2020 (11) TMI 636 - HC - Customs

Permission for re-export of imported diamonds on paying the penalty and redemption fine - Import of rough diamonds without KP (Kimberly Process) certificate - challenge on the ground that there was only a procedural defect in the import carried out and there is now a certificate issued as required under Exhibit P5 Circular - HELD THAT - Exhibit P10 is not a KP Certificate issued for the export of goods from UAE, which alone would validate its import into India. Exhibit P10 is a mere 'Technical Certificate' issued for sending back the goods to UAE, from which country the goods were sourced from. The certificate enables export, to carry out which the appellant would have to first get the goods released by paying the redemption fee and penalty since already the goods are confiscated. A reading of Exhibit P5, hence, makes it mandatory that KP Certificate should accompany the goods on import and even prior to its arrival, the copy of the certificate along with related documents are to be submitted for verification to the GJEPC. The Circular, which permit import of rough diamonds, mandates confiscation on violation of conditions. There are no reason to interfere with the judgment of the learned Single Judge - appeal dismissed.

Issues:
1. Procedural defect in import of uncut diamonds
2. Requirement of Kimberly Process Certificate for rough diamonds
3. Confiscation and re-export of goods under Customs Act

Analysis:
1. The appeal challenges a judgment allowing re-export of imported diamonds on payment of penalty and redemption fine due to a procedural defect in import. The appellant argues that the defect has been rectified, as they are importing uncut diamonds for the first time. The alternative contention is that re-export was sought, and there is no basis for confiscation of the goods.

2. The Department's Standing Counsel asserts that the import of rough diamonds is regulated by Exhibit P5 Circular to prevent financing of conflicts by rebel movements. The Circular mandates the Kimberly Process Certificate to accompany goods, with the certificate number displayed on the container. Failure to comply results in confiscation under Section 111 of the Customs Act. Re-export is only permitted under Section 125 after payment of redemption fee and penalty.

3. The Kimberly Process is an international scheme to prevent conflict diamonds from entering the legitimate trade. India, as a signatory to the Interlaken Declaration, is bound by the regulations. Exhibit P5 specifies the requirements for importing rough diamonds, including the mandatory presence of the Kimberly Process Certificate and submission of related documents for verification.

4. The Court notes that no certificate accompanied the imported goods, nor was a copy filed before arrival in India. The absence of a prior certificate for the imported diamonds is highlighted, emphasizing the necessity of compliance with the regulations outlined in Exhibit P5.

5. The contention regarding a time provision for certification is rejected, as the appellant failed to produce the required KP Certificate within the stipulated period. Exhibit P10, identified as a Technical Certificate for exporting goods back to UAE, does not validate the import into India and necessitates payment of redemption fee and penalty for release of confiscated goods.

6. Paragraph 7 of Exhibit P5 addresses import of rough diamonds through personal baggage, outlining similar procedures under specific export promotion schemes. The Circular mandates absolute confiscation of goods if liable under Section 111 of the Customs Act, emphasizing strict compliance with the regulations.

7. The Court upholds the judgment of the learned Single Judge, emphasizing the mandatory nature of the Kimberly Process Certificate for rough diamond imports and dismissing the appeal. Compliance with the regulations outlined in Exhibit P5 is deemed essential, with confiscation mandated for violations, as per the Customs Act.

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