9911796707
TMI Blog2006 (12) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... certain shortages and excesses were detected during the course of stocktaking. The unit was asked to prepare a statement of import and export of diamonds according to the rate at which the diamonds were imported and exported which was prepared by one Shri Ramesh Iyer, Accounts Manager and submitted under his signature. On verification of the said statement, it was found that in a large number of cases diamonds in the jewellery have been exported which are not relatable to any import documents. For example, during the period 1-4-1998 to 31-1-2000, the appellants were found to have imported a total quantity of 1894.51 cts. of diamonds at the rate of US$ 75 per ct. Against this quantity of diamonds, the appellants were found to have exported 29931.61 cts. diamonds in the jewellery indicating thereby that the appellants had exported excess unaccounted diamonds in the jewellery to the extent of 28037.10 cts. import value of which was US$ 75 per ct. This statement showed that there was a shortage of 73739.00 cts. and excess unaccounted stock of 10631.39 cts. The stock taking was completed on 3-2-2000 when Shri Suresh Mehta, partner vide his letter dated 3-2-2000 confirmed that the physi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicated by the Commissioner, who confirmed the entire show cause notice vide his order dated 13-6-2001. On appeal, the Tribunal set aside the entire order [2003 (155) E.L.T. 589 (Tri.-Mumbai)] on the ground that during the course of stock taking what was required to be taken into account was the total quantity of diamonds imported and the total quantity of diamonds exported without taking into account the value thereof bill of entry-wise and shipping bill-wise as the value was considered to be estimated value which varies from person to person and could not therefore be made basis thereof. The Tribunal, in a nutshell, went by para 8.78B of the Exim policy which prescribed a method of co-relation with reference to total quantity of imports and total quantity of exports. It was held that the value of diamonds declared in the value addition statement can never be the same as declared in the bill of entry as declaration in the two documents was based on approximation. The shortages were worked out because of wrong method of co-relation which were set aside. In respect of broken diamonds, the Tribunal held that since re-valuation was done on 7-2-2000 and stock taking was a continuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds were produced by partner Suresh Mehta some days after the verification started. According to the department the production of such valuable articles at a later point of time clearly shows that an attempt has been made to substitute the actual diamonds with items which were not covered by the import documents. Similar is the position relating to confiscation of 10631.39 carats of diamonds and alleged unaccounted gold and diamonds. 32.The Tribunal shall permit the respondents-assessees to produce the original records which shall be verified by it. Definite stand of the department as to how there are suppressions resulting in either excess or shortage of gold shall be considered. CEGAT shall consider the basic features to work out the details and find out whether there is any excess or shortage as alleged by the departmental authorities. If after considering the explanation of the respondents-assessees and that of the departmental authorities already on record it finds that the plea of the concerned assessees, is without substance it shall work out the suppression, if any, and the duty payable. The quantum of penalty would be equal to the sum of duty leviable in terms of confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.34 and 8.35 clearly stated that the exports shall be allowed by the Customs authorities provided the endorsements made on the shipping bills and the invoices are correct and the value addition achieved is not below the minimum prescribed in the policy. It was, therefore, urged that even though there is a reference in para 30 to verify the compliance of para 8.34 and 8.35, that stage is already crossed at the time of examining the goods physically and allowing exports. If after completion of exports at a later stage verification has to be done, the same has to be done as provided in para 8.78B and therefore co-relation has to be only with reference to total quantity of imports and total quantity of exports. In his submission, this is what the Hon'ble Supreme Court has stated in para 29. 9. Shri Mondal on behalf of the Revenue, however, submits that the main allegation in the show cause notice is substitution of cut and polished diamonds imported and cleared duty free for manufacture of jewellery for export with some other diamonds which are not covered by any import documents. The other allegation is improper maintenance of records contrary to the provisions of Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts maintained. 13. In view of the above unambiguous observations of the Apex Court, the contention of the appellants that they are required only to comply with the requirements of para 8.78B is incorrect and hence the same is unacceptable. 14. He then referred to the statement submitted by the appellants (attached to this order as Annexure 'A') showing compliance with the requirement of para 8.78B by making a co-relation with reference to total quantity found in stock, total quantity imported during the relevant period and total quantity exported during the relevant period which shows that the appellants have not been able to reconcile the imports and exports even in relation to their quantity alone. This statement also shows shortages of diamonds to the extent of 1473.44 cts. excluding broken diamonds of 1607.03 cts. and high value diamonds of 31.54 cts. Further, this statement also shows excess of diamonds to the extent of 165.40 cts. if broken diamonds and high value diamonds are included in the physical stock found. This only demonstrates that the appellants are not able to tally the accounts of diamonds even in terms of para 8.78B. 15. We have cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to know as to whether what was imported has been actually exported. We do not find any substance in the plea of the assessee that the value has to be approximated and not the actual value as declared in the bill of entry and once the value declared in the shipping bill was examined by the Customs Officers and found to be correct it cannot be disputed. Our attention had been drawn to para 8.29 of the Exim policy for the period 1997-2000 which says that the exporter was also required to achieve a value addition of 5% over the value of cut and polished diamonds and precious and semi-precious stones etc. over and above the value addition prescribed for gold, silver and platinum content. This addition has to be bill of entry-wise and variety-wise and therefore unless originally declared value in the bill of entry is shown, there are no means to know as to whether the said value addition has been achieved or not. In view of this, the value shown in the shipping bill cannot be approximated as contended by the appellants, but has to be one which is declared in the bill of entry. If the Customs officer has failed to detect the same does not mean that the appellants can be absolved of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of 73730 cts. as reflected in the show cause notice and the duty demandable on the same is 12,54,80,309/-. However for arriving at the actual shortage, we have to take a view whether the high value diamonds and the broken diamonds produced subsequently have to be taken into account or not. Our findings in respect of these two are as under :- High Value Diamonds : 19. We find that the appellants have taken a plea that the Apex Court in its remand order in para 31 only refers to the arguments of the Revenue regarding high value diamonds that they were produced by the partners of the appellants Shri Suresh Mehta some days after the verification started. However, finding of the Hon'ble Tribunal has not been reversed and since as per para 35 of the Hon'ble Supreme Court's judgement, the appeals are allowed to the extent indicated, unless there is a reversal of finding of the Hon'ble Tribunal, the Hon'ble Tribunal is not required to again deal with the issue of high value diamonds as the same has been decided in favour of the appellants. We however feel that if para 31 and 32 of the Apex Court's order are read together, then it would be clear that what the CESTAT is require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequently produced, 18 pieces mentioned at Sr. No. 4 to 14, 23 to 28 and 36 of Annexure 6A to the show cause notice at page 13 and 14 of paper book Volume II tallied with weighty and description shown in the Bills of Entry. We accordingly hold that these diamonds will have to be taken into account while determining the shortages ignoring the revenue's plea that the relevant invoices did not show the certificate number as indication of certificate number is not a legal requirement. Further, in respect of 5 pieces mentioned at Sr. No. 33, 34, 39, 40 and 45 of Annexure 6A to the show cause notice, only clarity does not tally. We find that the appellants have taken a stand that there are different standard for indicating the clarity as seen from grading given in U.K. Scandinavian Nomenclature, Gemological Institute of America, for e.g. VS is the standard adopted in U.K., whereas VSI and VS II adopted by Gemological Institute of America and therefore it is not correct to say that the clarity does not tally. Since the description and weight in all these 23 pieces tally with description weight given in the invoices and bills of entry and the accompanying certificates, we hold that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the appellants' accounts have not been found to be correct and shortages/excesses have been determined afresh, finding has to be given on this unaccounted diamonds as they were found in excess of what was licitly imported. Since there is no document to establish their licit import, we uphold their confiscation with an option to redeem the goods on payment of redemption fine of Rs. 43 Lakhs under Section 125 of the Customs Act as held by the Commissioner. 28. Similar is the situation in respect of unaccounted diamonds which have been exported without proof of its licit import as shown Annexure -XI to the Show Cause Notice weighing 63078.35 valued at Rs. 27,00,76,393/-. Since there is no proof regarding their licit import, the liability to the confiscation as done by the Commissioner is upheld. 29. As regards imposition of penalty of Rs. 5 Crores on M/s. B.V. Jewels under Section 112(a) and Section 114(i) of the Customs Act 1962 is concerned, we find that a penalty of around Rs. 12 Crores has already been imposed under Section 114A of the Customs Act, and therefore we feel that further imposition of penalty of Rs. 5 Crore under Section 112(a) and Section 114(i) is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Shri Suresh Mehta on 7-2-2000 1607.3 16073 - " - K. Excess of quantity if high value diamonds and broken diamonds are included in the stock of Appellants (H+I+J-G) 165.40 13559.48 L. (G-H) Shortage of quantity If high value diamonds and broken diamonds are excluded from the physical stock of Appellants. 1473.44 96617.52 (in Rs.) 4154553/- @ Exchange rate of Rs. 43/- per 1 USD Sd/- Sandip Sawant EXIM Officer B.V. Jewels ANNEXURE - 'B' Calculation of duty foregone on the 23 pieces of high valued diamonds with certificates : Sr. No. B/E No. Date Serial No. in Annexure VI. Wt in Cts CIF Value in US$ 1. 2602 dt. 12-10-1998 4 1.32 4092 2. " 5 1.14 3534 3. " 6 1.01 3131 4. " 7 1.00 3100 5. " 8 1.00 3100 6. " 9 1.02 3162 7. " 10 1.04 3224 8. " 11 1.00 3100 9. " 12 1.17 3627 10. " 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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