TMI Blog2009 (2) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... is as to whether the Adjudicating Authority was in error to decide the show cause notice when an appeal is pending before the Division Bench of Honble High Court of Karnataka - It is undisputed that the exports of the jewellery by the respondents were as per provisions of Export Import Policy. Respondents have obtained licence for value addition of minimum of 7% as per the Policy value addition raised to 15% by policy circulars by DGFT and same challenged in HC by writ petition petition allowed by Single Judge and writ appeal filed by revenue pending in HC stay of single judge order not granted adjudication of SCN not erroneous when stay absent appeal of revenue rejected - C/521/2008 and C/283/2007 - 82 and 83/2009 - Dated:- 10-2-2009 - S/Shri T.K. Jayaraman, Member (T) and M.V. Ravindran, Member (J) Shri P.R.V. Ramanan, Special Counsel, for the Appellant. S/Shri Naresh Thacker and V.S. Nankani, Kiran S. Javali, Advocates, for the Respondent. [Order per: M.V. Ravindran, Member (J)]. - These appeals are directed against Order-in-Original No. 1/2007, dated 31-1-2007. Since, both the appeals are against the same Order-in-Original, they are being disposed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a prescribed value addition of 7% as per Para 4.56.1(b) of the said HBP. The export product mentioned in the 28 licences issued by the JDGFT, Ahmedabad to respondent M/s. Adani Exports Ltd. read as "Studded gold jewellery 0.995 fine studded with synthetic/semi-precious stones: Bangle (gold 525.030 kgs. USD 8000000, stone 1,200 kgs, USD 500)". (iv) M/s. Rajesh Exports Ltd. had obtained 5 Advance Licences from the JDGFT, Bangalore for the import of 99.5% fineness gold bars. The licences were issued under Para 4.56(a) of HBP 2004-09 with a prescribed value addition of 7% as per 4.56.1(b) of the HBP 2004-09. The export product in the said 5 licences was described as "plain jewellery and articles and ornaments like Mangalsutra containing gold and black beads/imitation stones, cubic zirconia, etc., but excluding diamonds, precious, semi-precious stones. However, if the per gram value of the semi-precious stones utilized in the making of the jewellery/articles is less than the per gram value of gold, the wastage norms of plain jewellery shall be applicable." (v) Similarly, under the aforesaid Licences issued to respondents, they imported a total quantity of 21,428 kgs. of gold, duty f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-Cus., dated 10-9-2004 and read with proviso to Section 28 of the Customs Act, 1962. (vi) Therefore, a Show Cause Notice was issued for the violation of condition No. (v) of the Notification No. 93/2004 Cus. the said imported goods (21,428.693 kgs. of gold totally valued at USD 30,06,97,224), liability for confiscation in terms of Section 111(o) of the Customs Act, 1962 was issued directing the respondents to Show Cause as to why: (a) The imported gold weighing 21,428.693 kgs. valued at USD 30,06,97,224 should not be held liable to confiscation under Section 111(o) read with Notification No. 93/2004-Cus., dated 10-9-2004; (b) The export goods viz., 23,053.90 kgs of gold (mis-declared as jewellery) totally valued at USD 32,33,47,284 should not be held liable to confiscation under Section 113(i) of the Customs Act, 1962; (c) The goods exported by them should not be disallowed for completion of Exports Obligation and the assessments of the exports made against these Advance Licences should not be finalized by disallowing the DEEC benefit; (d) Customs duty of Rs. 54,64,31,672/- foregone on the imports of 21,428.693 kgs. of gold bars which have not been used for manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed with the Customs at the time of export. Accordingly, all assessment of shipping bill, including provisional assessed shipping bills of Rajesh Export Ltd. and Adani Export Ltd. at Air Cargo Complex, Bangalore are to be finalized. (6) Further, as contravention of Section 111(o) and 113(i) of the Customs Act, 1962 has not been held, the question of imposition of penalty under Section 112(a) and Section 114(a) of the Customs Act, 1962 does not arise. II. In terms of Value Addition, the Judgment of the Karnataka High Court dated 15-6-05 as prevailing is binding. The above High Court Judgment also applies to the issue regarding foreign exchange component in respect of local gold use for manufacture of gold jewellery exported. Although, an appeal has been filed, no stay has been obtained. However, these matters, as to whether the Value Addition of 7% or 15% is to be taken into account, as well as the foreign exchange component in respect of local gold are matters to be examined and finalized by the Licensing Authority/by the office of DGFT Bangalore/Ahmedabad and these Authorities may take appropriate action in light of Judgment of Division Bench of Karnataka High Court as and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the jewellery items worn are normally of 94% purity or below. The so called "Bangles" are not Indian jewellery as they are not normally used for adornment purposes as being 24 carat, they tend to deform easily. 4.1 It was submitted that the importers (M/s. Radhakrishna Jewellers and M/s. Excel Goldsmith), both related to Rajesh, required 500 kgs. of gold bangles, on a daily basis, just to scrap it, clearly indicates that the export was done not as a normal trade. If the importer's purpose was to scrap the jewellery, he need not have imported it from India in the form of crude bangles but could easily have got the gold bars in the Gulf markets and could have taken whatever quantity as and when required and that too at cheaper rates when compared to gold purchased from the Indian market, as India is not a net gold producer but a gold consuming nation. It is, therefore, apparent that the main intention of Rajesh and Adani in entering into this type of trade is to boost their export performance (turnover) and thereby gain export incentives such as DFCE and Target Plus. 4.2 It was submitted that this was not a genuine transaction but one designed to circumvent and misuse the expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble High Court of Karnataka has held in favour of the respondent as regards value addition for export obligation against the Advance Licence. It is his submission that the said judgment is not stayed by the Hon'ble High Court in writ appeal, hence, Adjudicating Authority was correct in passing the Order-in-Original. He would draw our attention to Para 79 of Order-in-Original to submit that even today the Order-in-Original has safeguarded the revenue's interest by holding back the surety bonds executed by the respondent. He draws our attention to the grounds of appeal of the revenue and submits that revenue has not challenged the findings of the Adjudicating Authority on the facts of the case as enumerated at Paras 62 to 66 in the impugned order. It is his submission that the consignments were cleared for export after proper examination by the customs authorities and also after certification from the Jewellers Association recognized by the customs department. It is his submission that the evidence in the form of the documents produced by the authorities as annexed to the Show Cause Notice did not have any signature nor they were given the copy of the report of the Consul (Econ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the entire evidence on record and rejected the evidence adduced by the department in the form of report received from the Consulate of India, Dubai. He would also submit that the Adjudicating Authority has erred in relying on only 5 Bills of Entry submitted by the respondent M/s. Adani during personal hearing for dropping charges of mis-declaration. It is the submission that the importer at Dubai was related to respondent M/s. Rajesh Exports Ltd. He would submit that the judicial pronouncements relied upon by the counsels for respondents were in respect of the import of goods but the facts of these cases are not applicable. It was also submitted that the department has option to invoke provisions of Section 28 of the Customs Act, 1962, without challenging the assessment as is held by the Apex Court in the case of Component Corporation v. Collector - 1998 (99) E.L.T. A228 (S.C.). 8.1 We have considered the submissions made at length by both sides and perused records. 8.2 We would first deal with the issue of the revenue as to whether the Adjudicating Authority was in error to decide the show cause notice when an appeal is pending before the Division Bench of Hon'ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid two definitions the said benefit cannot be denied to the petitioner in so far as the exports which they have already effected. The question whether the impugned circular only clarifies the aforesaid provisions or it would have the effect of amending the aforesaid provisions, whether the second respondent has power to amend those provisions by issue of circular and whether the said circular is contrary to Sections-5 and 6 of the policy are all matters which can be agitated and gone into by this court if and when the same is challenged as coming in the way of having the benefit of export policy before carrying out an export. It is always open to the exporters not to export the goods hereafter in view of Annexure-'B', when the authorities have clarified the policy, if it is not beneficial to them. Still if they want to challenge the circular it is open to them to do so. Suffice it to say, the said circular cannot be construed at this stage as denying the benefit of the policy to the petitioner. Therefore keeping open the aforesaid questions to be agitated in future it is held that the petitioner is entitled to the redemption of the license in respect of which they have performed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter was sub judice, the Department reserves the right to add/to amend/modify the SCN subject to the outcome of the said judicial proceedings, in so far as the aspect of Value addition was concerned. Thus, it is clear that the Commissioner while passing the above order, without awaiting for the outcome of the said judicial proceedings, has clearly gone beyond the scope of the Show Cause Notice. (ii) Further, as the said matter was pending before the Division Bench of the High Court, it was not legal and proper for the Commissioner to have taken a final decision with regard to the Value addition or other matters in the light of the executive instructions issued by the Central Board of Excise and Customs (the Board) in their Circular No. 162/731/95-CX.3, dated 14-12-1995 warranting such categories of cases to be transferred to the Call Book pending decision in the proceedings before the Court. The Commissioner was bound to follow the Board's instructions directing that cases in which the department had gone in Appeal to the appropriate authority to be transferred to Call Book and it was improper to decide a matter on which the department had gone in appeal to the higher Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that the Adjudicating Authority has not considered the evidence produced by the revenue in form of report received from Consul (Economics), Consulate General of India, Dubai, UAE. The importers at Dubai have cleared the consignment as 'gold scrap'. Misdeclaration charges were dropped based on the documents submitted by the respondents without causing any verification, and the importers were related to respondents. We gave anxious considerations to the oral and written submissions made by the learned Special Counsel for revenue. We find that the Adjudicating Authority, on the facts that exports were of gold jewellery manufactured/made out of imported gold, has held as under. "63. The Parties have imported 21428.693 kgs. of gold under various Shipping Bills. Before examination of this issue relating to export of gold product from Bangalore Customs, it would also be relevant to enumerate in brief the procedure followed right from time of filing of Shipping Bill to issue of Let Export Order. The Shipping Bills in respect of goods to be exported is filed either by the Exporter or the authorized Custom House Agent. Once the Shipping Bill is filed, the Documents filed are sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, only on such grounds of plainness of jewellery and of jewellery Bangles, it cannot be construed to signify that all such heavy marriage jewellery, is 'not jewellery as such', merely on ground of its weight or purity. It is also to be accepted that jewellery has traditional been used as form of investment and to provide a source of saving to ladies in case of distress/emergency. Jewellery, even if purchased purely as an investment does not go out of ambit of definition of 'jewellery', merely on this ground. The allegation in the SCN not to treat heavier jewellery or jewellery having higher purity and/or jewellery purchased/brought/sold more in form of investment than for casual/daily wear is, therefore, completely devoid of merit and is based on no rational or valid or practical consideration and/or on ground realities as prevailing, not only within India but also as prevailing outside the country including in the country of export. Thus the allegations and arguments as levelled in the SCN, that the gold Bangles/products exported cannot be termed as gold jewellery or studded gold jewellery are unacceptable. It has also been alleged in the Show Cause Notice that 24 carat jewell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of gold jewellery by the Representative of the Jewellers Association at the time of export. Such contrary and conflicting stand cannot be sustained. At the time of export of gold product, no officer of the Customs Department had raised any doubt or query that the exported product did not fulfil the description of goods, meant to be exported as per the Advance Licence and/or in fulfilment of Notification No. 93/04-Cus., dated 10-9-04. Even in respect of the gold consignment exported under Shipping Bill No. 145798, dated 20-1-05 in respect of which samples were drawn for examination (Para 9 of the SCN refers), the said gold consignment was allowed for export. Had the Dept. felt that the description of the product being exported was not proper and not as per the description in the Advance Licence or if the condition of the Notification No. 93/04-Cus., dated 10-9-04 or the surety Bond executed were being violated, the concerned Customs Officers should not have allowed 'Let Export Order'. No such action was taken. In this connection, I have also taken note of the Bombay High Court Judgment in case of Popular Dyechem - 1987 (28) E.L.T. 63 (Bom.) and CESTAT judgment in case of Madhus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idences adduced by the revenue in form of report received from the Indian Consulate, Dubai, UAE. It is noticed that the respondents, on receipt of the show cause notice, approached the authorities to provide copy of the full report from the Indian Consulate, Dubai, UAE. In response to such a request, the office of the Commissioner of Customs, Bangalore vide letter No. C. No. VIII/10/56/2005-Cus. Adjn./10874, dated 28-2-2006/1-3-2006 replied as under:- It can be noticed from Paragraph 2.1 of the above reproduced letter, it was informed that the contents of the letter from Indian Consulate are not relevant to the present case and it is only the information furnished by Consulate in form of 8 Bills of Entry which annexed to Show Cause Notice. This would mean that the Pills of Entry annexed to Show Cause Notice are the only document relied upon by the authorities to allege misdeclaration. The said Bills of Entry are annexed to the Show Cause Notice as annexures E5 to E12. On a careful perusal of the said documents, we find that they are photocopies of declarations made by the purchasers to Dubai customs. It is noticed that these documents are not attested or signed by the customs aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted a comparative chart in respect of Annexure E8 TO E12 as referred in the Show Cause Notice. The said comparative Chart was in respect of the Bill of Entry referred to SCN, the relevant Invoice No. and date, the corresponding Shipping bill No. and date (as referred to in para 19 of the SCN) well as, the Airway bill and date including the name of the buyer which was, Excel Goldsmith in respect of all these five cases (E8 TO E12 of SCN) refers. He submitted the original copies of invoice and landing certificate, the bill of entry of Sharjah Customs. The said documents i.e., the invoice, the landing certificate and the bill of entry where, have been attested by the Tika Ram, Vice Consulate General of India Dubai (U.A.E). These, three documents also bear the seal/stamp of the United Arab Emirates. The documents have been certified to be true copies by Notary S.R. Pandya. As per, the scrutiny of above bill of entry, the declaration the goods, description is as indicated below: (i) DEC/Bill of Entry No. 569, dt. 12-1-2005 studded gold jewellery E8 of SCN refers (ii) DEC/Bill of Entry No. 1143, dt. 23-1-2004 studded gold jewellery E9 of SCN refers (iii) DEC/Bill of En ..... X X X X Extracts X X X X X X X X Extracts X X X X
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