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2023 (12) TMI 798 - CESTAT NEW DELHILevy of penalty u/s 114AA of the Customs Act, 1962 on the firm as well as on Director - appellants sold the stock of duty-free gold in the open market (domestic) which was procured under the condition to be used for the export of the jewellery - HELD THAT:- The very fact that the customs authorities acted on the export obligation papers, as submitted by the appellant, is evident that export of jewellery by the appellant has taken place. Consequently, the conditions of the exemption notification read with the relevant circular and FTP stands fulfilled. Once the appellant had exported the jewellery and submitted all the proof of exports to the bank / importer and relying on those documents of export the customs authorities had not even doubted on the genuineness, the appellant cannot be held responsible for any violation so as to be charged with any kind of penalty under the Act. The reasoning adopted by the revenue is that as per the tally sheets on certain days, the appellants were having stock of only duty-free gold and they did not have any stock of duty-paid gold and therefore the inference would be that they have diverted the duty-free gold in the market. The submissions of the revenue deserves to be rejected in view of the Circular No. 23/2018 dated 23.07.2018 issued by the CBIC, clarifying that there can be no one-to-one correlation between the consignment of imported precious metal and the export of jewellery due to the homogeneous nature of precious metal. The said circular is binding on the department and resolve the doubt raised by them in this case. Once it is held by the adjudicating authority that the demand of duty would arise only if the condition of export of jewellery is violated, the necessary implication is that the exporter has fulfilled its obligation of exporting the gold jewellery of equivalent quantity of gold procured by them from the nominated agency. It is not a case where the appellant has submitted any false or incorrect undertaking so as to attract the provisions of section 114AA of the Act - The adjudicating authority while imposing the penalty on the appellant under section 114AA had proceeded on assumptions and presumptions that the jewellery has been made from the gold purchased from the domestic market on the basis of VAT invoice and depending on price fluctuation, they sold the gold in the domestic market and therefore they have not complied with the undertaking, resulting in giving a false and incorrect declaration. The said reasoning is not sustainable as it is not based on any evidence. There is no ground for imposing penalty under section 114AA of the Act - impugned order imposing penalty of Rs.5 lakhs on M/s Derewala Industries Ltd., and Rs. 1 lakh on Shri Yogendra Garg, Director of M/s. Derewala Industries Ltd., under section 114AA of the Customs Act, 1962 is, therefore set aside - Appeal allowed.
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