2004 (8) TMI 478 - AT - Customs

Show cause notice - Jurisdiction to issue - Adjudication - Confiscation - Excesses and shortages - PenaInterest - Demand

Summary

Issues involved:
1. Lack of jurisdiction of the show cause notice issuing authority and the adjudicating authority.
2. Validity of demand for duty on goods removed from a bonded warehouse.
3. Confiscation of unaccounted imported goods.
4. Imposition of penalties under different sections of the Central Excise Act and the Customs Act.
5. Demand of interest under specific sections of the Central Excise Act and the Customs Act.
6. Penalty imposed for non-maintenance of records under Rule 26 of the Central Excise Rules.

Issue 1: Lack of jurisdiction of the show cause notice issuing authority and the adjudicating authority.
The appellant contested the lack of jurisdiction of the Deputy Director of DGCEI and the Commissioner in issuing the show cause notice and adjudicating the case. The Tribunal found that the show cause notice was validly issued by the Deputy Director with the approval of the ADG DGCEI, who held a rank equivalent to a Commissioner of Customs and Central Excise. The notice alleged clandestine removal of imported goods and invoked Section 72 of the Customs Act. The Tribunal held that the DGCEI officers were competent to issue such notices as they were appointed as customs officers by the Central Government. The contention that the licensing authority under Section 58 of the Customs Act should adjudicate cases of unauthorised removal from bonded warehouses was deemed untenable.

Issue 2: Validity of demand for duty on goods removed from a bonded warehouse.
The Commissioner confirmed the demand for duty on polyester yarn and filament yarn removed from the bonded warehouse. The Tribunal upheld the demand, stating that the Commissioner correctly invoked Sections 28 and 72 of the Customs Act for goods removed unauthorisedly from the warehouse. It was noted that the appropriate officer designated by the Board could adjudicate such cases based on the value of goods and duty foregone, rejecting the argument that only the licensing authority under Section 58 should handle such cases.

Issue 3: Confiscation of unaccounted imported goods.
The Commissioner confiscated unaccounted imported goods found in the appellant's premises under Section 111 of the Customs Act. The Tribunal upheld the confiscation, emphasizing that the appellant failed to provide a plausible explanation for the presence of the goods. Despite the Commissioner's failure to mention the specific clause of Section 111, the Tribunal deemed the confiscation valid as the goods were liable for confiscation under Section 111(k).

Issue 4: Imposition of penalties under different sections of the Central Excise Act and the Customs Act.
The Tribunal addressed the imposition of penalties under various sections. It noted that penalty under Section 11AC of the Central Excise Act could not be imposed when duty was demanded under the Customs Act. The Tribunal set aside the penalties imposed under Section 11AC and interest under Section 11AB, stating that the Commissioner failed to correctly apply the provisions. Additionally, the Tribunal reduced the penalty imposed under Rule 26 of the Central Excise Rules to meet the ends of justice.

Issue 5: Demand of interest under specific sections of the Central Excise Act and the Customs Act.
The Tribunal found the demand for interest under Section 11AB of the Central Excise Act read with Section 28AB of the Customs Act vague and set it aside. It highlighted that in cases of clandestine removal of imported raw materials, the relevant provisions of the Customs Act should have been invoked instead of demanding interest under the Central Excise Act.

Issue 6: Penalty imposed for non-maintenance of records under Rule 26 of the Central Excise Rules.
The Tribunal acknowledged the penalty imposed for non-maintenance of records under Rule 26 of the Central Excise Rules. However, it reduced the penalty amount, stating that a lower penalty of Rs. 5,000 would suffice, considering the circumstances.