The New Delhi Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that a mismatch in gold content in imported dore bars is a normal industry occurrence and not sufficient on its own to establish customs duty evasion.
Naresh Vijayvargiya, the appellant, served as the former Chief Financial Officer (CFO) of MMTC-PAMP India Pvt. Ltd., a company engaged in importing and refining gold dore bars. The customs department issued an order on December 31, 2022, imposing a penalty of Rs. 50 lakhs on Mr. Vijayvargiya under Section 112(a)(ii) of the Customs Act, 1962.
The penalty was based on the allegation that he failed to report discrepancies between the gold content declared in the final invoices and that mentioned in the finalized Bills of Entry (BoEs), which, according to the department, amounted to abetment in duty evasion.
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The department alleged that as CFO, the appellant was aware of the differences in gold quantity and value but failed to disclose this to customs authorities, thereby facilitating evasion. It was claimed that when the final gold assay showed more gold than initially declared, the company paid less duty and did not update the customs records, leading to the shortfall.
In response, the appellant’s counsel argued that variations in gold content after refining are a standard feature of dore bar imports and not indicative of deliberate suppression or misstatement. They further argued that MMTC-PAMP had also filed refund claims and received reimbursements in cases where the final gold content was lower than initially declared, resulting in excess duty payments.
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The appellant also referred to a related decision in the case of MMTC-PAMP India Pvt. Ltd., where CESTAT had accepted the company’s explanation that the gold content may vary and had already led to both additional duty payments and refunds depending on the final assay results. The tribunal found that there was no evidence of willful misstatement or suppression of facts that could justify invoking the extended limitation period or penal provisions.
The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that evasion, under Section 112(a)(ii), must involve a deliberate and conscious effort. The final gold content often fluctuated after testing, and the company had voluntarily adjusted duty payments and sought refunds where applicable. The tribunal held that the appellant’s actions did not indicate any fraudulent intent or abetment of duty evasion.
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The tribunal ruled that a normal variation in gold content in dore bar imports could not be treated as an attempt to evade duty. Consequently, the penalty of Rs. 50 lakhs imposed on Naresh Vijayvargiya was set aside, and the appeal was allowed.
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