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TMI Blog2023 (12) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... rance limits of /.25 indicated by the CRCL itself and its reply of RTI. Further, the report based on which seizure has been made has subjected sample to a test other then Fire Assay Method as is prescribed by BIS. It is found that out of 27 Gold Bars admittedly 1 bar below was 5kg i.e. of 4.240 kg which is claimed to be erroneously imported due to error on the part of exporter by the appellants and the same in any case shall not be allowed to be imported under the conditions of Notification No. 50/2015-Cus dated 30.06.2017 or Notification No. 96/2008-Cus. Further, we also find that the appellants had initially claimed benefit of Notification No. 96/2008-Cus dated 13.08.2008 based on the country of origin being of Republic of Rwanda. However, on the behest of Investigating Agency and under protest to get release of consignment, they paid duty under protest on TR-6 challan No. 446 dated 21.12.2022. However, the goods were not released to them detention was converted into seizure - it is found that the differential duty which was paid on the goods which were to be released but eventually not released was to the extent of 15.20 Crores (approx) which is with the department available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter/order before uson the following grounds- A. Impugned goods are not prohibited goods- 3. Prohibited Goods are defined in Section 2(33) of the Customs Act, 1962 as meaning any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. The Gold Dore bars which are imported by the appellant are therefore not prohibited goods' in accordance with the said definition. 4. Foreign Trade Policy (FTP) states that imports are free except when regulated by way restriction as laid down in ITC (HS). Gold Dore bars have conditions imposed and therefore fall under the category of restricted goods'. The appellant-company being a refinery was issued import license (with actual user condition) by the DGFT for import of Gold Dore Bars. Gold dore bars are imported under ITC (HS) for 7108 12 00, for which the only condition imposed is that Gold Dore is subject to actual user conditions by refineries. The said condition has been complied with by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s placed on record. 40 (c) The importer produces before the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, an assay certificate issued by the mining company or the laboratory attached to it, giving detailed precious metal content in the Dore bar Condition is satisfied as assay certificate furnished by mining company makes it apparent that the goods conform to the conditions of import license being of up to 95% purity. Copy of the Assay Certificate provided by the miner is placed on record. 40 (d) The gold Dore bars are imported by the actual user for the purpose of refining and manufacture of standard gold bars of purity 99.5% and above; The Appellant has imported the said gold dore bars for the purpose of refining and manufacture of standard gold bars of purity 99.5%. Hence, the said condition stands fulfilled. 40 (e) The silver Dore bars are imported by the actual user for the purpose of refining and manufacture of silver bars of purity 99.9% and above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that such goods can, be exported in accordance with Rule 10 of Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 (hereafter SEU Rules) notified by Notification No. 74/2022 Customs ( N .T.) dated 09.09.2022. This rule provides for reexport or clearance of defective goods. The relevant extract of the said rule is as follows- 10. Re-export or clearance of unutilised or defective goods. - (1) The importer who has availed the benefit of a notification shall use the goods imported in accordance with the conditions mentioned in the concerned notification within the period and with respect to unutilised or defective goods, so imported, the importer shall have an option to either re-export or clear the same for home consumption, within the said period, namely (i) within the period specified in the notification; (ii) within six months from the date of import, where the time period is not specified in the notification: Provided that, the said period of six months can be further extended by the jurisdictional Commissioner for a period not exceeding three months, if sufficient reason is shown that the causes for not conforming to the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how that the impugned goods comply with the gold content requirement. 9.1 The test/assay report dated 01.12.2022 provided by the mining company indicates the gold content for all the 27 bars part of the impugned consignment. It shows that gold content in the bars range from 92.8% to 94.8%, thereby adhering to the requirement prescribed in the law. 9.2 Further, at the port of import, the proper officer drew samples and sent it to the CRCL laboratory for testing. The CRCL lab report dated 24.02.2023 indicates that the gold content is 94.70%. This again confirms that the gold bars in the consignment are adhering to the requirement prescribed in the law. 9.3 Lastly, DRI drew three samples and sent them to the CRCL laboratory for testing. The CRCL lab reports for these samples dated 18.01.2023 indicate that the gold content is marginally above 95% i.e., 95.10%, 95.26% and 95.17%. 9.4 With regard to the last test report, the Appellant had addressed an RTI application dated the 17.08.2023 to the seeking the information with respect to Method of testing of gold percentage in gold dore bars employed by CRCL, CRCL/SOP-13 method of testing percentage of gold in gold dore bars, Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n force shall not be allowed. 12. Relevant para of Circular No. 35/2017 reproduced below for reference : Circular 35/2017 - Guidelines for provisional release of seized imported goods pending adjudication under Section 110A of the Customs Act, 1962- Reg. para. 2. While provisional release of seized imported goods under Section 110A of the Customs Act, 1962 may normally be considered by the competent adjudicating authority upon request made by the owner of the seized goods, provisional release shall not be allowed in the following casesi. Goods prohibited under the Customs Act, 1962 or any other act for the time being in force; ii. Goods that do not fulfill the statutory compliance requirements/ obligations in terms of any Act, Rule, Regulation or any other law for the time being in force; iii. Goods specified in or notified under Section 123 of the Customs Act, 1962; iv. Where the competent authority, for reasons to be recorded in writing believes that the provisional release may not be in the public interest. 13. The Appellant relied on the judgment of the Hon'ble High Court of Delhi in Additional Director General (Adjudication) v. Its My ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view at the time of seizure does not make the goods prohibited goods. For seizure, the officer must have reason to believe that goods are liable for confiscation and in the instant case, it has been stated that goods are prohibited. However, it is submitted that such belief or act of seizure does not establish that the goods are prohibited goods. 18. The High Court of Madras in Al Qahir International v. Commissioner of Customs, Tuticorin, 2021 (378) EL.T. 784 (Mad.) has held that the question of goods being prohibited is a matter of adjudication and since both importer and customs authorities prior to adjudication have their own grounds for opposite views, the balance of convenience was in favour of the assesseeimporter and goods could not be termed as prohibited goods till such time adjudication was completed. 19. The appellant thus submitted that the impugned gold is not prohibited goods in as much as all documents to examine description, purity etc., have been submitted and purity is below 95% as per report dated 27.02.2023 even as per testing conducted by the department. D. Appellant has satisfied the conditions of applicable Notification No. 96/2008-Cus.- 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Cus. 25. On the question of choosing a beneficial notification, it is submitted that an importer is free to choose the notification which is more beneficial to him. In case of Share Medical Care V. Union of India, 2007 (209) ELT 321 (S.C), Hon'ble Supreme Court held that if applicant is entitled to benefit under two different notifications or under two different heads, he can claim the one which is more beneficial and it is duty of authorities to grant such benefits if applicant is entitled to such benefit. (Emphasis supplied) E. Seizure of the entire consignment is not valid- 26. Section 110 of Customs Act stipulates that any goods are liable to confiscation under this Act . That is only such goods which are confiscable which are improperly imported on account of infractions listed in Section 111 of the Customs Act. Goods which are not tainted by the same and those which have been properly imported cannot be seized. It is submitted that the continued seizure and detention of the entire consignment is without sanction of law. 27. The Appellant drew attention to Innovation, Secunderabad and Another v. Central Board of Excise and Customs and Another, 1984 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving declared the goods to be prohibited in nature (and hence cannot be imported), customs duty cannot be on the same. 33. The amount of Rs. 15,20,96,571/- (Rupees Fifteen Crores Twenty Lakhs Ninety-Six Thousand Five Hundred and Seventy-One only) is already paid vide TR Challan 4336 dated 20.12.2023 under major head customs duty cannot be appropriated by the revenue authorities since the collection of such duty is without authority of law and the same is liable to refunded with applicable interest. G. Denial of provisional release of goods even though duty has been paid, is not sustainable- 34. Since the subject goods were needed immediately due to business urgency, as per the instructions of DRI, duties were paid without claiming exemption under Notification No. 96/2008 under protest vide TR-6 Challan No. 4336 dated 21.12.2022 seeking release of goods. It is reiterated that the Appellant is eligible for claiming exemption under Notification No. 96/2008-Cus., having imported gold dore bars from the Republic of Rwanda which is listed as an LDC and the documents for claiming the exemption such as Certificate of Origin are in order. The appellant had earlier imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of import but then the import was never cleared but seized. This whole process of demanding duty on an import which was not liable to duty and then seizing the consignment after the deposit was made reeks of arbitrariness. 42. The reliance on a test report dated 27.01.2023 when there are three other test reports including the source Assay certificate provided by the mining company and the CRCL test reports which clearly show the gold content is within limit is arbitrary. Appellants also inter alia, took various grounds on the point of natural justice Case of the Department 43. The Appellant had filed BE No. 3625730 dated 06.12.2022 for clearance of goods i.e. Gold Dore Bars (having gold content not exceeding 95%). They classified the goods under CTH 71081200 and claimed the benefit of notification No. 96/2008 and notification No. 50/2017 . The Department has seized the goods on reasonable belief that the Appellant has misused the benefit of S.No. 354 of notification No. 50/2017-Cus dated 30.06.2017 and Country of Origin benefit notification No. 96/2008-Cus dated 13.08.2008. Thereafter, the inventory of the goods was prepared on 23.01.2023 before the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions and follows Notification No- 12/2012 Cus dated 17.03.2012 as a mandatory condition (Later Notification No - 50/2017 dated 30.06.2017 has been issued in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2012 -Customs, dated the 17th March, 2012). 47. Representative samples were drawn by the officers of Respondent on 23.12.2022 in presence of authorised representative of the appellant and the Customs Officer. Further CRCL vide report dated 27.01.2023[with regard to purity content of Gold Dore Bar] has reported the content of Gold beyond 95% (above 95% ). The appellant imported all the 27 Gold Dore Bars vide single Bill of Entry as one consignment. And since separate Bills of Entry were not filed independently in respect of each bar. Therefore the whole consignment was found liable for confiscation in the event of fake Assay Report. 48. The Appellant has presented only the small part of the Hon'ble High Court Order in the matter of Its My Name Private Limited (cited supra). Hon'ble High Court of Delhi has made the following observations which requires attention:- 12. Undisputedly, the Im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dore can be imported by refineries against an import license with AU condition. 51. From the above policy condition it is clear that except Gold Dore import of other items falling under CTH 71081200 is allowed only through nominated agencies as notified by RBI DGFT (for other agencies) and IFSCA. In so far as import of Gold Dore Bar is concerned the same is not allowed even through RBI and DGFT (for other agencies) and IFSCA. The same is only permitted for refineries only against an import License with Actual User Condition. 50.1 However, firstly it has been seen from the application filed by the appellant before DGFT that appellant has itself applied for import of Gold Dore Bars under CTH 71082000, whereas Appellant is importing Gold Dore Bars under CTH 71081200. It is to further bring to notice that the Appellant has been importing Gold Dore Bars since 2019 and that the CTH earlier applied was under CTH 71081200. 50.2 Secondly the Gold Dore Bars which the appellant has imported vide Bill of Entry No-3625730 dated 06.12.2022 is having Gold Content above 95% which does not come under the scope of Import Policy and the License so issued to the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner mandatorily required it to comply with the conditions imposed in that notification. We are also of the firm opinion that once that notification came to be superseded by the 2017 notification... Further at para 14 Hon'ble High Court observed that ...we find ourselves unable to sustain the submission of the petitioner being entitled to import Gold Dore bars solely on the basis of the notification of 2008.. 55. Therefore, all goods where in which non-observance of any of the conditions subject to import has not complied with falls under the category of prohibited goods as per Customs Act 1962. 55.1 The subject goods are beyond the prescribed boundaries of import license issued to the Appellant and are thus do not subject for provisional release under Section 110A of the Customs Act, 1962 in view of guidelines prescribed under the judgments of Hon'ble Madras High Court and Hon'ble Delhi High Court prescribed in the CBIC Circular-35/2017-Cus dated 16.08.2017. Further, the department vide further submission dated 06.11.2023 indicated that date of report as got clarified by them was actually 18.01.2023 only and not 27.01.2023 as has inadvertently g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en done by wrong methodology. They also seek to rely on the following RTI report obtained by them from office of CRCL as reproduced below : - 56.1 It was therefore, their submission that even seizure needs to be vacated and all benefits as was being permitted to them for their earlier imports at least 103 consignments from year 2018 to 2020, which were cleared by the Customs earlier should be allowed to them without any hinder by Customs department/DRI and the whole seizure is vacatable as even the percentage is in accordance with tolerance limit permitted as above of /.25 as indicated by the CRCL as per above RTI response and also it is clear from the response of RTI that CRCL while following SOP-13 for testing percentage of gold in Gold Dore Bars has Followed Gravimetric Method and not a Fire Assay Method as is prescribed under Indian Standard 1418-2009. Therefore, report based on which seizure has been made is rejectable. 57. We have considered the rival submissions and various materials including case law as put forth by both sides. At this stage, we have to only decide about previsional release under Section 110A of the Customs Act, 1962 and various conditions fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed benefit of Notification No. 96/2008-Cus dated 13.08.2008 based on the country of origin being of Republic of Rwanda. However, on the behest of Investigating Agency and under protest to get release of consignment, they paid duty under protest on TR-6 challan No. 446 dated 21.12.2022. However, the goods were not released to them detention was converted into seizure. We find that the differential duty which was paid on the goods which were to be released but eventually not released was to the extent of 15.20 Crores (approx) which is with the department available for any appropriation, if so needed. We, further find that the another Gold Bar 4.240 which cannot be subjected to claim of exemption at present. The fate of the same whether being eligible for re-export are not has to be decided by the adjudicating authority, at the time of adjudication, the same will have a value exceeding Rs. 2.5 crores. We find that availability of this amount of security exceeding Rs. 17.5 crores along with execution of bond of full value of the goods should suffice to safeguard the interest of revenue. While attempting to balance both the rival interests, we have been guided by the following fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in force , goods that do not fulfil the statutory compliance requirements/obligations in terms of any Act, Rule, Regulation or any other law for the time being in force; and goods specified in or notified under Section 123 of the Customs Act, 1962 . Mr. Ganesh relied on Agya Import Ltd. (supra), which holds that para 2 of the said Circular was merely in the nature of a general guideline , and did not incorporate any mandate. We, having perused para 2 of Circular No. 35/2017-Cus. supra, vis-a-vis Section 110A of the Act, are not inclined to be so magnanimous. According to us, para 2 of Circular No. 35/2017-Cus. is clearly contrary to Section 110A and is, consequently, void and unenforceable at law. It is not permissible for the C.B.E. C., by executive fiat, to incorporate limitations, on provisional release of seized goods, which find no place in the parent statutory provision, i.e. Section 110A of the Act. Executive instructions may, it is trite, supplement the statute, where such supplementation is needed, but can never supplant the statutory provision. [Lok Prahari v. State of U.P., (2016) 8 SCC 389, which digests several earlier decisions]. By excluding, altogether, certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to confiscation, or passing appropriate orders in that regard. It is precisely for this reason that, at the time of provisional release, the importer is required to furnish a bond, covering the full value of the imported goods, along with security, in accordance with law. Allowing provisional release of the seized gold jewellery does not, therefore, interfere, in any manner, with due adjudication of the show cause notice, or with the jurisdiction, of the adjudicating authority, to hold the gold jewellery liable to confiscation. The mere fact that imported goods, consequent on adjudication may, possibly, be held to be liable to confiscation at a later stage, cannot be a ground to refuse provisional release. Else, Section 110A of the Act would, in our view, be largely rendered nugatory and otiose. Ruling being of jurisdictional High Court on validity of Circular as well as on scope of powers under Section 110A is binding on us and is worthy of following in substance. 58. Therefore, We are of the view that goods even if there is any remote possibility of being found prohibited or restricted at the time of adjudication is there, cannot be subjected to non release in terms of S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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