In CUSSA 229 of 2019 - DEL HC- ‘In exercise of jurisdiction under Section 130 of Customs Act, the Court could not revisit the findings in the absence of perversity’: Delhi High Court
Justice Mukta Gupta and Justice C.Hari Shankar [26-05-2023]

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Simran Singh

New Delhi, May 26, 2023: In a Customs Act Appeal, the Delhi High Court allowed the review petition which was preferred by the respondent seeking review of the judgment dated 01-06-2020, and held that there were positive findings of fact by the Tribunal, that the imported jewellery had been appraised and found to be the same as the jewellery which had earlier been exported; thus, could not revisit these findings, absent perversity. The High Court accordingly upheld the decision of the Tribunal to permit provisional release of the remaining gold and gold jewellery, on furnishing of enhanced B/G.

“Our decision in that regard stands endorsed by the Supreme Court by its order dated 1st October 2020, which has declined to interfere except for further enhancing the value of the B/G to be deposited by the review petitioner.”

Factual Matrix

In the matter at hand, the respondent imported gold into India which was seized by the Directorate of Revenue Intelligence (DRI), in part from the workshop or factory premises of the respondent and in part from the Airport, after the gold had crossed the Customs barrier. The respondent disputed the legitimacy of the seizure, contending that the gold had been earlier exported by the respondent and was being re-imported into India within a year of export, and was entitled, therefore, to complete duty exemption under S. No. 5 of Notification dated 30-06-2017. A Show Cause Notice was issued by the DRI to the respondent on 26-09-2019, which was presently pending adjudication.

In the meanwhile, the respondent had applied for provisional release of the seized gold, under Section 110A of the Customs Act, 1962 (Customs Act) which was rejected by the Additional Director General (ADG), DRI, vide order dated 04-10-2019. The respondent appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) which passed a positive finding stating that the gold imported had been verified and found to tally with the gold earlier exported, thus the Tribunal, vide final order dated 13-11-2019 directed provisional release of the gold, on terms fixed by it. The customs appeal in which the present review petition was filed was preferred by DRI against the said final order under Section 130(1) of the Customs Act.

Under the review petition, the decision of the Tribunal was upheld vide judgment dated 01-06-2020, directing release of the gold seized from the factory or the warehouse of the respondent as well as 25400.06 grams gold jewellery covered by Bill of Entry dated 26-02-2019, but enhanced the conditions of release to furnishing of a bond covering the entire value of the gold along with an irrevocable Bank Guarantee (B/G) for ₹ 10 crores. However, the direction of the Tribunal  was set aside permitting release of the consignment of 25299.68 grams gold jewellery which was also seized at the Airport, on the reasoning that the said consignment was not signed by the Customs clerk.

The appellant DRI preferred an appeal before the Supreme Court against the aforementioned judgment, to the extent of the direction of the  release of the gold seized from the factory or warehouse of the respondent as well as 25400.06 grams gold jewellery covered by Bill of Entry dated 26-02-2019 seized at the Airport. However, the same was disposed of, vide order dated 01-10-2020. The lis, as regards provisional release of the gold seized from the factory or the warehouse of the respondent as well as 25400.06 grams gold jewellery covered by Bill of Entry dated 26-02-2019 seized at the Airport, thus, stood concluded, with the Supreme Court upholding the judgment subject to enhancement of the quantum of B/G to be furnished from ₹ 10 crores to ₹ 15 crores.

The present Review Petition was, qua the third consignment, viz. 25299.68 grams gold jewellery which was also seized at the Airport, seeking review of the decision to set aside the judgment of the Tribunal, which had permitted provisional release of the said consignment.The main contention of the Review Petitioner was that the quantity of 25299.68 grams gold jewellery was imported as baggage and that the requirement of filing of a B/E, which emanated from Section 46(1)3 of the Customs Act, in Chapter VII thereof, did not apply to baggage, in view of Section 444 of the Customs Act.

Analysis of the Bench

The Bench opined that intricate provisions of the Foreign Trade Policy and other statutory mandates, were outside the scope of present proceeding as well as of Section 130 of the Customs Act. These review proceedings arise out of a judgment in an appeal filed by the DRI under Section 130 of the Customs Act and the scope of examination, in a statutory appeal under Section 130, was limited to substantial questions of law. It was stated that findings of fact could not be interfered with, under Section 130, unless they suffered from manifest perversity.

The Bench stated that the scope of the present review proceedings stood further curtailed by the fact that the DRI actually moved the Supreme Court against the judgment under review which declined to interfere with it, except for enhancing the amount of B/G to be furnished for securing provisional release of the goods. “We had, in our judgment under review, categorically held that the findings of fact, of the learned Tribunal, regarding the identity of the imported jewellery with the exported jewellery, was not open to re-appreciation.”

The Court stated that there were positive findings of fact, by the Tribunal, that the imported jewellery had been appraised and found to be the same as the jewellery which had earlier been exported. “We, in our judgment, clearly held that, in exercise of the jurisdiction vested in us by Section 130 of the Customs Act, we could not revisit these findings, absent perversity, which we did not find to exist. Save and except for the consignment of 25299.68 grams forming subject matter of the present review petition, we had, therefore, upheld the decision of the Tribunal to permit provisional release of the remaining gold and gold jewellery, on furnishing of enhanced B/G.”

Further , the Court was of the opinion that the finding of the Tribunal regarding the identity of the imported gold jewellery with the exported jewellery also extended to the 25299.68 grams gold jewellery forming subject matter of the present review petition.

“The only reason why we did not choose to extend, to the said imported gold jewellery, the same approach as was extended to the other imports, was our view that, in respect of the 25299.68 grams of gold jewellery, no signed and endorsed B/E was available.”

The Court navigated through Clauses 2(xii) and 2(xiii) of Standard Operating Procedure (SOP) dated 29-03-2016 which indicated that, in respect of gold jewellery, which was exported for exhibitions and re imported into the country, the procedure of filing of a B/E, under Section 46 of the Customs Act, was inapplicable. Also, the regular provisions applying for import of baggage appear to have been substituted, in the case of such re-import, by the procedure envisaged by Clauses 2(xii) and 2(xiii) of the SOP.

The Bench was of the view that there was a clear averment, by the review petitioner, that the said procedure was in fact followed even in respect of 25299.68 grams gold jewellery. The Tribunal had also, in its final order, held, on facts, that the entire quantity of gold jewellery was subjected to appraisal and the appraiser had, on comparing the gold jewellery with the jewellery which had earlier been exported vide shipping bills dated 13-03-2019 and 20-02-2019, found that the jewellery which was being sought to be imported by the respondent-review petitioner was, in fact, the same jewellery which had earlier been exported for exhibition abroad. Thus, it was stated that there was no categorical traversal, of these findings, in the appeal preferred by the DRI, as had already been observed in the judgment under review. Even otherwise, absent perversity, these findings could not be re-examined in an appeal under Section 130 of the Customs Act, which was restricted to substantial questions of law.

It was stated that the only ground on which the Court had extended differential treatment to the 25299.68 grams gold jewellery, from the remaining gold seized in the warehouse or godown of the review petitioner and at the Airport, was that the B/E relating to the 25299.68 grams gold jewellery was unsigned by the customs authorities. The Show Cause Notice issued to the review petitioner, acknowledged that the jewellery was imported as baggage. In these circumstances, the Court was of the opinion that the review petitioner was justified in its prayer that the 25299.68 grams gold jewellery was to be extended the same treatment as has been extended to the remaining gold.

Conclusion

The Court was felt fortified in its view sine Supreme Court, in the SLP preferred by the appellant-DRI against the judgment under review, did not choose to interfere with the decision to permit release of the gold jewellery (except for the consignment forming subject matter of the present review proceedings). The judgment under review worked out the quantum of the BG to be furnished at ₹ 10 crores, as 30% of the total value of the gold seized, including the unreleased 25299.68 grams gold jewellery forming subject matter of the present review proceedings. That amount was enhanced by the Supreme Court to ₹ 15 crores, otherwise upholding the judgment. It was not possible to direct furnishing of any further bank guarantee, as a condition, for release of 25299.68 grams gold.