2026-VIL-31-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs Duty - Export against supply by nominated agencies, duty-free gold import, maintenance of accounts - Respondent is a "Nominated Agency" under the Foreign Trade Policy and imported duty-free gold for supplying to domestic manufacturers and exporters. Derewala Industries furnished the required bonds and exported the jewellery manufactured from the gold supplied by the appellant within the prescribed time - Derewala Industries had allegedly diverted and sold in the domestic market the duty-free gold - Whether the Respondent is liable to pay the proposed customs duty and penalty under Section 112(ii) of the Customs Act for the alleged diversion of duty-free gold by Derewala Industries – HELD - The Principal Commissioner held that the Respondent is not liable for the customs duty demand as it had complied with all the conditions under the Exemption Notification and the Customs authorities had duly cancelled the bonds executed by the Respondent after verifying the proof of exports submitted by Derewala Industries. The Principal Commissioner noted that as per the CBIC Circular, there is no requirement of one-to-one correlation between the gold procured and the jewellery exported. Further, the show cause notice did not invoke confiscation of the goods under Section 111 of the Customs Act, which is a prerequisite for imposing penalty under Section 112(ii). Therefore, the Principal Commissioner rightly dropped the customs duty demand and the penalty proposed under Section 112(ii) on the Respondent - Department appeal against the orders dropping the customs duty demand and penalty is dismissed
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