) of the Customs Act 1962. The redemption fine was reduced from ?60 lakhs to ?15 lakhs, considering the duty evaded was approximately ?18 lakhs. The penalty of ?10 lakhs under section 112(a) was also upheld. However, a separate penalty of ?50 lakhs on the partner was set aside, following the Gujarat High Court's decision in Jai Prakash Motwani, which held that separate penalties on partners cannot be imposed when the firm is penalized. 5. Limitation Period for Demanding Differential Duty: The Tribunal dismissed the appellant's argument that the demand for differential duty was barred by limitation. It found that the WhatsApp messages and other evidence clearly showed that past consignments were also artificially created. The Tribunal concluded that the earlier assessments, even if samples were taken, did not reveal the true nature of the goods due to the appellant's elaborate scheme to evade customs duty. The demand for duty and interest on past consignments was upheld, along with penalties under section 114A of the Customs Act 1962. Conclusion: The appeal of M/s Mulchand M. Zaveri was partly allowed, reducing the redemption fine but upholding the reclassification, confiscation, and penalties. The appeal of the partner was allowed, setting aside the separate penalty imposed on him. The Tribunal's decision emphasized the importance of the natural origin of 'ores' and the inadmissibility of artificially created substances under the claimed exemption.
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