State Must Restrict Statutory Intervention Only within Intent of Statute: CESTAT Allows Re-Export of Rough Diamonds [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed re-export of rough diamonds and commented that State must restrict their statutory intervention only within the intent of the statute and any excess of that will not only imperil their action but also have consequences in law.

The two consignments of 62,837 carats and 76,195.45 carats, , imported by M/s Kiran Gems P Ltd were declared to be in conformity with description corresponding to tariff item 7102 3100 in First Schedule to Customs Tariff Act, 1975 but, on examination, were observed to consist of parcels, some of which were marked as ‘rejections’ from ‘Al Rosa’ mine, besides not matching the quantities declared in the bills of entry which were, of themselves, inconsistent with the details in the accompanying invoices, packing lists and Kimberley Process Certificates (KPC) and, therefore, seized under section 110 of Customs Act, 1962.

The adjudicating authority found the Kimberley Process Certificates (KPC) to be in order. However, the ‘rough diamonds’ were ordered to be confiscated under section 111(m) of Customs Act, 1962 on account of assessable value having been revised to ₹ 26,16,99,645.22 and ₹ 94,24,99,507.50 by recourse to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

It appeared from the findings of the original authority about the composition of lots/parcels and the reasoning for recourse to the ‘residual method’ of valuation after rejecting the declared value under rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

A Two-Member Bench of the Tribunal comprising CJ Mathew, Technical Member and Ajay Sharma, Judicial Member observed that “Hence, the discarding of the proposals for confiscation under section 111(d) of Customs Act, 1962 and for denial of the option of redemption are, after the refusal of the first appellate authority to admit the appeal of Commissioner of Customs, no longer available for agitating before the Tribunal.”

Allowing the re-export of rough diamonds, the Bench further noted that “The valuation is purely academic and we, thus, reiterate our earlier observation that agencies of the State must restrict their statutory intervention only within the intent of the statute. Any excess of that will not only imperil their action but also have consequences in law.”

To Read the full text of the Order CLICK HERE

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