IMPORTANT POINT
Exemptions should generally be interpreted strictly the beneficial and promotional exemption calls for liberal interpretation.

JUDGMENT

H.L. Dattu, J. —

1) This appeal is by the Revenue against the Order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, West Zonal Branch at Mumbai [hereinafter referred to as ‘Tribunal’] in Appeal No.C/138/03 Mum dated 23.06.2003. By the impugned order, the Tribunal has allowed the appeal filed by the respondent and has set aside the original order passed by the adjudicating authority, wherein it had directed the respondent to pay a sum of ‘2,20,50,125/- (Rupees Two Crores Twenty Lakhs Fifty Thousand One Hundred & Twenty Five only) by way of duty under the provisions of The Customs Act, 1962 (hereinafter referred to as, “the Act”) for release of the goods seized from the possession of the respondent.

2) The factual matrix in brief is as follows:

In a search and seizure in the office premises of the respondent- firm conducted by the officers of Customs Department, on the basis of specific information, a large quantity of rough diamonds was recovered. The partner of the respondent-firm, Shri Maganbhai Patel was neither able to offer any satisfactory explanation nor produce any documents in relation to the import of the said diamonds, and the diamonds were seized by the officers in the reasonable belief that they are liable for confiscation under the provisions of the Act. After investigation, a Show Cause Notice was issued to the respondent and others wherein confiscation of the seized diamonds was proposed. After adjudication, the adjudicating authority passed an order confiscating the seized diamonds under Section 111(d) of the Act. However, an option was given to the respondent to redeem the seized goods on payment of redemption fine. The respondent was also asked to pay the appropriate duty on the said confiscated diamonds which were allowed to be released on payment of redemption fine. In addition, penalty was also imposed on the respondent under Section 112 of the Act. Being aggrieved by the aforesaid order, the respondent had preferred an appeal before the Tribunal. The Tribunal, by its order dated 29.12.1995, disposed of the appeal and confirmed the redemption fine of ‘60,00,000/- (Rupees Sixty Lakhs only) and the penalty of ‘25,00,000/- (Rupees Twenty Five Lakhs only) on the respondent herein. The respondent thereafter filed a Writ Petition before the Bombay High Court and the same was withdrawn to avail the benefit under Kar Vivad Samadhan Scheme, 1998 (in short, “KVS Scheme”). Pursuant to the order passed under the KVS Scheme by the designated authority, the respondent was directed to pay an amount of ‘42,50,000/- (Rupees Forty Two Lakhs and Fifty Thousand only) towards redemption fine and penalty and the designated authority also gave liberty to the respondent to redeem the goods on payment of duty at the appropriate rate. The respondent thereafter requested the appellants for release of diamonds by placing reliance on the Notification No.247/76-Cus dated 02.08.1976. This request was turned down by the department and the respondent was informed that the seized diamonds would be released only after payment of duty in the light of the order (original) dated 03.12.1992. Respondent thereafter preferred a Writ Petition No.1976 of 2000 before the Bombay High Court. The said Writ Petition was dismissed by the High Court, wherein it was specifically observed “that the petitioner imported diamonds of foreign origin without a valid licence.” This order was questioned before this Court in S.L.P.(C) No.1495 of 2000. This Court, by its order dated 06.09.2002, while dismissing the Special Leave Petition, directed the Additional Collector of Customs (Preventive), Mumbai or other appropriate Assessing Officer to decide the amount of duty payable under the Customs Act in respect of seized goods. The Commissioner of Customs vide order in Original No.CCP/KPM/ADJN/M&P/27/2002, quantified the duty payable by the respondent for an amount of ‘2,20,50,125/- (Rupees Two Crores Twenty Lakhs Fifty Thousand One Hundred