CESTAT upholds ₹101.86-crore customs duty demand and penalties against gold importer for violating import conditions

M/s Tasha Gold Pvt. Ltd. imported gold dore bars from countries including Tanzania, Rwanda and Burundi under DGFT authorisations permitting the import of gold dore bars under CTH 71081200.

The licences expressly required compliance with Notification No. 12/2012-Customs, subsequently superseded by Notification No. 50/2017-Customs, and applicable RBI requirements.

Three show-cause notices were issued in respect of imported gold dore bars and past Bills of Entry.

The adjudicating authority confirmed the demands and penalties.

Whether the appellant violated the conditions of Notification No. 50/2017-Customs and the corresponding DGFT import authorisations by failing to comply with the prescribed requirements relating to weight, purity, mining-company packing lists and assay certificates?

Whether such non-compliance rendered the imported gold dore bars liable to confiscation and justified the imposition of penalties on the importing company, its directors and Customs Broker?

Whether the appellant could simultaneously claim the benefit of Notification No. 96/2008-Customs despite the import licences requiring compliance with Notification No. 50/2017-Customs?

The Tribunal applied Section 2(33) of the Customs Act, 1962, concerning “prohibited goods,” and Sections 111(d), 111(m), 111(o) and 111(q), relating to confiscation of goods imported contrary to legal restrictions, involving misdeclaration, or cleared subject to unfulfilled exemption conditions.

Sections 112 and 114AA were applied in relation to penalties for acts or omissions rendering goods liable to confiscation and for use of false or incorrect documentation.

Notification No. 50/2017-Customs, particularly entry 354 and Conditions 9 and 40, required compliance with the prescribed weight, direct-shipment, mining-company packing-list, assay-certificate, purity and actual-user requirements for gold dore bars.

The Tribunal relied on the strict-construction rule for exemption notifications stated in Krishi Upaj Mandi Samiti v. Commissioner of Central Excise and Service Tax and Commissioner of Customs v. Dilip Kumar & Co., namely that the assessee bears the burden of proving strict compliance and that an exemption cannot be claimed unless every prescribed condition is fulfilled.

It also treated voluntary statements recorded under Section 108 of the Customs Act as admissible substantive evidence.

The Tribunal found that the import licences specifically required compliance with Notification No. 12/2012-Customs and its successor, Notification No. 50/2017-Customs.

The appellant admittedly could not produce packing lists or assay certificates issued by the mining companies; the available documents had been issued by the supplier, M/s Equinox Mining, and did not satisfy Condition 40(b) or 40(c).

CRCL testing also showed purity exceeding the 95% limit, and at least one bar failed the minimum five-kilogram weight requirement.

Applying the strict-compliance rule, the Tribunal rejected the appellant’s argument that a supplier’s documents, measurement error or substantial compliance could cure the statutory deficiencies.

The Tribunal further held that the appellant could not avoid the licence conditions by claiming the separate preferential exemption under Notification No. 96/2008-Customs.

Even where multiple notifications are invoked, the conditions of each must be independently satisfied.

The country-of-origin certificates were considered insufficient because they were based on the exporter’s declaration and did not establish compliance with the required origin conditions.

Consequently, the imports were treated as having been made contrary to the applicable restrictions and exemption conditions, justifying confiscation, recovery of differential duty and penalties.

The admitted involvement and knowledge of the importer, its directors and Customs Broker supported the penalties imposed on them.

It held that M/s Tasha Gold had failed to comply with the mandatory conditions of Notification No. 50/2017-Customs and the DGFT import authorisations, and could not validly claim the benefit of Notification No. 96/2008-Customs without satisfying its independent requirements.

The imported goods were therefore liable to confiscation, and the differential customs duty, interest and penalties imposed on the importing company, its directors and Customs Broker were upheld.

All eleven appeals were dismissed, and the impugned adjudication order was affirmed.