Seized Gold Cannot Be Confiscated Just For Having An Invalid Letter Of Approval: CESTAT

The Allahabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that seized gold cannot be confiscated just for having an invalid letter of approval. There was a difference in the opinion between the P.K. Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member) on the issues involved in the case. Therefore, the matter was place before third member ie. S.S. Garg (Judicial Member) for determination of the same. In this case, Officers of Noida Special Economic Zone Customs visited factory premise of assessee which is a partnership concern. The Officers found that the factory was operational. On being demanded, Sujit Kumar Bera produced all the gold available in the factory. Total quantity of gold was found to be 2417 grams. All three workers found present in the factory were unable to produce any documentary evidence in respect of stock of gold and consequently, gold was detained under Section 110 of the Customs Act, 1962. The Adjudicating Authority held that the assessee did not have valid LOA and the seized gold was transferred to assessee without any valid documents and the Voucher was an after-thought and an attempt to cover up unauthorized possession of seized goods. The Adjudicating Authority chose to dismiss the voucher as it was the only voucher issued in the name of assessee. Rest of the vouchers were issued in the name of their sister concerns. The Adjudicating Authority passed the impugned order directing absolute confiscation of goods u/s 111 (o) of the Customs Act, 1962. The assessee has challenged the order passed by the Adjudicating Authority before the Tribunal. The issue before the bench was: Whether Customs Officers have jurisdiction to investigate, issue SCN and adjudicate the issues under consideration or it is the authority under the SEZ Act and Rules who are authorised to deal with the matter? JUDICIAL MEMBER'S OPINION He opined that issues pertaining to invalid LOA and non-maintenance of records by assessee falls under the jurisdiction of the Development Commissioner/ Special Officer and action may be taken against assessee under SEZ Act and Rules according to the law but invocation of Section 111 (o) of the Act absolutely confiscating the seized gold and imposing penalties on the assessee under Sections 112 (a), (b) and 114 AA of the Act is not tenable and is liable to be set aside. He accordingly set aside the order passed by the Adjudicating Authority. TECHNICAL MEMBER'S OPINION He stated that the entire investigations and proceedings were initiated and conducted by NSEZ Customs which is very much part of the office of Development Commissioner. He accordingly dismissed the appeals. THIRD MEMBER'S OPINION The Third Member noted that Rule 47 of the SEZ Rules, 2006 is a part of Chapter V of the said rules which specifies ―conditions subject to which goods may be removed from Special Economic Zone to Domestic Tariff Area‖. Rule 47 deals with sales in DTA, however, it is nobody's case that the disputed goods were removed or being removed or even attempted to be removed from SEZ into DTA without payment of duty, requiring recovery of such duty by issuing the demand etc. Hence, Rule 47 is not applicable in the facts and circumstances of the case and is not relevant. He opined that the matter was pertaining to manufacturing activity by SEZ unit within SEZ unit without valid LOA which falls within the jurisdiction of Development Commissioner, NSEZ and is not a contravention under the Customs Act, 1962 which can be adjudicated by the Commissioner of Customs, Noida. The Third Member agreed with the opinion of the Judicial Member. In view of the above, the Tribunal allowed the appeal. Case Title: M/s Encee International NSEZ v. Commissioner of Customs, Noida Case Number: Customs Appeal No.70692 of 2019 Counsel for Appellant/ Assessee: J. M. Sharma Counsel for Respondent/ Department: A. K. Choudhary Click Here To Read/Download The Order

Seized Gold Cannot Be Confiscated Just For Having An Invalid Letter Of Approval: CESTAT

Mehak Dhiman

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