The Supreme Court has issued notices to Adani Enterprises and its MD Rajesh Adani after the Customs Department challenged a tribunal order that cleared the company in a Rs 49.77 crore duty-free gold and silver import case. The case will be taken up at the next hearing date.
New Delhi: The Supreme Court on Friday, October 10, issued notices to Adani Enterprises Ltd, its managing director Rajesh Adani, and others in response to a plea filed by the Customs Department.
The Department had challenged a decision of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which had set aside a show cause notice and related proceedings initiated against the company.
As reported by Informist, the Supreme Court said,
“Issue notice. We will dispose of it at the next date of hearing.”
According to the Customs Department, Adani Enterprises had obtained duty-free credit entitlement certificates from the Directorate General of Foreign Trade (DGFT), Ahmedabad, and used them to import gold and silver without paying customs duties under the former Incremental Export Promotion Scheme.
The Department claimed that between 2008 and 2010, Adani Enterprises imported around 31,219.79 kg of silver and 25,432.84 kg of gold bars under these duty-free credit entitlements, thereby causing a duty loss of about ₹497.77 million (Rs 49.77 crore).
Under the Incremental Export Promotion Scheme (launched in 2003-04), exporters could earn duty credits equal to 10 % of their incremental exports over the previous year, provided their export growth was at least 25 %.
These credits were granted via Duty-Free Credit Entitlement (DFCE) licences, which allowed imports without paying customs duty, on the condition that such imports were connected to the exporter’s output.
The Customs Department’s contention is that Adani Enterprises did not satisfy that linkage. The Department argued that gold and silver bars have no connection with the company’s exported products, which consist of cut and polished diamonds.
It held that these bars could not be treated as inputs or replenishment for diamond exports because Adani Enterprises had exported diamonds in exactly the same form (cut and polished) and not in the form of jewellery.
In the Department’s view,
“such bars could not be treated as inputs or replenishment for diamond exports as the company has exported diamonds in the same form and not as jewellery items.”
Earlier, in 2012, the Customs Department had issued a notice demanding duty and proposing confiscation and penalties under Section 29 of the Customs Act, 1962. But CESTAT later intervened, siding with the company, and dropped the proceedings.
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The Tribunal held:
“…valid DFCE licences have been used for import of the goods by the respondents (Adani Enterprises), hence, we do not find any reason for demand of duty or confiscation of the goods, or imposition of penalties.”
With the Supreme Court now having taken the matter up and issued notices, the next hearing will be closely watched by legal observers, trade bodies, and industry stakeholders.
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