Supreme Court issues notice to Adani Enterprises on customs department plea challenging tribunal order

The Supreme Court issued notices to Adani Enterprises Ltd, its managing director Rajesh Adani and others, following a petition filed by the Customs Department.

The plea challenged a decision of the Customs, Excise & Services tax Appellate Tribunal (CESTAT), which had set aside a show cause notice and related proceedings initiated by the department against the company, reported Informist.

"Issue notice. We will dispose of it at the next date of hearing," the Supreme Court said on Friday, Oct 10, as per Informist.

The Customs Department reportedly alleged that Adani Enterprises had obtained duty-free credit entitlement certificates from the Directorate General of foreign Trade (DGFT), Ahmedabad. The company allegedly used them to import gold and silver without paying customs duties under the erstwhile incremental export promotion scheme.

The department stated that between 2008 and 2010, Adani Enterprises imported around 31,219.79 kg of silver and 25,432.84 kg of gold bars without paying customs duty, which led to a duty loss of approximately ₹497.77 million (₹49.77 crore). 

Scheme conditions and department's allegations 

The DGFT introduced the Incremental Export Promotion Scheme in 2003-04, allowing exporters to earn duty credits worth 10% of their incremental exports over the previous year, provided they achieved at least 25% growth, as per Informist.

These credits were used to import goods duty-free through Duty-Free Credit Entitlement (DFCE) licences, with the condition that imports must be linked to exported products.

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The Customs Department argued that Adani Enterprises was not entitled to import gold and silver bars as they bore no connection with its export products, which are cut and polished diamonds.

It added that 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, as per Informist.

Tribunal's earlier ruling

In 2012, the Customs Department had issued a notice demanding duty and proposing confiscation and penalties under Section 29 of the Customs Act, 1962.

However, the CESTAT later upheld the adjudicating authority's view to drop the case, stating, "...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."

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