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TMI Blog2024 (7) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by certain persons in import of gold for the purpose of manufacturing jewellery for export and diverting it into domestic market calls for confiscation of the gold seized from the premises of the respondent - the appellant refused to exercise the discretion conferred under the provisions of the Customs Act to release the goods provisionally. The Tribunal has got powers to interfere with the order passed by the appellant. At the same time, given the nature of violation committed by the respondent in importing gold for manufacturing jewellery for export but diverting it into domestic market, we are of the view that this is not a fit case where the Tribunal is justified in exercising the discretion conferred upon Section 110-A of the Customs Act to provisionally release the goods. The Tribunal also ignored clause (i) of part 2 of Circular No.35/2017-Customs dated 16.08.2017 wherein it was stated that provisional release of goods shall not be allowed in respect of prohibited goods as has been defined under Section 2 (33) of Customs Act, 1962. In this case, it is clear that the goods which are sought to be provisionally released, is a prohibited goods and therefore, the Tribunal ough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is wider conspiracy to defraud the exchequer by unscrupulous exporters in connivance with local jewellers and bullion traders, such as, the respondent, based in Chennai with an intent to divert the duty free gold and to export fake jewellery under the guise of 22 Carat plain gold jewellery to fulfil the export obligation. The further follow-up searches made at the manufacturing places of fake jewellery at Rajkot and Kolkata revealed that the exported jewelleries contained only about 15% to 20% of gold. 2.2. As regards the case on hand, investigation revealed that the respondent, as one of the buyers, procured the diverted duty free gold bullion on cash basis through a broker named Jitendra Kumar Jain @ Jitu, who is a business-friend of the respondent and who mediates between the respondent and one Deepak Siroya. It was also found that crude gold found in the premises of the respondent was not satisfactorily accounted for in his books of accounts. Further, the respondent was sending huge quantities of foreign currency to Dubai through non-banking channels in collusion with others. After completion of investigation, show cause notice was issued to several noticees, including the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e burden that the seized gold was not a smuggled one in terms of Section 123 of the Customs Act, 1962. Further, the CESTAT has failed to note that even though Section 110A provides provisional release of seized goods, the Rules, Circular and Instructions issued by the Department from time to time provide the categories of goods that can be released provisionally. As far as the present case is concerned, the respondent had purchased the duty free gold, which was clandestinely cleared through fraudulent exporters and the investigation conducted so far had revealed that the seized gold at the respondent's premises was the diverted gold. Thus, according to the Revenue, the provisional release of seized gold under Section 110A of the Customs Act, 1962 is, therefore, not applicable to the case of the respondent. It is emphatically submitted that Section 110A of the Customs Act, 1962, itself uses the word may and not shall and hence, release of seized goods is a discretionary power vested with the adjudicating authority and not a mandatory power. In this context, the learned counsel for the appellant placed reliance on the decision of the Honourable Supreme Court in Sheikh Mohd. Omer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made garments. Hence, the authority imposed redemption fine as well as levied penalty. In our view, this finding arrived at by the authorities below cannot be said to be, in any way, unreasonable which would call for interference by this Court in this appeal. 3.2. That apart, reference was made to the decision of the Honourable Supreme Court in the case of Union of India and others vs. Raj Grow Impex LLP and others reported in (2021) 18 Supreme Court Cases 601 in which it was held as follows:- 140. It needs hardly any elaboration to find that the prohibition involved in the present matters, of not allowing the imports of the commodities in question beyond a particular quantity, was not a prohibition simpliciter. It was provided with reference to the requirements of balancing the interests of the farmers on the one hand and the importers on the other. Any inflow of these prohibited goods in the domestic market is going to have a serious impact on the market economy of the country. The cascading effect of such improper imports in the previous year under the cover of interim orders was amply noticed by this Court in Union of India vs. Agricas LLP (2021) 14 SCC 341. This Court also hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: 83. Adverting, now, to the terms of provisional release, the impugned Final order does not set out any precise reasoning for having permitted provisional release on furnishing of a bond with bank guarantee for Rs. 1.25 crores. A Division Bench of this Court had, in Navshakti Industries Ltd., vs. Commissioner of Customs, ICD (2011) (267) E.L.T. 483 (Del.) permitted provisional release of the goods in issue in that case on furnishing of a bond covering 20% of the differential duty payable on the goods, with no other condition. The said condition was modified by the Supreme Court, in appeal (as reported in 2011 (269) E.L.T. A146 (SC) by directing furnishing of a bank guarantee for 30% of the differential duty payable on the goods. Zest Aviation Pvt Ltd., vs. U.O.I. (2013 (289) E.L.T. 243 Del.) and Aban Exim Pvt Ltd., vs. Principal Commissioner of Customs (2015) (319) E.L.T. 430 (Del) too followed the same standard by allowing provisional release on furnishing of a bank guarantee covering 30% of the differential duty payable on the goods in issue. Furnishing of a bond, for the value of the goods, along with a bank guarantee covering 30% of differential duty, was the standard fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2. In appeal, the High Court by its order dated 28 February 2020 noted that the total value of the goods was Rs. 28.23 Crores. The High Court has directed provisional release subject to the respondent furnishing a bank guarantee quantified at Rs. 10 crores, besides other incidental conditions. 3. During the course of the hearing, we have heard Mr. S.V. Raju, Additional Solicitor General in support of the Special Leave Petition and Mr. Harish N. Salve, Senior counsel on behalf of the respondent. 4. We are of the considered view that the quantum of the Bank guarantee which has been directed to be furnished by the High Court, should be enhanced from Rs. 10 crores to Rs. 15 crores. Mr. Salve has stated on instructions that he has no objection to an enhancement of the quantum of the bank guarantee. We accordingly modify the order of the High Court by directing that the quantum of the bank guarantee shall stand enhanced to Rs. 15 crores. The other conditions which have been imposed by the High Court shall continue to govern. 5. The Special Leave Petition is accordingly disposed of. 6. Pending applications, if any, stand disposed of. 4.3. Therefore, the learned counsel for the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturing jewellery for export but diverting it into domestic market, we are of the view that this is not a fit case where the Tribunal is justified in exercising the discretion conferred upon Section 110-A of the Customs Act to provisionally release the goods. The Tribunal also ignored clause (i) of part 2 of Circular No.35/2017-Customs dated 16.08.2017 wherein it was stated that provisional release of goods shall not be allowed in respect of prohibited goods as has been defined under Section 2 (33) of Customs Act, 1962. In this case, it is clear that the goods which are sought to be provisionally released, is a prohibited goods and therefore, the Tribunal ought not to have passed the order, which is impugned in this appeal. Furthermore, the judgment of the High Court of Delhi in the case of Additional Director General (Adjudication) vs. Its My Name P.Ltd . , reported in 2020 SCC OnLine Del 2760 , relied upon by the CESTAT for passing such order is not applicable to the facts and circumstance of the present case. We find that the matter has not been dealt with in detail without taking note of the irregularities and illegalities committed by the respondent. The investigation carr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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