The Delhi Bench of Customs, Excise and Service Tax (CESTAT) has allowed the provisional release of 53 kgs of gold seized by Directorate of Revenue Intelligence (DRI).
The bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that the finding recorded by the Commissioner that the premises did not have a fully mechanized machine for manufacture of jewellery is not based on any evidence.
The appellant/assessee is engaged in manufacturing, trading and export of gold jewellery. It had been importing gold under Advance Authorization to manufacture gold jewellery and export it.
In this connection, an Advance Authorization License dated 19.02.2019 was issued by the Directorate General of Foreign Trade to the appellant for import of gold bars in terms of Foreign Trade Policy 2015-2020 and to export gold jewellery after undertaking the process of manufacturing. ‘
In pursuance of the Advance Authorization, the appellant imported 53kgs of duty free gold bars through two Bills of Entry, both dated 13.08.2020. One Bill of Entry No. 8461348 was for import of 31kgs of gold and the other Bill of Entry No. 8461516 was for import of 22kgs of gold.
The export obligation period in respect of the gold bars imported under the aforesaid Advance Authorization was 120 days from the date of clearance of the import consignment by the customs authority.
In view of the COVID pandemic, extension in deadlines were given as a result of which the aforesaid period of 120 days stood extended till 31.12.2021 without composition fee. The export obligation period could, however, be extended further on payment of composition fee, as provided for under paragraph 4.42(d) of the Handbook of Procedure of Foreign Trade Policy.
It transpires from the records that the Officers of DRI conducted a search at the premises of the appellant on 13.08.2020 on the allegation of diversion of duty free gold imported by the appellant. The search continued till 14.08.2020 at the declared premises of the appellant as also other premises belonging to the Director of the appellant as well as the premises of other related person.
According to the appellant, 53kgs of gold that was imported by the appellant through the two Bills of Entry were cleared by the customs in the late hours and thereafter the same were kept by the Principal Officer of the appellant after clearance and could not be brought inside the declared premises because of the search that was going on. After the search was over, the gold bars were brought into the declared premises.
The appellant contended that the Director of the appellant appeared in the office of the DRI on being called on 17.08.2020 and on the basis of the disclosure made by him that 53kg gold was kept in a chest 40/4914, Regarpura, Karol Bagh, New Delhi, search proceedings were conducted by DRI Officers of the premises and 53kgs of gold was found in the chest.
The 53kgs of gold imported by the appellant through the two Bills of Entry were placed under seizure by the Officers of DRI through a seizure memo on the allegation that the same was kept outside the declared premises with intention of diversion. Possession of 53kg gold was taken from the appellant by the DRI Officers on 28.12.2020 under a panchanama and was deposited in the customs godown.
The appellant filed Writ Petitionbefore the Delhi High Court seeking a direction for release of the seized gold and for re- validation/extension of the Advance Authorization issued to the appellant.
During the pendency of the Writ Petition, a show cause notice dated 11.08.2021 was issued to the appellant proposing confiscation of the said 53 kgs of gold seized through seizure memo under section 111(o) of the Customs Act, 1962
The Commissioner, by order dated 01.05.2024, rejected the application filed by the appellant for provisional release of gold. The Commissioner observed that since 53kgs of gold was not found in the premises on 13.08.2020 and 14.08.2020 when the search was carried out, it appeared that the appellant intended to bypass the import policy and save duty on the import of gold. The Commissioner also noted that under the Advanced Authorization Scheme manufacture of gold jewellery/articles has to be undertaken by a fully mechanized process, but during the search of premises fully mechanized facility for manufacture of jewellery/article was not found by the Officers of DRI.
The tribunal held that the panchanama clearly mentions that two machines for manufacture of jewellery were available on the fifth floor. The Commissioner assumed that these two machines were not fully mechanized. It was imperative for the Commissioner to have obtained a report about the two machines found on the fifth floor before recording a finding whether they were mechanized or not.
The tribunal quashed the order passed by the Commissione and allowed the application filed by the appellant for provisional release of the gold that was seized.
Case Details
Case Title: M/s. Shree Gold Art Pvt. Ltd. Versus Commissioner of Customs
Case No.: Customs Appeal No. 52026 Of 2024
Date: 17.03.2025
Counsel For Appellant: Nisha Bineesh
Counsel For Respondent: Rajesh Singh
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