Action of Department on Disposal of Gold through SBI Bullion during the pendency of appeal violates the natural justice principle: CESTAT allows Refund of Differential Value of Gold with Interest

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that action of department on disposal of gold through SBI Bullion during the pendency of appeal violates the natural justice principle.

Based on the intelligence that a car allegedly carrying smuggled gold bars and seized the gold. The department issued show cause notice for absolute confiscation of the gold with imposition of penalties uponSatish Mehta, the Appellant and Co-appellants under Section 112(a) of the Customs Act.

The Appellants challenged the adjudication order before the Tribunal and the Tribunal vide final order dtd. 25.03.2019 allowed the appeals of Appellants and quashed and set aside the confiscation of the seized goods. The Appellant requested for release of confiscated gold and return the amount deposited at the time of preferring the appeal before the Tribunal.

The department stated that the confiscated gold belongs to the Appellants was deposited in the I.G. Mint, Mumbai which was disposed of through SBI Bullion at market price on 01.08.2018 and provided the cheques to the Appellants. The Appellants requested the department to refund the differential value of gold that was calculated by comparing the value of the gold melted on 01.08.2018 and date on which cheque was given to the Appellants. The department rejected the request for refund of the differential value of gold with interest.

 Shri Hardik Modh counsel appeared on behalf of the Appellants submitted that since gold is included in the sensitive list, the department ought to have followed the procedure as prescribed under Section 110(1A). The department without following due process of law, as mandated under Section 110(1A) of the Customs Act, disposed of the gold.

Per Contra the Shri. Dharmendra Kanjani, Superintendent (Authorized Representative) appeared on behalf of the revenue argued that in the present case the Gold seized by the DRI was absolutely confiscated and the Appeals before filed in June 2018.

A Coram of Mr. Ramesh Nair, member (judicial) and Mr. Raju, member (technical) observed that “the action of the department such as disposal of gold through the SBI Bullion during the pendency of the appeal is against the existing departmental instructions. Therefore, the argument of the revenue in that disposal of gold during the pendency of the appeal legally correct cannot be accepted.”

It was viewed that provisions of Section 110(1A) of the Customs Act, does not permits the proper officers for dispose of the disputed goods during the pendency of appeal. The Tribunal viewedthat the department has disposed of /sold the goods on the understanding that the first order of the adjudicating authority is the final order and the department was well aware about the pendency of the appeals before this Tribunal.

“The appellants are entitled for the refund of differential value of the gold as claimed by them alongwith interest”the bench held. The appeals are allowed.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to TaxscanPremium. Follow us on Telegram for quick updates.