2024 (6) TMI 403 - HC - Customs

Jurisdiction to entertain the Anticipatory Bail Applications - Validity of the extension of export obligation period - evasion of duty - Confiscation of gold which is imported, on which the duty is not paid which is more than Rs. 50 Lakhs - HELD THAT - The importer had to process the articles imported under that scheme and had to export the processed articles within 120 days of actual receiving that consignment in India. The period of 120 days is the maximum period. The authorization extending the export obligation period, which is relied on by learned counsel for the Applicants mentions that the period under export obligation period was extended from 4.5.2024 to 4.11.2024 but that would again relate back to the imports made 120 days before any day falling between this period. It is not the case of the Applicants that they had imported any gold after 25.1.2023. Therefore, this extended period for export would not be of much relevance in the present facts of the case. As far as the merits of the matter is concerned, there are statements recorded of a few witnesses and the statements recorded of the Applicants themselves. One Dushyant Ashok Soni was concerned with D.B. Gold He has stated that the Applicants had never given him any gold for processing work. On the day of search i.e. on 12.6.2023 the Applicant Hemang had telephonically instructed him not to go to the office premises of D.B. Gold. This witness denies of having received any part of the gold i.e. any part of 37 kgs of gold which was imported by the Applicants. The Applicants wanted him to sign the vouchers without any supply of the gold. The sum and substance of this discussion is that 37 Kgs of gold which was imported by the Applicants under that Scheme has disappeared; either it is sold in the local market or it was misappropriated by the Applicants. It is quite obvious that the gold after processing was not exported. Therefore, the Applicants are liable to pay the duty. The matter does not rest there, but the gold itself was liable to be confiscated under Section 111 (o) of the Customs Act. Since the gold is not found, the further steps for confiscation cannot be taken and for this very purpose the Applicants custodial interrogation is necessary - The gold is misappropriated. The offence is quite serious. The Applicants custodial interrogation is necessary. No case for grant of protection under Section 438 of Cr.P.C. is made out. The Application is rejected. Application dismissed.

Summary

Issues Involved:
1. Jurisdiction and admissibility of anticipatory bail application.
2. Allegations of duty evasion and non-compliance with import-export obligations.
3. Validity of the extension of export obligation period.
4. Necessity of custodial interrogation and rejection of anticipatory bail.

Summary:

1. Jurisdiction and Admissibility of Anticipatory Bail Application:
The Applicants sought pre-arrest bail u/s 438 of Cr.P.C. in connection with an inquiry conducted by the Directorate of Revenue Intelligence (DRI) u/s 193 and 228 of IPC. The jurisdiction of the Sessions Court in Mumbai and the High Court of Bombay to entertain the anticipatory bail applications was not contested.

2. Allegations of Duty Evasion and Non-Compliance with Import-Export Obligations:
The Applicants, partners of M/s. Diavon Fine Jewels L.L.P., were authorized to import 150 kg of gold under Notification No. 18/2015-Customs. They imported 37 kg of gold but failed to process and export it within the stipulated 120 days, leading to duty evasion. The investigation revealed that the gold was sold in the Indian market, and the Applicants' registered office was a dummy office. The supporting manufacturer, M/s. D.B. Gold, did not receive any gold from the Applicants. The Applicants admitted selling the imported gold to local entities, evading customs duty of over Rs. 3.38 Crores, thus committing offenses u/s 135 (1) (i) (A) and 135 (1) (i) (B) of the Customs Act, 1962.

3. Validity of the Extension of Export Obligation Period:
The Applicants argued that the export obligation period was extended from 4.5.2024 to 4.11.2024, making the inquiry premature. However, the investigating agency contended that the 120-day export period from the date of import could not be extended. The court found that the extension did not negate the requirement to export within 120 days from the date of import, which the Applicants failed to do.

4. Necessity of Custodial Interrogation and Rejection of Anticipatory Bail:
The court noted that the Applicants failed to provide satisfactory answers regarding the gold and its whereabouts. Witnesses confirmed that the gold was not processed or exported but sold locally. The court concluded that the Applicants misappropriated the gold, evaded duty, and their custodial interrogation was necessary. Consequently, the application for anticipatory bail was rejected. The court also denied the extension of interim relief, considering the gravity of the offense involving the misappropriation of 37 kg of gold and significant duty evasion.