Allegation of Duty free gold under replenishment Scheme Unsustainable: Madras HC Bars Criminal Proceedings against Jewellery Exporter [Read Order]
The bench, relying on the Supreme Court’s ruling, held that the chances of conviction were “bleak” and criminal proceedings could not continue.
![Allegation of Duty free gold under replenishment Scheme Unsustainable: Madras HC Bars Criminal Proceedings against Jewellery Exporter [Read Order]](https://images.taxscan.in/h-upload/2025/09/23/2090070-duty-free-gold-case-madras-hc-gold.webp "Allegation of Duty free gold under replenishment Scheme Unsustainable: Madras HC Bars Criminal Proceedings against Jewellery Exporter [Read Order]")
The Madras High Court has quashed criminal prosecution initiated jewellery exports in connection with alleged misuse of the duty-free gold replenishment scheme under the Foreign Trade Policy.
The Directorate of Revenue Intelligence (DRI), Hyderabad, had alleged that the exporter, Jurassic Refiners & Jewels Private Ltd procured duty-free gold from nominated agencies like Diamond India Ltd. (DIL) under replenishment scheme by misdeclaring export jewellery details and not fulfilling value-addition norms, thereby evading customs duty.
A show-cause notice (SCN) issued in September 2018 culminated in adjudication proceedings demanding duty from DIL.
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However, on appeal, the CESTAT Hyderabad (order dated 08.02.2024) set aside the adjudication, holding the allegations unsustainable. The Department’s further appeal was dismissed by the Telangana High Court (22.11.2024), affirming the CESTAT’s findings. No further appeal was filed.
Despite this, a private complaint was lodged before the Customs Court, Alandur, invoking offences under Sections 132 and 135 of the Customs Act, 1962 read with Section 120B IPC. The jewellery exporter sought quashing, arguing that the very foundation of the criminal case, the SCN had been found false up to High Court level.
Justice N. Sathish Kumar accepted the plea, observing that while adjudication and prosecution are independent, where exoneration is on merits after full factual appreciation, continuation of prosecution on the same allegations is unsustainable.
The bench, relying on the Supreme Court’s ruling in Ashoo Surendranath Tewari v. DSP, EOW, CBI (2020), held that the chances of conviction were “bleak” and criminal proceedings could not continue.
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The court observed that “Whereas, on careful perusal of the common judgment of the High Court of Telangana in Central Excise Appeal Nos.23,27,29,31 & 32 of 2024 dated 22.11.2024, it would indicate that the order is not based merely on technical ground and also on merits considering the factual aspects in the case. Such view of the matter, this Court is of the view when the allegation is found to be not sustainable at all after appreciation of evidences available on record, criminal prosecution on the very same set of facts and circumstances cannot be allowed to continue as the same appears to be bleak.”
Accordingly, it set aside the prosecution pending before the Customs Court, Alandur.
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