Plea against Customs notice on diversion of gold junked

Fake gold jewellery was purportedly shown as exports, while the bullion was sold to local dealers.
Telangana High Court
Telangana High CourtPhoto | Express

HYDERABAD : A bench of the Telangana High Court has dismissed two writ petitions filed by M/s. Sri Krishna Exim LLP and another entity challenging the show cause notices issued by the Principal Commissioner of Customs, Hyderabad under Section 28(4) of the Customs Act.

The Directorate of Revenue Intelligence (DRI) received information about the misappropriation of duty-free gold bullion acquired by the petitioners under the Special Economic Zone scheme for manufacturing and exporting studded gold jewellery. Following this, a search was conducted on the premises of the Sri Krishna Group of companies and associated entities, leading to seizures and subsequently, the show cause notices dated June 26, 2020, and June 27, 2020, issued under Section 124 of the Act.

Initially, the High Court had granted interim protection, restraining the respondents from taking any consequential steps based on the show cause notices. However, further investigations revealed that the petitioners were allegedly diverting the imported gold bullion into the local market instead of using it for manufacturing jewellery for export. Fake gold jewellery was purportedly shown as exports, while the bullion was sold to local dealers.

Senior counsel for the petitioners argued that a circular dated March 10, 2017, did not exempt any provisions of the Act and that the Board’s instructions should be mandatory. Conversely, senior standing counsel for the CBIC contended that the petitions should be dismissed as the allegations were serious, and it was premature for the court to intervene at the stage of show cause notices issuance.

After reviewing the arguments and records, the bench, comprising Justice P Sam Koshy and Justice N Tukaramji, noted that the circular primarily applied to the Central Excise Act but was also relevant to the Customs department. The court found no grounds to challenge the jurisdiction of the authority issuing the show cause notices or any violations of natural justice principles and dismissed the writ petitions.

Genuinely fake

Investigations revealed that the petitioners were diverting the imported gold bullion into the local market instead of using it for manufacturing gold jewellery for export. Fake jewellery was purportedly shown as exports, while the bullion was sold to local dealers.

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