TMI Blog2022 (2) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... t have failed to fulfil their export obligation as required under the scheme of the Special Economic Zone. The allegation of Revenue that the appellant has mis-declared the import consignments inasmuch as they have imported fully finished or high-end gold jewellery which did not require any further processing and have mis-declared the same as old/ outdated gold jewellery. Such allegation is based on the report of the Departmental jewellery appraiser, who in his report have stated that, the jewellery under import which were seized pursuant to inspection on 06.02.2009, appears to be new jewellery. On the basis of this report, Revenue concluded that brand new jewellery was imported under the guise of old/ outdated jewellery and thereafter such jewellery was diverted in the local market - the appellant s firm was evidently authorized to import old/ outdated jewellery or damaged jewellery for melting and re-making into finished product for export. Such outdated jewellery or out of fashion jewellery may also appear at times to be new - Once this is so, it is difficult to understand how the report of jewellery appraiser supports the allegation of mis-declaration. The report of jeweller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s duty free - such excess quantity is nominal and an invoice may be revised for clerical errors, which does not invite any adverse inference, unless there are other supporting reasons for the same. This nominal shortage and/ excess in export of goods, which is only on two occasions cannot form the basis for the charge of clandestine removal of 27,888.50 gm and 22,254 gm of gold jewellery in the domestic market. There is virtually no evidence in support of the charge of clandestine removal, and in absence of any cogent evidence on record, we hold that the charge of clandestine removal cannot be sustained. Revenue has also not produced the person before the Adjudicating Authority for examination and consequent cross-examination, whose statements have been relied upon in support of the allegations by Revenue, for cross-examination. Therefore all such statements cannot be read as evidence against the appellant, being in violation of the provisions of Section 138B of the Customs Act. The Adjudicating Authority have not stated any of the exception as provided in Section 138B, for not examining the witnesses of Revenue - the charge of clandestine removal is a serious charge and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Nishant Mishra, Advocate for the appellant Shri Gyanendra Kumar Tripathi, Authorised Representative for the respondent ORDER The appellants herein are the partnership firm and its partner (Ajit Singh) are in appeal against the demand of duty and penalty for alleged violation of the provisions of Customs Act and the Special Economic Zone Act. Further, there is also order of confiscation of gold jewellery, etc. seized from the appellants, both at the business premises and residence of the partner-Shri Ajit Singh. 2. The appellant partnership firm was constituted on 1.4.2005, wherein the appellant Shri Ajit Singh with 75% share and the other partner-Shri Kirti Jain having 25% share. The appellant firm is engaged in the manufacture and export of gold jewellery. In terms of the provisions of Export Oriented Unit Scheme (EOU) as envisaged under Export Import Policy/Handbook of Procedures, the appellant applied for permission to establish a new undertaking at Noida Export Processing Zone, Noida for the manufacture of plain gold jewellery, and vide letter of authorisation dated 16.05.2001 issued by Deputy Development Commissioner (at the relevant time, the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. ( VEJPL for short) at the Plot No.197 198, subject to the following conditions:- (i) Physical separation of space between the two units shall be carried out to the satisfaction of NSEZ Customs; (ii) Separate entry and exit points shall be maintained subject to satisfaction of NSEZ Customs; (iii) Self-certified layout plan of the building with proper earmarking of space amongst sharing units shall be submitted; (iv) Separate records and accounts shall be maintained by each unit and sharing of capital goods/raw materials/consumables etc., shall be subject to normal procedure. 5. Thereafter, the appellant shifted its manufacturing activities from the premises SDF No.D-8 to Plot No.197 198, Noida SEZ. Upon shifting, as directed, physical separation of space and separate entry and exit points were carried out and made, to the satisfaction of NSEZ Customs Authority as stipulated in the permission letter, self-certified layout plan of building was also submitted. The appellant also fulfilled the other conditions, such as maintaining of separate records and accounting of transactions. The appellant was regularly achieving minimum export performance as prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to Central Warehousing Corporation (hereinafter referred to as CWC ) for transportation to SEZ. At the time of entry into SEZ, the import consignment was physically checked by the Customs Department. Upon physical checking, the purity of gold was checked by preventive officer on karatometer and thereafter the imported jewellery was mutilated and entry of the same was also made in the import register maintained by the appellant. A report to the said effect was also made by the jewellery appraiser i.e. Deputy Commissioner, Customs 11. That the export of gold jewellery was made under self-sealing/self-certification procedure. After preparing invoice, packing list and shipping bill (containing the details of import-corresponding bill of entry no.), the same was submitted at the customs office situated within SEZ. After checking that the gold jewellery sought to be exported is made out from the stock available in the corresponding bill of entry, as recorded in the import register, the documents were handed over back to the appellant. Export consignment along with invoice, packing list and shipping bill was then handed over to the Preventive officer, Customs and after prepara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E/NSEZ/Exp/ 109/2008-09 dated 4.2.2009. As regards remaining 02 (two) packages, Panchanama records that Sri Vakas Sharm informed that the same were imported vide B/E No.BE/NSEZ/IMP/00622 dated 4.2.2009. Panchanama further records that Shri Vikas Sharma also produced complete set of documents relating to the 15 (fifteen) packages in question. Panchanama also records that a detailed examination of the import export consignment(s) was conducted by jewellery appraiser posted at J.J.C, Jhandewalan, New Delhi, vis-a-vis declaration appearing on the import export consignments appearing in the relevant documents. Panchanama records that export consignments were found to contain either brass or iron scrap and the import consignment were found to contain brand new gold jewellery, including some branded jewellery, which does not require melting and re-melting, instead of outdated gold jewellery for melting and re-making as declared in the import documents. Panchnama also records seizure of i) 24,746 grams of gold jewellery (imported vide Bill of Entry No.00622/09 dated 4.2.2009) and ii) brass circles, iron scrap and brass scrap/cuttings weighing 193.676 Kg. B. Business premises o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 28.04.2009. (ii) Residential premises of Shri Irfan Munshi, Director of DRJPL on 27.04.2009, during which certain documents were resumed vide panchnama dt. 27.04.2009. (iii) M/s MBS Impex P. Ltd., Plot No. 125, 1st floor, M. G. Road, Secunderabad, Andhra Pradesh on 20.04.2009, during which certain documents were resumed vide panchnama dated 27.04.2009. (iv) Office premises of M/s G. Anantha Co., No. 27, IInd floor, Elephant Rock Road, IIIrd Block, Jayanagar, Bangalore (C.A. of DRJPL) on 29.04.2009, during which certain documents were resumed vide panchnama dated 29.04.2009. 17. That in respect of seizure of gold jewellery, brass circles and iron scrap from the shared premises of AE and VEJPL, ld. Commissioner of Customs, Air Cargo Exports, New Customs House, Near IGI Airport, New Delhi, vide O-I-O dated 30.07.2009 extended the period of show cause notice, and later on show cause notice dt. 02.02.2010 was issued to AE and others demanding customs during and cess amounting to ₹ 2,61,36,747/- and also proposing confiscation of seized goods and imposition of penalty. 18. That during investigation, statements of the following persons were also recorded: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 Sri Sukesh Gupta (Director M/s MBS Impex P. Ltd.) 17 8.1.2010 Sri Rajesh Kallaveetil (General Manager M/s Fantasy Diamond Cuts P. Ltd.) 18 7.2.2009 17.2.2009 6.1.2010 30.03.2011 Sri Vikas Sharma (alleged employee of appellant) 19 7.2.2009 16.2.2009 Sri Sunit Kumar Mishra (Employee of VEJPL) 20 3.7.2009 Sri Naveen Sharma (Accountant of VEJPL) 21 20.4.2009 21.4.2009 6.7.2009 9.11.2011 14.11.2011 Sri Komal Jain (Director of VEJPL) 22 23.6.2009 Sri Sanjeev Varma (Director of VEJPL) 23 11.11.2009 12.11.2009 17.11.2011 Sri Ajit Singh (Partner of appellant) 24 6.2.2009 17.2.2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, without payment of customs duties and delivered/sold to the buyers in the local market/DTA, should not be held liable for confiscation under Section 111(d), (j), (m) and (o) of the Customs Act, 1962. (ii) The duty-free primary gold/gold bars procured by M/s Ajit Exports, Noida from Bank of Nova Scoatia, New Delhi, which were clandestinely removed from the SEZ unit, as such, without carrying out any process, without payment of customs duties and delivered/sold to the buyers in the local market DTA, is liable for confiscation under Section 111(d), (j) and (o) of the Customs Act, 1962. (iii) The benefit of exemption granted under Section 26 of the SEZ Act, 2005 read with Rule 25, 27 and 34 of SEZ Rules, 2006 from duty of Customs under the Customs Act, 1962, should not be denied to them with regard to the goods mentioned in para (i) (ii) above and the customs duties and cess amounting to ₹ 52,61,59,594/- on gold jewellery imported free of duty by M/s Ajit Exports, Noida and duty free primary gold/gold bars procured by M/s Ajit Exports, Noida from the Bank of Nova Scotia, New Delhi, as per the details given in chart, which were clandestinely removed from the SEZ unit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed to impose penalty on Gold Stone Exports under various sections of the Act. 22.2. Out of 15 packages seized from the business premises of M/s Ajit Exports/Vee Ess Jewellery, 13 packages pertained to export consignments and remaining 2 packs pertained to import consignments. The export packs were ready for exports dulysealed as per procedure. The documents/shipping bill have had already been filed with the SEZ Authority and the assessment was got done by the competent authority. However, on subsequent examination by Jewellery Appraiser (after seizure), the packages were found to contain iron scrap/brass circles/brass scrap/cuttings in rectangular forms weighing 193.676 kgs. (having negligible commercial value). 23. Two packages related to import consignments were found to contain finished assorted gold jewellery of Italian origin being of 18 carat /22 carat, both plain and studded weighing 24.746 kgs. valued at ₹ 3,24,90,156/- which appeared to be brand new. 24. In the search of the residential premises of Shri Ajit Singh - the appellant, resulted in recovery of assorted gold jewellery viz. 36 set of ear tops and lockets and 109 pairs of ear tops, weighing 82 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and due permission was granted by the Assistant Development Commissioner, that M/s Ajit Exports is importing gold jewellery from Deepu Jewellers, Dubai (Director, Mr. Kishore Dhakan), M/s. Samrah Gold, Sharjah, and M/s. Mahesh Co., Singapore (owner - Mahesh Kumar), that Komal Jain has got introduced him with the aforementioned persons. He further stated that he was not having documents relating to jewellery seized from his residence on 6.2.2009. He further stated that they were importing damaged and/or old jewellery for re-making, re-polishing, etc. and thereafter re-exporting the same, and he did not know much about the day-to-day business as the same was being looked after by Mr. Komal Jain as well as by Mr. Kirti Jain. 28. On being asked if the gold jewellery weighing 41,315.20 gm seized from the business premises of M/s. Vee Ess Jewellers, Karol Bagh on 6.2.2009, whether belonged to M/s Ajit Exports, he stated that the same belonged to M/s Ajit Exports, and he had also filed complain of theft with the Noida Police, against Mr. Komal Jain and Mr. Kirti Jain. 29. Shri Ajit Singh in his further statement recorded on 17.11.2011 by the DRI Authorities, inter alia, stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Samrah Gold Factory, Sharjah and nor they had business relation with M/sMahesh and Company, PTE Ltd., Singapore. 33. Similar statement was given by Shri Shashi Kumar, Managing Director of M/s. Goldstone Infratech Ltd., 34. That Shri Ajit Singh, Partner of M/s Ajit Exports vide his letter dated 14.09.2009 addressed to DRI (Hqrs), New Delhi submitted that on 4.2.2009, he found some jewellery missing from his business premises at Plot No.197-198, First Floor, SEZ, Noida and consequently, on 8.2.2009 he lodged a complaint of theft at Police Station, Noida. That he had come to know that the said jewellery has been stolen from his business premises byShri Komal Jain (Director of Vee Ess Jewellers) with the help of his real brother Shri Kirti Jain (Partner in M/s Ajit Exports), which has been found and seized by DRI officials from the business premises of Vee Ess Jewellers, Karol Bagh, New Delhi on 6.2.2009. He further stated that bills submitted by Shri Komal Jain purportedly issued by M/s Mahak Exports (Proprietor, Smt. Tina Verma wife of Partner, Shri Sanjeev Verma, another Director in M/s Vee Ess Jewellers), and by Damas Jewellery Pvt. Ltd., Mumbai dated 2.1.2009 and 3.10.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jit Exports had imported brand new gold jewellery and exported only metal scrap materials and primary gold. He further stated that on many occasions, he had forged the signature of Shri Ajit Singh and signed the documents of M/s Ajit Exports viz. invoices, shipping bill, packing list, bill of entry, etc. That pursuant to export vide shipping bill dated 20.01.2009, M/s. Mahesh Co. PTE Ltd., Singapore remitted USD 4,10,490 in the account of M/s Gopal Sons Jewellers. The said amount was remitted back to M/s Ajit Exports. Further, he submitted that he had not invested any money in M/s Ajit Exports. That his brother, Shri Komal Jain made him Partner in M/s Ajit Exports. He further stated that although he was entitled to 25% share in the profits of M/s Ajit Exports, but till date he has not received any money from the said firm. He further stated that the export of gold jewellery made by M/s Ajit Exports in the name of Gopal Sons Jewellers, as athird-party exporter, was made with his consent. 38. Shri Kirti Jain further stated that he knew Shri Kishore Dhakan, who used to send brand new gold jewellery from Dubai to India through M/s Ajit Exports and M/s. Vee Ess Jewellers Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured from M/s. Vee Ess Jewellers at Karol Bagh and also at SEZ, Noida as well as from M/s Ajit Exports, SEZ, Noida. Mr. Ajit Singh and Komal Jain used to tell him as to on which company, he had to place orders.That he also stated in the year 2006, Mr. Ajit Singh and Mr. Komal Jain suggested him that he could despatch old and used jewellery as they also had refining facility. They also told him that he could manage to send them high end branded jewellery, and in turn, they would replace the same with Indian make jewellery, to which he was agreed. While exporting outdated gold jewellery, they used to prepare packing list, invoice and airway bills. Thus, he was despatching old used gold jewellery and also high-end branded gold jewellery, and in turn, he used to receive Indian make finished jewellery from M/s Ajit Exports and Vee Ess Jewellery. He further stated that M/s. Damasay Retail Jewellery Pvt. Ltd., Mumbai and M/s. Damasay Jewellery Pvt. Ltd., Bangalore had requested him to supply jewellery. As both these were new companies in India and were affiliated to Damas L.L.C., Dubai and Mr. Tawhid Abdullah, owner of Damas, LLC, Dubai was his good friend, hence, he agreed to supply go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEZ units were permitted to import duty free semi-finished or old/ outdated gold jewellery for assembling/ plating /refinishing and/or remaking, and thereafter the same was required to be re-exported after completing the process required to be carried out, as per the direction of the Supplier (as declared in the bill of entry/packing list at the time of importation). The details of the process to be carried out on the imported gold jewellery as declared in the import documents clearly indicate that the same jewellery was required to be exported, as the major portion of such jewellery was being imported for carrying the process, which did not amount to change of shape and design. 41. However, the Appellant M/s Ajit Exports M/s V.S. Jewellers appeared to have clandestinely removed the foreign made branded finished new jewellery which was imported in their Unit situated in Noida SEZ without payment of custom duty, and diverted the same in the local market as per directions of Shri Kishore Dhakan, Dubai and/or Mahesh Kumar of Singapore. The Shippers used to convey the name/identity of the person/firm to whom the finished imported gold jewellery was to be handed over in India unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding the export and import, bore some remarks on the file cover indicating the actual nature of goods procured from the local market and exported in that particular consignment. Copies of the export documents are available in the particular file. Such remarks on the files are also corroborated by the fax messages received from the local supplier of the goods namely M/s Shakti Jewellers Pvt Ltd., Mumbai and handwritten calculation on papers found available in the file. Such handwritten calculations were in the handwriting of Mr. Komal Jain of V.S. Jewellers, who during the course of investigation was found to be looking after the entire day to day working of both M/s Ajit Exports V.S. Jewellers. Mr. Komal Jain in the course of his statement tendered before the authority have admitted that such remarks/calculations were written by him. On being asked to explain the remarks and calculations, he gave an evasive reply with intent to conceal the real nature of such remarks/calculations. Mr. Ajit Singh partner of M/s Ajit Exports in his statement deposed that he was not knowing the exact nature of such notes which were prepared by Mr. Komal Jain who was looking after the day-to-day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected to be recovered under Section 28 of the Act, the amount deposited during investigation have been appropriated and penalties have been imposed upon the appellants and others. 47. The impugned order-in-original (in earlier round) was challenged in separate appeals by these appellants, as well as nine other appellants/ co-noticees before this Tribunal. The appeal of these appellants was allowed by way of remand in the earlier round of litigation by this Tribunal, in view of the jurisdiction issue as clarified by Delhi High Court in the case of Mangli Impex vs. Union of India. Thereafter, in the re-adjudication proceedings the present order-in-original dated 18.10.2018 have been passed. 48. The appeal of the other co-appellants before CESTAT being Customs Appeal Nos. 70148/2019 and others (total nine in number) and also the appeal filed by Revenue being Customs Appeal No. 70318/2019, were heard and disposed of vide Final Order No. 71733-71742/2019 dated 09.07.2019. The appeals filed by the co-noticees/ appellants were allowed with consequential relief, and the appeal filed by Revenue was dismissed. 49. So far these appellants are concerned, the impugned order was served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s outdated gold jewellery, also at times such jewellery appears, to be new. Therefore, the report of jewellery appraiser that the imported consignments seized from the SEZ Unit,contained new jewellery, does not in any manner support the case of Revenue. 52. Learned Counsel further urges that the allegation of clandestine removal of imported jewellery from the SEZ Unit is incorrect, presumptive and not supported by any evidence. 53. Movement of goods from SEZ to DTA is restricted and is only possible after checking by and with the prior permission of the authorized officer (Officers of the Customs). For obtaining such permission, it is required to submit import license (Rule 47 (a) of SEZ Rules) and presentation of Bill of Entry by the DTA buyer (Rule 48(1) of SEZ Rules). Therefore, alleged clandestine clearance of 3,568.385 kg. of gold jewellery and 181 kg. of gold bars is impossible without the connivance of the authorised Officers of the SEZ / Customs, which is not the case of Revenue, nor there is a whisper of connivance in the show cause notice. 54. The entire case set up by the Revenue alleging clandestine removal of the imported jewellery is based on statements of va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uest of the importer. Once the allegation of mis-declaration at the time of import are not sustainable, then the proper Officer cannot have any reason to doubt the truth or accuracy of the value declared and there was also no such request from the appellant s firm. 55.2 It is further urged that the Officers of DRI (who issued the show cause notice) and the Adjudicating Authority are not competent to deny the exemption under Section 26 of the Special Economic Zone Act. 56. The Special Economic Zone Act being a special law (having overriding effect on other tax laws etc.), the jurisdiction to deny benefit / exemption under Section 26 and thereafter demand duty under Section 30 is conferred on the specified Officer posted in the Special Economic Zone alone. Whereas, the Officers of Customs DRI and the jurisdictional Custom Commissionerate has been authorized to carry inspection, search or seizure only after issuance of Notification Nos. 2665, 2666 and 2667 all dated 05.08.2016. Thus, prior to 05.08.2016, the Officers of DRI Customs have no jurisdiction to conduct investigation and issue show cause notice, denying the benefits under Section 26 of the Special Economic Zone Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of aforementioned jewellery under Section 111 (j) and (o) is illegal as the two imported consignments were allowed to be cleared for processing/ manufacture in the SEZ unit by the proper Officer, and there was no occasion for the appellant not to observe the conditions for exemption. That is, using the imported goods/ gold jewellery in re-making of gold jewellery for export. Further, the two consignments in question were seized even before the same were opened or inspected. 60.1 The confiscation of 822.17 gm of gold jewellery from the residence of Shri Ajit Singh (appellant) is also illegal, inasmuch as it was alleged by the revenue that the same was seized on the reasonable belief that it was manufactured out of clandestinely cleared imported gold jewellery, whereas Revenue have failed to prove its allegation of clandestinely clearance. 60.2 It is further urged that imposition of penalties is bad and illegal and the same is done in a mechanical manner without application of mind. The whole show cause notice is presumptive based on assumptions and presumptions. There is no evidence to suggest that goods were improperly imported or attempted to be improperly exported. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR before the Police at Noida of such theft committed bythe named persons, being FIR dated 08.02.2009. 60.6 Even if adverse inference is drawn in respect of 13 export packages, then also the offence can only be that of mis-declaration, for which penalty under Section 114 can be imposed. Since iron scrap and iron are not prohibited goods, hence quantum of penalty cannot exceed 10% of duty sought to be evaded or ₹ 5,000/-, whichever is higher. As no duty was payable, hence, the quantum of penalty cannot exceed ₹ 5,000/-. 61. Opposing the appeals, learned Authorised Representative appearing for the Revenue relied upon the findings recorded by the Adjudicating Authority in the impugned order. He further urged that there is mis-declaration in the import consignments and as per the statement of person(s) brought on record during investigation, the imported new gold jewellery was to be diverted clandestinely in the local market and the appellants met their export obligation by exporting Indian made jewellery, etc. Therefore, the demand of duty, interest and penalty has been rightly confirmed against these appellants and the seized gold jewellery have been rightly confisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states that the jewellery was appearing as new. Thus, all that glitters is gold. Thus,we hold that the report of jewellery appraiser does not advance or support the allegations of Revenue. 62.4 Further, it is admitted case on facts that during the period in question, the proper Officer of Customs / Special Economic Zone regularly assessed the Bills of Entry filed by these appellants and on finding the same to be tallying with the declaration made in the Bill of Entry allowed the import, each and every time. Never before any mis-declaration was found. There is no allegation by Revenue that these appellants were in collusion with such proper Officer of the Customs / Special Economic Zone. Once this is so then the allegations in the case set up by Revenue regarding mis-declaration in the import consignments is clearly presumptive and not based on any cogent evidence. 62.5 We are also benefited by the findings of the Coordinate Bench of this Tribunal at Allahabad and reproduce the findings recorded in para 20 and 30 of the Final Order dated 09.07.2019, which reads as under: - 20. In any case and in any view of the matter, we note that the Revenue s allegation and findings a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of import of gold jewelry from Dubai, Singapore or other countries and at the time of the export of remade jewelries to the said countries and having not been revoked by the proper officer under the provisions of Customs Act, we really fail to understand as to how Revenue can allege to the contrary and impose penalties upon the appellants . 62.6 In view of our findings recorded hereinabove which are also fortified by the findings by the Coordinate Bench at Allahabad, on the allegations or issue of mis-declaration, we hold that the question of rejection of transaction value also does not survive against the appellants. We further find that the Bills of Entry were duly assessed by the proper Officer of Customs in accordance with law and such order of assessment have not been reviewed or challenged by the Revenue. 63. Now coming to the next issue as regards the allegation of clandestine removal of imported jewellery to the local market, learned Counsel for the appellants has submitted that the show cause notice refers to various materials, but the same are related to M/s V.S. Jewellers Pvt Limited (who were sharing the premises with the appellants in the Special Economic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not prove the charge of clandestine removal of imported gold jewellery in the local market. 64.2 As far as the fax messages allegedly sent by M/s Shakti Jewellers Pvt. Ltd., are concerned, the Coordinate Bench of this Tribunal in its Final Order dated 12.09.2019 have already held that the same were not related to M/s Shakti Jewellers Pvt. Limited. On the face of this finding such fax message cannot be relied upon against these appellants, when the person who sent these fax messages and the contents thereof, are not established by the Revenue. The fax machine was also being used by other / neighbours, as stated in the statement of the Director of M/s Shakti Jewellers. 64.3 Now coming to the alleged parallel invoices, we find that the show cause notice alleges only two sets of export invoices, as parallel invoices. In respect of these, the explanation given by the appellant s firm is that the two invoices were initially prepared and thereafter subsequently cancelled, due to necessary correction. First set of invoice shows export of 27,888 gm of jewellery instead of 28000 gm whereas the second set of invoice shows export of 27,254.60 gm of jewellery instead of 27000 gm Even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken by the coordinate Bench at Allahabad in the aforementioned Final Order dated 09.07.2019, we reproduce para 27 from the said order: - 27. At this state we may refer to certain precedent decisions on the issue of the findings of clandestine activities based upon the statements of various deponents, who have not been allowed cross-examination. The Hon ble Supreme Court in the case of Andaman Timber Industries v. Commissioner of C. Ex. Kolkata-II reported as MANU/SC/1250/2015, while dealing with the cross-examination of the witnesses observed that not allowing the assessee the cross-examination of witnesses is a serious flaw which makes the order nullity inasmuch as the same amounts to violation of principles of natural justice because of which the assessee was adversely affected. The Hon ble Supreme Court further observed that when the assessee disputed the correctness of the statements and wanted to cross-examine and such opportunity was not given, the rejection of this plea is totally untenable. It is not for the adjudicating authority to have guess work as to for what purposes the appellant wanted to cross-examine. It was not for the adjudicating authority to pre-suppose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who were monitoring the movement of the goods. In absence of any cogent evidence and any allegation of connivance, we hold that the allegations of clandestine removal are clearly presumptive. We further observe that the charge of clandestine removal is a serious charge and the same cannot be upheld merely on the basis of assumption and presumption. Applying this principal, the demand confirmed in the impugned order under Section 28 of the Act, by denying the exemption under Section 26 of the SEZ Act cannot be sustained and accordingly we set aside the same. 64.7 Once the allegation of mis-declaration, clandestine clearance, denial of exemption under Section 26 being set aside and decided in favour of the appellants, we hold that the imposition of penalties against these appellants also cannot be sustained. Accordingly, we set aside all the penalties imposed on the appellants. 65. Now, we take up the issue of confiscation of gold jewellery from the shared factory premises and the residence of Shri Ajit Singh. We note that confiscation under clauses (j) and (o) of Section 111 is attracted if any dutiable / prohibited goods are removed from the Customs area/ warehouse without t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because the Central Government is the authority which appoints both the officers of the Directorate of Revenue Intelligence which is set up under the Notification dated 04.12.1957 issued by the Ministry of Finance and Customs officers who, till 11.5.2002, were appointed bythe Central Government. The notification which purports to entrust functions as proper officer under the Customs Act has been issued by the Central Board of Excise and Customs in exercise of non-existing power under Section 2(34) of the Customs Act. The notification is obviously invalid having been issued by an authority which had no power to do so in purported exercise of powers under a section which does not conferany such power. 68. We further note that in the present case, it is the officer of DRI, who has issued the show cause notice demanding duty and penalty under Section 28 of the Customs Act, which power can be exercised only by the proper Officer . Once the Additional Directorate General of DRI is not a proper Officer , we have no hesitation to hold that the show cause notice itself is wholly without jurisdiction, and any demand based on such show cause notice(s) cannot be sustained. 69. We fur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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