2025-VIL-1699-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs - Import of duty-free gold, Nominated agencies, Fraudulent diversion, Extended period of limitation, Penalty - Import of duty-free gold by nominated agencies under the Scheme of Exporters of Gems and Jewellery under Foreign Trade Policy 2015–20. The gold was procured by an exporter who failed to export the gold jewellery made from the duty-free gold and instead diverted it into the domestic market without payment of applicable customs duty - violation of the conditions under the exemption Notification No.57/2000-Cus dated May 5, 2000 read with Circular No.27 of 2016–CUS dated June 10, 2016 - Whether the nominated agencies, being the importers of the duty-free gold, are liable to pay the customs duty on the gold diverted by the exporter into the domestic market - HELD - The nominated agencies, being the importers of the duty-free gold, are liable to pay the customs duty on the gold diverted by the exporter into the domestic market. The incidence of Customs duty is a charge on the imported goods themselves, rather than being a personal liability of a specific individual. The liability to pay duty is intrinsically linked to the goods and arises irrespective of the identity of the importer. The nominated agencies had executed bonds at the time of importation, undertaking to pay the customs duty in the event the exporter fails to export the gold jewellery within the prescribed period. Therefore, the nominated agencies are liable to pay the customs duty on the diverted gold - the order of confiscation and redemption fine, and the penalty imposed on the nominated agencies are set aside – The appeal is partly allowed - Whether the extended period of limitation under Section 28(4) of the Customs Act can be invoked against the nominated agencies - HELD - Since there is no evidence of collusion or fraud on the part of the nominated agencies, the extended period of limitation under Section 28(4) cannot be invoked against them. The case was initiated as one of fraudulent diversion, and it was only after investigation that the liability of the nominated agencies was determined. Therefore, the normal period of limitation shall apply - Whether penalty can be imposed on the nominated agencies under Section 112(a) of the Customs Act - HELD - The Adjudicating Authority had specifically found that there is no evidence of the nominated agencies colluding with the exporter or submitting any willful misstatement. The nominated agencies cannot be penalized for the illegal acts of the exporter, and they had no reason to suspect any malafide since the customs officials had processed the shipping bills and export invoices.
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