Gold Dore Imports Must Satisfy Customs Notification Conditions: Delhi HC

Tasha Gold Pvt. Ltd. Vs Union of India & Ors. (Delhi High Court)

Summary: Delhi High Court declined to interfere with the seizure of Gold Dore bars imported by Tasha Gold Pvt. Ltd., holding that the importer was bound by the conditions incorporated in its import permission and by the customs exemption notification governing the import at the relevant time. The petitioner had obtained permission from the Exim Facilitation Committee to import 5 MT of Gold Dore bars of up to 95% purity for its refinery. The permission specifically required compliance with Customs Notification No. 12/2012 dated 17.03.2012 and applicable Reserve Bank of India notifications. Under the 2012 notification, Gold Dore bars having gold content not exceeding 95% were subject, inter alia, to the condition that the goods be directly shipped from the country where they were produced and that each bar weigh 5 kg or more. The goods were seized at the time of import after the authorities found that they did not satisfy the prescribed weight specifications. On further examination by the Central Revenues Control Laboratory, the respondents also objected that the Gold Dore bars exceeded the maximum purity limit of 95%.

The Court noted that Notification No. 12/2012-Customs dated 17.03.2012 had subsequently been superseded by Notification No. 50/2017-Customs dated 30.06.2017. The later notification substantially reiterated the relevant requirements governing Gold Dore bars, including the purity ceiling of 95%, actual-user requirement for refining and manufacture of standard gold bars of purity 99.5% and above, and the requirement that each bar weigh 5 kg or more. The petitioner sought to avoid those conditions by relying upon Notification No. 96/2008-Customs dated 13.08.2008, which dealt with imports from “least developed countries”. Since the Gold Dore bars had been imported from Rwanda, the petitioner contended that the 2008 notification was special in character and continued to apply because it had neither been rescinded nor superseded by the 2012 and 2017 notifications. It was also argued that the Import Policy entry relating to Gold Dore bars did not itself prescribe the impugned weight or purity conditions.

The Delhi High Court rejected that challenge. It found that the Import Policy permitted import of Gold Dore bars against an import licence subject to an Actual User condition and, significantly, the specific import permission granted to Tasha Gold expressly referred to the 2012 notification and mandated compliance with its conditions. Once the 2012 notification was superseded by the 2017 notification, which held the field when the import was actually effected, the petitioner was required to comply with the weight and purity conditions stipulated therein. The petitioner had also never approached the authorities seeking amendment of the conditions incorporated in its import permission. It was consequently impermissible for the petitioner to contend after import that the 2012 and 2017 notifications were inapplicable or that it could import the Gold Dore bars solely on the basis of the 2008 notification.

The Court was informed by the Directorate of Revenue Intelligence that the seizure period contemplated under Section 110 of the Customs Act, 1962 had been duly extended and that the DRI was in the process of finalising the show cause notice. The Court therefore left the petitioner’s factual contentions open to be raised before the competent DRI authority, including its right to question the respondents’ findings concerning the weight and purity of the imported Gold Dore bars.

As regards release of the goods, the Court noted that the petitioner had paid the entire customs duty under protest and had also filed an application before the second respondent seeking provisional release. Since the duty element and liability had been taken care of, the High Court left the petitioner free to pursue that application and directed that any pending application for provisional release be considered and disposed of expeditiously, preferably within three weeks. All contentions of the parties on merits were otherwise kept open and the writ petition along with the pending application was disposed of accordingly.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. This petition has been preferred assailing the validity of the seizure memo dated 26 December 2022. The issue itself arises in the backdrop of a seizure affected by the respondents of “Gold Dore” bars which were being imported by the petitioner.

2. There does not appear to be any dispute insofar as the following facts are concerned. The petitioner applied for import permission before the Exim Facilitation Committee [“the Committee”] whose proceedings of 15 March 2022 stands placed on the record as Annexure P-20. While dealing with the case of the petitioner specifically, the Committee proceeded to grant permission for import of 5 MT of Gold Dore bars [up to 95% purity] subject to the following conditions incorporated therein: –

3. In terms of the decision taken by the Committee, import permission came to be granted to the petitioner. As would be evident from the conditions for import which came to be imposed, the petitioner was held obliged to comply with the terms of Custom Notification No.12/2012 dated 17 March 2012 and other applicable Reserve Bank of India [RBI] notifications.

4. For the purposes of considering the challenge which stands raised, the Court deems it apposite to extract the following parts from the notification dated 17 March 2012 insofar as it deals with the import of Gold Dore bars:-

ANNEXURE

5. The goods are stated to have been seized at the time of import and as per the respondents on due examination, it was found that the Gold Dore bars did not meet the weight specifications as stood embodied in the notification of 17 March 2012. In the course of further examination of the imported article by the Central Revenues Control Laboratory [CRCL], the respondents also took the objection of the Gold Dore bars exceeding the maximum purity limit of 95%. These are the facts which are disclosed in the return which has been filed by the Directorate of Revenue Intelligence [DRI] in these proceedings.

6. It would be pertinent to note that in terms of exemption notification dated 17 March 2012, the bars were to comprise of gold content not exceeding 95% and be of 5 kg. or above. According to the respondent-DRI, the imported goods failed to conform to the aforenoted two conditions and it is this which constrained them to seize the articles in question.

7. Undisputedly, the exemption notification of 17 March 2012 has since then been superseded by a notification of 30 June 2017. The relevant parts of that notification are reproduced hereinbelow: –

ANNEXURE

8. As would be evident from the above, the additional conditions as stipulated in respect of Gold Dore bars in the notification of 17 March 2012 are reiterated in the subsequent notification of 30 June 2017.

9. The case of the petitioner however rests on a notification of 13 August 2008 which dealt with the import of Gold Dore bars and other articles from “least developed countries”. According to Mr. Rai, learned counsel appearing for the petitioner, in light of the fact that the said notification had neither been rescinded nor superseded by the notifications of 17 March 2012 and 30 June 2017, the petitioner would neither be held bound to comply with the conditions carried in those notifications nor could the Gold Dore bars have been seized for the purposes of initiation of proceedings. The submission essentially was that since the import was from Rwanda, one of the countries forming part of the list of “least developed countries”, it would be the 2008 exemption notification which would be applicable being special in character as opposed to the 2012 and 2017 notifications which applied to the import of Gold Dore bars generally.

10. Mr. Rai also referred to the Import Policy insofar as Gold Dore bars is concerned and specifically to classification entry 7108 to contend that none of the conditions with respect to weight or purity stand reflected or adopted in that policy. According to learned counsel, since those conditions did not form part of the Import Policy as framed, the seizures of the Gold Dore bars is liable to be held to be illegal and the seized articles consequently be released.

11. Having heard learned counsels for parties, the Court finds itself unable to sustain the challenge as raised in the instant writ petition for the following reasons.

12. Undisputedly, the Import Policy alludes to Gold Dore bars being permitted for import against an “import license with Actual User [AU] condition”. As was noticed hereinabove, the import permission which was granted to the petitioner specifically alluded to the notification of 2012. The permission which was granted to the petitioner mandatorily required it to comply with the conditions imposed in that notification. We are also of the firm opinion that once that notification came to be superseded by the 2017 notification [and which was the notification which held the field at the time when the import was effected] the petitioner was bound to comply with the conditions relating to weight and purity as stipulated therein.

13. It is also not the case of the petitioner that it had, at any time, approached the respondents to seek amendment of the conditions which stood added to the import permission. In view of the aforesaid, it would be impermissible for the petitioner to now contend that the notifications of 2012 and 2017 would not be applicable. In view of the aforesaid, we find ourselves unable to sustain the submission of the petitioner being entitled to import Gold Dore bars solely on the basis of the notification of 2008.

14. We were informed by Mr. Singh, learned counsel appearing for DRI during the course of arguments that the period of seizure as contemplated under Section 110 of the Customs Act, 1962 has been duly extended and that they are in the process of finalizing the show cause notice which is to be issued. In view of the aforesaid, we leave all contentions relating to facts available to be addressed by the petitioner before the competent authority of the DRI. This would include the right of the petitioner to question the findings with respect to weight and purity which has been referred to by the respondents, if so chosen and advised.

15. The record bears out that the petitioner has additionally and upon payment of the entire customs duty under protest also moved an appropriate application to the second respondent for provisional release of the goods. In view of the fact that the duty element and liability has been duly taken care of, we leave it open to the petitioner to pursue that application and only observe that any application for provisional release which may be pending consideration before the second respondent shall be taken up for consideration and disposed of expeditiously and preferably within a period of three weeks from today. All contentions of respective parties, on merits, otherwise are kept open.

16. The petition along with pending application shall consequently stand disposed of on the above terms.