Conditions Of All Exemption Notifications Must Be Strictly Complied With For Simultaneous Benefit: CESTAT Delhi

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that an importer claiming exemptions under multiple customs notifications must comply with the conditions prescribed under each notification.

The tribunal observed that “strict interpretation to all notifications has simultaneously to be given”, and that the conditions of all the notifications have to be strictly complied with to avail their simultaneous benefit.

A bench comprising Officiating President Dr. Rachna Gupta and Technical Member Hemambika R. Priya made the observation while dismissing 11 appeals arising from the case of Tasha Gold Pvt Ltd.

Three appeals concerned confiscation, customs duty and penalties imposed on the importer, six concerned personal penalties imposed on its directors, and two concerned personal penalties imposed on its Customs Broker.

Tasha Gold had DGFT licences to import gold dore bars. The licences required compliance with Notification No. 12/2012-Cus., which was later superseded by Notification No. 50/2017-Cus.

The importer also claimed nil Basic Customs Duty under Notification No. 96/2008-Cus., which provides an exemption for specified imports from Least Developed Countries, including Tanzania and Rwanda.

Notification No. 50/2017-Cus. prescribed conditions for gold dore bars, including a minimum weight of 5 kg per bar, conformity with a packing list issued by the mining company, and production of an assay certificate issued by the mining company or its attached laboratory.

The required mining-company documents were not produced. Instead, the packing list and assay certificate submitted by Tasha Gold had been issued by its supplier, Equinox, rather than the mining company, Ngali Mining. The tribunal also noted that CRCL testing found the purity of the imported bars to be above 95% and held that the relevant weight, purity and documentation conditions had not been strictly fulfilled.

The importer had acknowledged in statements recorded under Section 108 of the Customs Act that it could not provide the mining-company packing lists. It had also indicated that obtaining the assay certificates was not feasible.

The tribunal held that the requirement for a mining-company packing list could not be left to the discretion of a supplier or trader. It therefore rejected the claim that the supplier's documents could satisfy the condition.

The tribunal then examined the claim under Notification No. 96/2008-Cus. The certificate of origin relied upon by the importer recorded that it was issued on the basis of “control carried out” and that the exporter's declaration was correct. The tribunal held that the condition concerning an authentic certificate of origin had not been complied with.

Thus, Tasha Gold could not obtain the simultaneous benefit of the two notifications without satisfying the conditions of both. The tribunal also held that the importer, its directors, and the customs broker had knowledge of the non-fulfilment of the conditions and upheld the customs duty demand and penalties.

The tribunal further held that once the import conditions were not complied with, the goods became prohibited goods in terms of Section 2(33) of the Customs Act and were rightly ordered to be confiscated under Section 111. It found no infirmity in the adjudication order and dismissed all 11 appeals.

For Appellant: Advocates Arjun Raghavendra M., Jayant Kumar, Soham Bandopadhyay, Manjunath A.N., S.P.R. Abhir Om and Stephin George,

For Respondent: Ranjan Prakash and Rajesh Singh, Authorised Representatives