LAWS(DLH)-2001-5-13

MMTC LIMITED Vs. COMMISSIONER OF CUSTOMS

Decided On May 25, 2001
MMTC LIMITED Appellant
V/S
COMMISSIONER OF CUSTOMS Respondents

JUDGEMENT

(1.) This is an application under Section 130A(1) of the Customs Act, 1962 (in short the "Act"), which relates to the consolidated order dated 7/12/2000, passed by the Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi (in short "Tribunal") in Appeal Nos. C/50-53/98-NB(DB) & C/478/98-NB(DB).

(2.) The following questions have been proposed: 1. Whether the liability for payment of customs duty can at all be on MMTC which is a canalizing agency, even though the conditions of fulfilment of export under the Customs Notification No. 177/94 and 3/88, chapter 8 of the Exim Policy and Procedure, REP Circular No. 22/88, and the Customs Circular Nos. 10/88 and 2/92, all require the Gem and Jewellery unit located in the EOU/EPZ, to fulfil the export obligation, and upon their failure to do so, to pay/suffer, duties, fines and penalties. 2. Whether, as a consequence of the appointment of MMTC as canalizing agency for the import of gold, MMTC can be made liable for payment of customs duty in the event the unit commits a breach of its obligation to export the jewellery made from such gold, and thereby allow all such defaulting units to escape scot free of any liabilities. 3. Whether the finding by the Hon'ble Tribunal that "the scheme provides for issuing of gold by M/s. MMTC to the unit only on the strength of Bill of Entry filed by the unit and duly assessed", does not lead to the conclusion that once the gold is issued to a unit, the liability for payment of duty in me event of default gets automatically transferred to the unit to whom the said gold is issued. 4. Whether there can be any requirement read into the REP Circular No. 22/98, as held so by the Hon'ble Tribunal, namely that "MMTC has a responsibility/continuing obligation to monitor the activities of the exporting unit and to ensure exportof gold/ jewellery within a stipulated period of time following which M/s. MMTC has to inform the customs authorities and to levy penalty on the unit for extension of period on expiry", when, in fact there is no such requirement laid down in the REP Circular itself. 5. Whether the finding by the Hon'ble Tribunal that "M/s. MMTC had also executed bond with NEPZ Customs under the warehousing provisions of the "Customs Act, and had undertaken to satisfy the customs authorities that the gold imported by them will be utilized for export as per scheme of export of gold jewellery by units in the EPZ and they were also under an obligation to pay the customs duty and penalty chargeable on such goods, together with interest", is sustainable when in fact no such warehousing bond was before the Tribunal as part of record of the present case, and in fact no such condition can be prescribed in a warehousing bond in view of Section 59(3) of the Customs Act, 1962, which provides that where any goods are transferred by the owner of a bonded warehouse to another person, the authorities shall obtain a bond for the transferred goods from the transferee, and thereupon the bond executed by the transferor shall stand discharged to the extent of the goods transferred out of his charge. 6. Whether any penalty could be imposed upon M/s. MMTC in the absence of any evidence implicating MMTC with the breach of the scheme or the conditions of the notification, and in the absence of any finding that the import of gold was made pursuant to a conspiracy to illegally divert the gold. 7. Whether in the facts of the present case, any penalty could at all be imposed, in view of the decision of the Hon'ble Supreme Court in Indian Oil Corporation Ltd. Vs. Chief Inspector of Factories (1999 (113)ELT 761), wherein it was held that IOCL, which was wholly owned and controlled by the Government was not "likely to evade" the law, while being engaged in the supply and distribution of petroleum and petroleum products, in order to ensure an effective and efficient supply system. Mutatis Mutandis, the same legal position should apply to the facts of the present case where, as a matter of governmental policy, it was decided to arrange the import of gold through M/s. MMTC, apparently with a view to ensure an effective and efficient supply system.

(3.) Backgrounds facts as noted by the Tribunal essentially are as follows: Petitioner is a Public Sector Undertaking of the Government of India. Under the Export and Import Policy of the Government, as framed from time to time, Schemes were formulated whereby jewellery manufacturing units were permitted to import primary gold of 0.995 fineness for the purpose of manufacture and export of gold jewellery, subject to certain value addition norms. Such units were permitted to set up manufacturing facilitie within the specified Export Processing Zones (in short "EPZ") or in Special Export Oriented Complexes subject to these units being 100% Export Oriented Units (in short "EoUs.). Para 88 of the Exim Policy 1992-97 deals with the schemes for export of gold/silver jewellery and articles. Para 88 is divided into Clauses A to G and each clause governs a different Scheme. The Broad outlines of the Scheme are as under: