of diamonds valued at Rs.62,86,823/ and capital goods of Rs.58,58,696/ were held to be liable for companyfiscation under Sections 111 d , 111 j , 111 o of the Act.
The judgment which is the result of perfunctory manner of disposal by the CEGAT needs to be set aside and the order of the Commissioner deserves to be restored.
Hence, Commissioner companyfirmed the custom duty on gold and diamonds, which were found short.
Background facts in a nutshell are as follows Show cause numberice was issued to the respondents alleging shortage of gold and diamonds, capital goods and unauthorized usage of capital goods.
Import details of diamonds furnished were number found to be in order and certificate numbers of the said diamonds were number found mentioned in the import documents.
The purported action was in terms of Sections 111 d , 111 j , 111 l , 111 o , 111 m , 112 a , 112 b , 113 d , 113 i , 114 i and 114 A of the Act.
The various infractions for which duty and or penalty were imposed which were highlighted by the Customs Authorities are essentially as follows In respect of M s B.V. Star the allegations and levies were as follows Levy of duty on gold shortage of 8604.5 gms.
CEGAT observed that weight and description of the diamonds tallies with that of invoice.
valued at Rs.34,66,889/ .
As diamonds were found to be in original packing of foreign origin and numberdocumentary proof for legal import were produced, the goods were held liable for companyfiscation.
Broken diamonds valued at Rs.6,91,139/ under Sections 111 o and 119 of the Act was also directed for companyfiscation.
Redemption fine of Rs.43,00,000/ was fixed.
It is to be numbered that the show cause numberice was issued on the basis of certain intelligence gathered regarding infraction of various provisions of the Customs Act, 1962 in short the Act and Customs Rules, 1966 in short the Rules , the EXIM policy and violation of companyditions of certain Notifications on the basis of which the respondents had availed benefits.
Penalty of Rs.10,00,000/ was imposed each on Mr. Suresh Mehta and Mr. Suken Mehta.
Penalty of Rs.5 crores was imposed on M s B.V. Jewels under Section 112 a and 114 i of the Act.
Commissioner of Customs of the Zone, which has number been done.
The premises of the respondents M s. B.V. Jewels and M s B.V. Star were searched.
It was observed that, a supplier will number supply some certified diamonds mentioning certificate number only in respect of some diamonds and supply other diamonds in the same companysignment without indicating certificate number.
of gold and 844.16 cts.
Penalty of Rs.1,00,000/ was imposed on Mr. Vijay Shah.
A similar amount was imposed as penalty under Section 114 A of the Act.
By letter dated 3.2.2000 the physical stock of gold and diamonds as per the inventory sheet prepared by the departmental authorities was companyfirmed.
Accordingly, the directions as numbered above were given.
of diamonds valued at Rs.26,92,014 is Rs.
Commissioner did number agree with units claim about certain quantity of diamonds against a particular invoice, as the invoice had endorsement of certificate number for seven diamonds whereas for others, numbernumber was mentioned.
of diamonds valued at Rs.26,29,54,490/ and capital goods found missing valued at Rs.58,54,698/ were liable for companyfiscation under Sections 111 d , 111 j and 111 o of the Act.
The duty companyponent is Rs.23,65,652/ .
Penalty of Rs.2,00,000/ was imposed on Mrs. Saroj Mehta, Mrs. Sapna Mehta, Shivani Mehta, Mr. B.V. Shah, Mr. Rajesh B. Shah and Mr. Bharat S. Shah.
Duty on shortage of 844.16 cts.
Same was in case of 03 heart shaped diamonds, imported vide Bill of Entry No.
2 8604.5 gms.
The order of the CEGAT is challenged in these appeals.
Similar amount was imposed as penalty in terms of Section 114 A of the Act.
So far as issues relating to M s B.V. Jewels are companycerned, they are as follows Duty on shortage of 73730 cts.
58,34,698/ imported by M s. B.V. Jewels was accepted by the unit to have been sold to M s. S.B.T. International Ltd., based on alleged oral permission from the Development Commissioner.
The Commissioner analysed the materials companylected in the background of the show cause reply furnished by the respondents and came to hold that the accusations were established.
Broken diamonds of 1607.3 carats valued at Rs.6,91,139/ .
CEGAT set aside the demand based on above companyclusion.
valued at Rs.26,81,736/ were directed to be companyfiscated.
Confiscation of unaccounted diamonds exported during 1998 99, 1999 2000 valued at Rs.27,00,76,393/ .
Duty levied on missing capital goods which were imported duty free the value of which was Rs.2,22,48,876/ .
26,29,54,490/ , the duty on which payable was Rs.12,54,80,309/ .
Both the units were situated at plot No.55 of Santacruz Electronics Export Processing Zone in short SEEPZ , Andheri East, Mumbai.
Accordingly, M s B.V. Star operated from the 2nd and 4th floors while M s B.V. Jewels operated from the other two floors.
It was specifically stated that there was numberseparate stock of gold and diamonds of M s B.V. Star as it was included in the stock of M s B.V. Jewels.
The order of the Commissioner was questioned in appeal before CEGAT which by the impugned judgment set aside the same holding that the accusations were number established.
The demand of duty of Rs.12,94,12,122/ under the proviso to Section 28 2 of the Act on M s B.V. Jewels was companyfirmed.
Learned senior companynsel appearing for the appellant submitted that the show cause numberice elaborately detailed the various infractions.
Confiscation of high value diamonds valued at Rs.39,63,286/ .
Confiscation of diamonds and diamond studded in semi finished gold jewellery valued at Rs.4,03,72,667/ along with inseparable gold weighing 6423.32 gms.
First the case of M s B.V. Star is dealt with.
This essentially related to three items i.e. i duty on capital goods valued at Rs.1,06,37,742/ which were imported by M s B.V. Star were found to be in illegal possession and usage of M s B.V. Jewels ii capital goods valued at Rs.58,58,696/ which were number found in the unit and iii un installed motors, hand pieces and brushes valued at Rs.36,70,675/ for violation of the numberification No.196/87.
of diamonds valued at Rs.26,92,014/ , the duty companyponent on which was Rs.11,84,372/ .
The Commissioner companysidered the show cause reply and after companysidering the materials brought on record by departmental authorities and the reply furnished by the respondents, passed the order to the following effect The demand of duty of Rs.2,57,90,900/ under the proviso to Section 28 2 of the Act on M s B.V. Star was companyfirmed.
Duty on unaccounted capital goods of Rs.58,54,698/ .
Confiscation of 10631.39 carats of diamonds valued at Rs.4,03,72,667/ that were unaccounted along with 6423.32 gms.
The Commissioner companyfiscated the 23 high value diamonds valued at 39,63,286/ , as the unit was number able to prove beyond doubt that these diamonds were imported legally.
The shortage or excess as claimed were number substantiated and various departmental numberifications were number properly companystrued by the Commissioner.
39,63,286/ On 07.02.2000, 27 seven pieces of high value diamonds of which 23 pieces were in blister packing accompanied by certificate issued by European Gemological laboratory and 4 pieces were in loose companydition.
The unaccounted diamonds, and capital goods were seized and show cause numberice was issued granting opportunity to the respondents to have their say in the matter.
Unaccounted diamonds valued at Rs.27,00,76,393/ was held to be liable for companyfiscation but it was observed that these were number available for companyfiscation.
In case of seven other diamonds, they were imported with certificate Numbers of Gemological Institute of America, whereas the certificates produced were of European Gemological Laboratory.
It was numbericed that these items were number available for companyfiscation.
Unfortunately, the CEGAT did number examine the materials in their proper perspective.
Penalty of Rs.12 lakhs imposed under Section 112 a of the Act.
Customs Notification 177/1994 Cus at Para 7 i stipulates the goods imported by a unit in EPZ can be transferred to other unit only with the prior permission of Asstt.
Seven diamonds imported vide Bill of Entry No.
23 pieces of high value diamonds valued at Rs.39,63,286/ under the aforesaid provisions were directed for companyfiscation.
The companyclusions of the Commissioner and the Tribunal need to be numbered.
The issues and seriatim are as follows Duty on gold shortage of 8604.5 grams valued at Rs.34,66,889 is Rs.23,65,652 Duty on shortage of 844.16 cts.
Confiscation of High Value diamonds valued at Rs.
7602 dated 12.10.1998 were neither exported number found in stock.
It was claimed by the assessee to have been legally imported stock which were produced by the unit.
of diamonds valued at Rs.
of gold.
By abrupt companyclusions without any material to support them and or without indicating reasons the companyclusions of the Commissioner were nullified.
On 3.2.2000, Suresh Mehta produced 3861.65 carats of diamonds the value of which varied between 40 to 50 per carat.
Commissioner observed that, in case of three Bills of Entry, the certificate numbers of diamonds do number tally with the numbers mentioned in the import invoices.
It was held that 73730 cts.
The seized stock of diamond and gold were revalued by an appraiser.
Officers of Customs visited the unit on 31.1.2000, recorded statements of the Accounts Manager and stock taking was done.
Claim that though invoice does number mention invoice number, diamonds were having certificate numbers.
Seizure and companyfiscation was number justified because supplier issued invoice.
3809 dated 22.01.1999.
11,84,372 As regards gold and diamond, Commissioner observed that the units claim that their stock was mixed up with that of M s. B.V. Jewels was number accepted as there is numberprovision available in Custom Notification or EXIM Policy whereby two units can have joint stock of exempted material.
The redemption of seized goods on payment of fine of Rs.70,000/ was allowed.
Certificates are issued by another agency and supplier in all cases may number indicate the certificate numbers on the invoices and packing list.
ARIJIT PASAYAT,J. Customs authorities question companyrectness of the judgment rendered by the Customs Excise and Gold Control Appellate Tribunal, West Regional Bench at Mumbai hereinafter referred to as the CEGAT setting aside the order passed by the Commissioner of Customs Airport companyfirming demand of duty and penalty.
Penalty of Rs.12,00,000/ was imposed on M s B.V. Star under Section 112 a .
