No concessional rate benefit on import of rectangular shape gold bars as serial numbers not engraved

HDFC Bank Ltd Vs Commissioner of Customs (CESTAT Hyderabad)

CESTAT Hyderabad held that benefit of concessional rate vide notification no. 62/2004-Cus dated 12.05.2004 is denied on import of rectangular shape gold bars as manufacturers or refiners serial numbers not found engraved on the gold bars.

Facts- The appellant is a banking company. It regularly imports gold of various forms, including gold coins, for further sale, through various ports. Import of gold coins attracts a concessional rate of duty at Rs.100/- per 10 gm under Notification No.62/2004 dt.12.05.2004. The appellant has been importing gold coins and said concessional rate of duty was being extended to them. These gold coins are wrapped with plastic on which serial numbers are given. In one of the imports, the appellant filed two Airway Bills dt.18.08.2005 and 06.06.2006 and claimed concessional rate of duty on the gold coins. However, it was denied by the customs on the ground that the coins also shall contain the serial number engraved on them. Though the appellant explained that there is no such condition for the coins, the customs insisted payment of duty at higher rate of duty and the appellant paid the duty at higher rate and thus, excess duty of Rs.5,35,500/- under protest.

Appellant filed a refund claim for the excess duty paid but the same was rejected vide OIO dt.27.09.2012 on directions from Hon’ble High Court. The OIO was upheld by the Commissioner (Appeals) vide the impugned OIA.

Conclusion- Held that the goods are found to be 5 gram gold bars in rectangular shape (other than tola bars) and the manufacturers or refiners serial numbers are not found engraved thereon the gold bars which is the primary condition specified under Sl No.1 of the Notification No.62/2004-Cus dt.12.05.2004 and also the description itself declared by the imported on the BE 5 gram gold coins 999 purity bar. The 5 grams gold bars/pieces cannot be called as gold coins. Basing on the examination report, the assessing officer rightly concluded that the goods are not covered under Sl No.1 but falls under Sl No.2 of the notification.

Held that the imported goods are not related to S.No.1 as required by the notification. Therefore, we find no merit in the appeal and accordingly, the appeal is liable to be dismissed. Thus, Appeal dismissed.

FULL TEXT OF THE CESTAT HYDERABAD ORDER

M/s HDFC Bank Ltd (hereinafter referred to as the appellant) are in appeal against the OIA dt.10.01.2013, wherein, the Commissioner (Appeals) had upheld the OIO denying the benefit of S.No.1 of Notification No. 62/2004-Cus dt.12.05.2004 for concessional rate of duty and confirmed the rejection of refund claim of Rs.5,35,500/-.

2. The brief facts of the case are that the appellant is a banking company with its head office at Mumbai. It regularly imports gold of various forms, including gold coins, for further sale, through various ports. Import of gold coins attracts a concessional rate of duty at Rs.100/- per 10 gm under Notification No.62/2004 dt.12.05.2004. The appellant has been importing gold coins through various ports viz., Cochin, Hyderabad, New Delhi, etc., and said concessional rate of duty was being extended to them. These gold coins are wrapped with plastic on which serial numbers are given. In one of the imports made through Air Cargo Complex, Hyderabad, the appellant filed two Airway Bills dt.18.08.2005 and 06.06.2006 and claimed concessional rate of duty on the gold coins. However, it was denied by the customs on the ground that the coins also shall contain the serial number engraved on them. Though the appellant explained that there is no such condition for the coins, the customs insisted payment of duty at higher rate of duty and the appellant paid the duty at higher rate and thus, excess duty of Rs.5,35,500/- under protest.

3. Appellant filed a refund claim for the excess duty paid but the same was rejected vide OIO dt.27.09.2012 on directions from Hon’ble High Court. The OIO was upheld by the Commissioner (Appeals) vide the impugned OIA.

4. Learned Advocate for the appellant submits that the rejection of concessional rate of duty and consequential rejection of refund claim is wrong on the following reasons:

4.1 Department has misinterpreted the exemption notification by reading the condition of engravement for gold bars to be applicable to even gold coins imported by the appellant despite there being a separation of clauses in the said sentence by a comma. S.No.1 of the said notification should be construed as having two separate disjunctive entries viz., (a) gold bars, other than tola bars, bearing manufacturer’s or refiner’s engraved serial number and weight expressed in metric units and (b) gold coins. The condition of engraving of the serial numbers is applicable only to the first entry and not to the second item.

4.2 Such interpretation is against the rules of interpretation of the legal provisions and notification as held in the following cases:

a. Mohd. Shabir Vs State of Maharashtra [1979 (1) SCC 568 – SC]

b. Govt. of NCT of Delhi Vs Jaspal Singh [2003 (10) SCC 586 – SC]

c. UOI Vs Rabinder Singh [2012 (12) SCC 787 – SC]

4.3 The concessional rate was allowed to the appellant on all the imports made through various ports including Hyderabad and the objection was raised only against these two AWBs.

4.4 When the benefit is allowed at all other places of import, it is incorrect to deny the same on incorrect reading of the entries in the notification. The appellant relied on the following decisions in support of this contention.

a. TELCO Ltd Vs CCE, Pune [1997 (94) ELT 4 (SC)]

b. Darshan Boardlam Ltd Vs UOI [2013 (287) ELT 401 (Guj)]

5. The contention of the Revenue that the articles imported are rectangular in shape and hence cannot be called coins but as bars as they are not in the shape of circle is wrong. A coin need not be circular in shape in terms of HSN notes under CTH 7118 that covers ‘coin’, wherein it was specified that ‘coins are made by stamping out blanks from sheet metal; these are then struck with the appropriate dies to produce simultaneously the designs on the two faces. It does not mention that a coin shall be in a particular shape. Even the Gold (Control) Act, 1968 defined ‘gold coin’ vide section 2(k) thereof and it also does not mention that it should be in a particular shape. The Revenue did not bring any evidence, suggesting that a coin shall be only in circular shape. He further submits that reliance placed by Revenue on the case of CC (Imports), Mumbai Vs Dilip Kumar and Co. & Ors [2018 (7) TMI 1826 – SC] is not applicable in the present case, since there is no ambiguity in understanding the entry in the exemption notification. The question of whether a coin shall be only in circular shape is only difference in interpretation of the entry and the only question is whether the coin should be only in circular shape or any other shape is the factual issue. This judgment has been distinguished in the following cases:

a. M/s Datex Obmeda India Pvt Ltd Vs CC [2018 (8) TMI 9080 – CESTAT Bang]

b. CCE, Patna Vs M/s Shapoorji Pallonji and Co. Pvt Ltd & Ors [2023 910) TMI 748 – SC]

6. He further submits that the issue is res judicata and following the doctrine of finality, appeal is required to be allowed in favour of the appellant. Though principles of res judicata does not squarely apply for one assessment to another, various Courts dropped demands in such cases following doctrine of finality as department cannot take a different stand unless there is a marked change from one assessment year to another. Reliance is placed on the following judgments.

a. John Oakey and Mohan Ltd Vs CCT, UP [2024 (2) TMI 950 – Allahabad HC]

b. CCE, Nagpur Vs Shree Baidyanath Ayurved Bhawan Ltd [2009 (237) ELT 225 (SC)]

7. On the other hand, learned AR reiterates the findings of the Commissioner (Appeals) in the impugned order and relies on the following judgements in support of his contentions:

a. CC (Import), Mumbai Vs Dilip Kumar and Co. & Ors (supra)

b. Orient Traders Vs CTO, Tirupati [2008 (3) TMI 452 – SC]

8. He further submits that since the imported goods are ‘rectangular bars’ of 5g weight without the manufacturer’s or refiner’s engraved serial number, the exemption benefit under S.No.1 of the said notification, as denied by the Commissioner (Appeals) in the impugned order is legal and proper and accordingly, he prays that the appeal may be dismissed.

9. Heard both sides and perused the records.

10. The only issue to be decided in this appeal is whether the goods of the appellant are related to S.No.1 or S.No.2 as per the description of the goods given in the Notification No.62/2004-Cus dt.12.05.2004.

11. Learned Adjudicating Authority has decided that the goods are covered under S.No.2, which is upheld by learned Commissioner (Appeals).

12. Learned Counsel for the appellant argued that the concessional rate was denied by the department on the ground that the coins do not have engraved serial number as required under the notification and hence, no such conditions for the coins. Therefore, it is very relevant to quote the Notification No. 62/2004-Cus dt.12.05.2004, which is as under:

Notification No. 62/2004-Customs

“In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 80/1997-CUSTOMS, dated the 21st October, 1997, published in the Gazette of India, Extraordinary vide, G.S.R. No.610(E), dated the 21st October, 1997, hereby exempts goods of the description specified in column (2) of the Table hereto annexed and falling within Chapter 71 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India, other than through post, courier or baggage, from so much of the duty of customs leviable thereon which is specified in the said First Schedule as is in excess of the amount calculated at the rate specified in the corresponding entry in column (3) of the said Table and from the whole of the additional duty of customs leviable thereon under section 3 of the said Customs Tariff Act.

Table

Explanation.- For the purposes of this notification, the expression ‘Gold in any form’ or ‘Silver in any form’ shall include medallions and coins, but shall not include jewellery made of gold or silver, as the case may be, and foreign currency coins.”

13. Learned AR argued that the description in the packing list matches with the description given in the brochure of the supplier M/s PAMP (Produits Artistiques Métaux Précieux), where they described the goods as Ingots (small bars). As seen from the PAMP brochure, under the heading Minting Services/Ingots (small bars), they refer to ingots or small bars as those minted as weights of 50 gms or less and all may be referred to collectively as bullion bars. They have rectangular bars of various weights including 5 gms. It is also stated that brochure under minting services/coins and medals, PAMP SA does not have ‘rectangular coins of 5 gms’. Hence, the description of the imported goods as gold coin is the innovation of the appellant. The manufacturer’s or refiner’s engraved serial number and weight are required for gold bars, but not for gold coins.

14. Learned Commissioner (Appeals) has stated, which would not be irrelevant to mention. It is as follows:

“7.With regard to Bill of Entry No.121188 dt.25.08.2005, I find that on examination the goods in question are found serially numbered which are not engraved, they are other than tola bars and rectangular shape, laminated in card shape, the manufacturer/refiner ‘essayeur fondeur’ and are made in Switzerland for HDFC Bank and the assay certificate is also printed on each of the coin lamination. Further with regard to Bill of Entry No.153821 dt.08.06.2006; the packages contains 20 small plastic containers, each container consists of 25 pieces of gold coins of rectangular shape, each coin contains bankers marks embossed and its serial number are printed on tamper proof seal as drawn in the picture in the file. The goods are not engraved with serial numbers, hence appear to merit duty under Sl No.2 of the Notification No.62/2004-Cus and not as claimed by them in the BE under Sl No.1.

8. The lower authority held in his findings that it is clearly mentioned in the examination report that the goods are found to be 5 gram gold bars in rectangular shape (other than tola bars) and the manufacturers or refiners serial numbers are not found engraved thereon the gold bars which is the primary condition specified under Sl No.1 of the Notification No.62/2004-Cus dt.12.05.2004 and also the description itself declared by the imported on the BE 5 gram gold coins 999 purity bar. The 5 grams gold bars/pieces cannot be called as gold coins. Basing on the examination report, the assessing officer rightly concluded that the goods are not covered under Sl No.1 but falls under Sl No.2 of the notification.”

15. Learned Commissioner (Appeals) on the basis of above observations decided that the primary and foremost condition that the manufacturer’s or refiner’s engraved serial number and weight in metric units should be there as referred in notification. Learned Counsel for the appellant submitted that the condition of engraving of the serial numbers is applicable only to the first entry. We agree with this argument of the learned Counsel but the goods in question are related to first part of entry (other than tola bars). The goods cannot be said to be gold coins, as discussed. Therefore, the goods are not related to S.No.1 as claimed by appellants.

16. Reliance placed by learned Counsel for the appellant and learned AR on various decisions, supra, are related to law of interpretation, since, there is no any ambiguity in the notification, there is no need to go into much details.

17. The constitutional bench of Hon’ble Supreme Court in the case of CC (Imports), Mumbai Vs Dilip Kumar and Co. & Ors (supra) held as under:

19. The well-settled principle is that when the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences. If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense. The words used declare the intention of the Legislature. In Kanai Lal Sur v. Paramnidhi Sadhukhan, AIR 1957 SC 907, it was held that if the words used are capable of one construction only then it would not be open to the Courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act.

20. In applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose [Assistant Commissioner, Gadag Sub-Division, Gadag v. Mathapathi Basavannewwa, 1995 (6) SCC 355]. Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation.

43. There is abundant jurisprudential justification for this. In the Governance of rule of law by a written Constitution, there is no implied power of taxation. The tax power must be specifically conferred and it should be strictly in accordance with the power so endowed by the Constitution itself. It is for this reason that the Courts insist upon strict compliance before a State demands and extracts money from its citizens towards various taxes. Any ambiguity in a taxation provision, therefore, is interpreted in favour of the subject/assessee. The statement of law that ambiguity in a taxation statute should be interpreted strictly and in the event of ambiguity the benefit should go to the subject/assessee may warrant visualizing different situations. For instance, if there is ambiguity in the subject of tax, that is to say, who are the persons or things liable to pay tax, and whether the revenue has established conditions before raising and justifying a demand. Similar is the case in roping all persons within the tax net, in which event the State is to prove the liability of the persons, as may arise within the strict language of the law. There cannot be any implied concept either in identifying the subject of the tax or person liable to pay tax. That is why it is often said that subject is not to be taxed, unless the words of the statute unambiguously impose a tax on him, that one has to look merely at the words clearly stated and that there is no room for any intendment nor presumption as to tax. It is only the letter of the law and not the spirit of the law to guide the interpreter to decide the liability to tax ignoring any amount of hardship and eschewing equity in taxation. Thus, we may emphatically reiterate that if in the event of ambiguity in a taxation liability statute, the benefit should go to the subject/assessee. But, in a situation where the tax exemption has to be interpreted, the benefit of doubt should go in favour of the revenue, the aforesaid conclusions are expounded only as a prelude to better understand jurisprudential basis for our conclusion. We may now consider the decisions which support our view.

18. As per the argument by the learned Counsel, if there is any ambiguity
in the notification for sake of argument, then as per Hon’ble Supreme Court’s decision, the benefit of doubt should go in favour of the Revenue.

19. Hon’ble Supreme Court in the case of Orient Traders Vs CTO, Tirupati (supra), held as under:

18. It is well established principle that the exemption notifications are to be construed strictly, reference may be made to State of Jharkhand & Others v. Tata Cummins Ltd. and another, 2006 (4) SCC 57 and Kartar Rolling Mills v. Commissioner of Central Excise, New Delhi – 2006 (4) SCC 772. If the intention of the legislature is clear and unambiguous, then it is not open to the courts to add words in the exemption notification to extend the benefit to other items which do not find mention in the notification. In the present case, there is no ambiguity in the expression used in the G.O. The intention of the State Government is clear that only gold bullion and specie is entitled to the concessional rate of tax. Under the circumstances, the same cannot be extended to the silver as claimed by the assessee.

20. Therefore, it is well settled principle that when the words are clear, plain and unambiguous, then only one meaning can be inferred. We found that lower authorities decided the case on merit and there is no any infirmity in their decisions.

21. Learned Counsel also argued that the concessional rate was allowed by various ports including Hyderabad in other cases. Since those matters are not before this Bench, therefore, we are not expressing any views in this regard.

22. As discussed above, we find that the imported goods are not related to S.No.1 as required by the notification. Therefore, we find no merit in the appeal and accordingly, the appeal is liable to be dismissed.

23. Appeal dismissed.

(Pronounced in the Open Court on 19.09.2025)