CBIC Detailed Guidelines on Handling Confiscated Gold

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·         Annexure I: Memorandum of Understanding (MoU)

·         Annexure-II: Mapping of Customs Commissionerates to Focal Customs Commissionerates and IG Mints

·         Annexure-III: Form for Intimation of availability of Seized/Confiscated Gold

·         Annexure-IV: Note on Handing over Seized/Confiscated Gold (HOGS Note) - ORIGINAL/DUPLICATE/TRIPLICATE/QUADRAPLICATE

·         Annexure-V: Note on Preliminary Weight (PW Note)

·         Annexure-VI: Note on Final Weight (FW Note)

·         Annexure-VII: Register for Focal Commissionerate for entering details of Receipt of HOGS Note, issuance of PW and FW Notes

·         Annexure-VIII: Acknowledgement of Gold Delivery Memo-

[CBIC Instruction No. 27/2021-Customs dated 3 December 2021]

<Full Text of Circular>

Subject: Guidelines for the sale of seized/confiscated gold

I am directed to refer to Para 11.2 of Chapter 11 of Disposal Manual 2019 read with Ministry’s letter F. No. 711/164/93-Cus (AS) dated 08.08.2005 and Circular No. 57/2016-Customs dated 01.12.2016 on disposal of seized/confiscated gold and Board’s letter vide F. No. 50711/5/2021-Inv-Customs, dated 22.09.2021. Para 11.2 of Disposal Manual 2019 that relates to disposal of standard/primary form of gold with assayed purity, inter-alia, prescribes that the sale of seized/confiscated gold (other than gold ornaments/jewellery) shall be routed through all public sector banks (approved by RBI to import and sell gold), MMTC Ltd. and STC Ltd. and related procedures for such sale.

2. With the approval of competent authority, it has now been decided that henceforth seized/confiscated gold will be sold (other than gold ornaments/jewellery/articles) to Reserve Bank of India (RBI) only. In this regard, Board has consulted RBI and Security Printing and Minting Corporation of India Limited (SPMCIL) and also signed a tripartite Memorandum of Understanding (MOU) with them. The MOU, inter alia, provides for roles and obligations of CBIC, RBI and SPMCIL regarding collection, transportation and standardization of seized/confiscated gold, delivery of standard gold bars and payment thereon. The text of MOU is given at Annexure-I.

3. Accordingly, the following guidelines are issued for disposal of seized/confiscated gold (other than gold ornaments/jewellery/articles).

3.1. Henceforth, the seized/confiscated gold (other than gold ornaments/jewellery/articles) shall be sold to RBI only. Any mention of gold in subsequent paragraphs shall refer to gold other than gold ornaments/jewellery/articles. For this purpose, SPMCIL has been engaged for collection, transportation, conversion into standard gold bars and delivery to RBI. The SPMCIL has facility to melt gold at India Government Mints (IG Mint) located at Hyderabad, Kolkata and Mumbai. Therefore, Hyderabad, West Bengal (P) and Mumbai (General) Customs Commissionerates have been designated as Focal Customs Commissionerates. Customs Commissionerates have been mapped to one of the three mints on the basis of their location (Annexure-II). IG Mints will be carrying out processes such as pre-melting, assaying and weighing in the presence of Customs Officer. For this purpose, the focal Customs Commissionerate shall nominate an officer not below the rank of Superintendent of Customs as indicated in the following table.

Focal Commissionerate from where officer to be nominated

IG Mint to which the nominated officer is attached

Hyderabad

Hyderabad

West Bengal (Preventive)

Kolkata

Mumbai (General)

Mumbai

3.2. The process flow of disposal is given as under.

Step-1

Step-2

Step-3

Step-4

Step-5

Intimation to SPMCIL

Collection of gold by SPMCIL Transportation of gold to India government Mints

Preliminary Assaying Melting/minting Conversion into standard gold bars Final Assaying

Delivery of Standard gold bars to RBI

Payment by RBI through crediting into Government Account

3.3. As soon as the seized/confiscated gold is ready for disposal, the Deputy/Assistant Commissioner of Customs in-charge of the disposal, shall intimate SPMCIL on the availability of gold for collection. The form of intimation is given at Annexure-III.

3.4. Thereafter, SPMCIL will collect the gold from the Customs Commissionerates. The Customs Commissionerates shall take adequate precautions during handing over gold to SPMCIL for keeping the evidentiary value of the gold intact, including but not limited to ensuring presence of witnesses, videography of the process of handing over, accounting and obtaining acknowledgement in the form of ‘Note of Handing over Gold’ to SPMCIL (HOGS Note). The form of HOGS Note is given at Annexure-IV. The printed HOGS Note shall be prepared in quadruplicate; original copy shall be handed over to SPMCIL; duplicate copy shall be forwarded to the focal Commissionerate; triplicate copy shall be forwarded to Directorate of Logistics (DoL), New Delhi; Quadruplicate copy shall be kept by the Customs Commissionerate concerned. The HOGS note shall be prepared for each packet separately. The HOGS note shall have reference to the seizure to which the packet belongs.

3.5. SPMCIL will perform preliminary assay procedure at IG Mints in the presence of nominated officer of the focal Customs Commissionerate. SPMCIL will conduct preliminary X-Ray Fluorescence (XRF) analysis for each packet of gold separately HOGS Note wise. The preliminary XRF analysis will be recorded in CCTV camera. It shall carry out pre-melting, and sampling process which will also be recorded in CCTV camera. Upon completion of preliminary XRF analysis, SPMCIL will issue copies of XRF Assay Readings along with the weight slip to the nominated officer of the focal Customs Commissionerate. Based on the copy of the XRF Assay Readings along with the weight slip, issued by SPMCIL, the Deputy/Assistant Commissioner of the focal customs Commissionerate shall prepare a Preliminary Weight Note (PW Note) in the form given at Annexure- V in triplicate. The original copy, shall be sent to the respective field Commissionerate from where the gold was collected; the duplicate copy shall be forwarded to the DoL. Triplicate copy enclosing a copy of XRF Assay Readings along with the weight slip shall be retained by the focal Customs Commissionerate.

3.6. The gold collected from the Customs Commissionerates will be converted into standard gold bars (around 11-13 kg) at IG Mints. SPMCIL will communicate the quantity of gold converted into standard gold bars and the number of such standard gold bars to the nominated officer of the focal Customs Commissionerate through Out Turn Certificate. Based on such communication, the Deputy/Assistant Commissioner of the focal Customs Commissionerate shall prepare a Note on Final Weight (FW Note) in the form prescribed at Annexure-VI in duplicate. The original copy shall be sent to the Principal Commissioner, DoL. The duplicate copy along with the copy of the Out Turn Certificate shall be retained by the focal Customs Commissionerate.

3.7. The focal Customs Commissionerate shall maintain a register in the format prescribed in Annexure-VII for recording the receipt of HOGS Note, issuance of PW Note and FW Note.

3.8. It may be noted that: the SPMCIL will deliver the standard gold bars to the RBI at Issue Department, RBI, Fort, Mumbai preferably within one month of collection of seized/confiscated gold; the quantity of remnant gold, if any, after conversion into standard bars shall be kept by the SPMCIL and the same will be included in the next lot of gold collected and processed; the price of the fine gold to be purchased by RBI shall be determined based on the average LBMA rate of gold for the preceding 30 days from the date of receipt of gold by the RBI at Mumbai and the same shall be converted into INR (rounded off to the nearest INR) using the Financial Benchmarks India Private Limited (FBIL) USD: INR exchange rate of that day.

3.9. RBI shall, on its part, before making payment to CBIC, share the details of the final weight of the gold as mentioned in the delivery cum acknowledgement memo received from SPMCIL and price of the gold to the Principal Commissioner, DoL. The DoL shall acknowledge the receipt of delivery memo in the form given at Annexure-VIII.

3.10. The DoL shall maintain proper account of gold for which an appropriate physical/electronic ledger shall be devised. The ledger shall contain the details of HOGS Notes received from Customs Commissionerates, PW Notes and FW Notes received from focal Customs Commissionerates, Delivery Memo received from RBI and invoice received from SPMCIL. These details should clearly bring out the gold handed over by the Customs Commissionerates, the charges payable to SPMCIL, gold deposited with RBI, amount credited by RBI to CBIC, adjustment in weight required on account of melting and refining and balance quantity of gold carried over to the next cycle by SPMCIL. As mentioned supra, SPMCIL should complete the processes on the gold collected from the Customs Commissionerates within one month of such collection. The Principal Commissioner, DoL shall monitor this time limit. DoL shall also make the payment to SPMCIL upon receipt of the invoice from SPMCIL and delivery cum acknowledgement memo from RBI.

3.11. The Customs Commissionerates can treat the Seized/confiscated gold as disposed only when the following processes are completed, namely, -

i.   Receipt of PW Note from focal Customs Commissionerate; and

ii.   Necessary entries in their stock register (refer to Para 3.4.1 & Form 5 of Chapter 3 of Disposal Manual, 2019) are made accordingly.

4. These guidelines shall come into force from the date of issue. All the formations and officers concerned may be suitably sensitised about the above guidelines.

5. All the field formations shall also ensure that the seized/confiscated gold is disposed of, in the manner prescribed above, within three months of seizure.

6. Any difficulty that may arise during the course of implementation of these guidelines shall be brought to the notice of Board immediately for making suitable amendments.

7. This Instruction supersedes Board Ministry’s letter F. No. 711/164/93- Cus (AS) dated 08.08.2005 and Board’s Circular No. 57/2016-Customs dated 01.12.2016. Paragraph 11.2. of Chapter 11 of Disposal Manual,2019 stand modified to the extent described above.

Enclosure: Annexures I, II, III, IV, V, VI, VII & VIII

F. No. CBIC-50711/5/2021-INV-CUSTOMS