2004 (3) TMI 666 - Commissioner - Central Excise

Issues Involved:
1. Whether the appellant was required to execute fresh B-17 Bonds against capital goods imported and raw materials obtained indigenously.
2. Whether the principles of natural justice were violated by the Assistant Commissioner of Central Excise (A.C.C. Ex.) Boisar-I Division.
3. The adequacy and validity of the sureties provided for the existing bonds.
4. The applicability and interpretation of various CBEC Circulars regarding bond execution by 100% EOUs.

Issue-wise Detailed Analysis:

1. Requirement to Execute Fresh B-17 Bonds:
The Assistant Commissioner of Central Excise (A.C.C. Ex.) Boisar-I Division directed the appellant to execute fresh B-17 Bonds of Rs. 2.50 crores for capital goods and Rs. 0.50 crores for Advance DTA Sales, despite the appellant having already executed such bonds for the same amounts, which were accepted by the A.C. The appellant argued that they had already provided adequate bond cover through double duty bonds at the time of import of capital goods and additional B-17 Bonds, as per the Circular No. 50/2000-Cus., dated 24-5-2000, which required only 25% of the duty amount as bond cover. The judgment concluded that the appellant had indeed complied with the bond requirements as per the applicable circulars, and there was no need for fresh bonds.

2. Violation of Natural Justice:
The A.C.C. Ex. Boisar-I Division passed the order dated 10-12-2003 without issuing a show cause notice (SCN) or providing an opportunity for a personal hearing to the appellant, which was a gross violation of natural justice. The judgment referenced decisions by the Hon'ble Calcutta High Court and the Hon'ble Supreme Court, emphasizing that any adverse action must be preceded by a fair hearing and opportunity to represent the case. Consequently, the order was set aside on this ground.

3. Adequacy and Validity of Sureties:
The A.C.C. Ex. questioned the validity of the sureties provided by the appellant, specifically the solvency certificates from Chartered Accountants. The appellant contended that the sureties were furnished as per the legal requirements and backed by professional certificates, which should not be arbitrarily questioned by the A.C. The judgment supported the appellant's position, stating that the sureties provided were in accordance with the Circular No. 76/99-Cus., dated 17-11-1999, and thus, the A.C.C. Ex.'s questioning of their adequacy was unjustified.

4. Applicability and Interpretation of CBEC Circulars:
The appellant argued that various CBEC Circulars (14/98-Cus., 42/98-Cus., 66/98-Cus., 76/99-Cus., and 50/2000-Cus.) were intended to mitigate the difficulties faced by EOUs and did not mandate the execution of fresh bonds in addition to already executed double duty bonds. The judgment clarified that as per the latest circulars, the bond amount should be 25% of the duty on the sanctioned requirement of capital goods and raw materials for three months, and the appellant had already complied with this requirement. Therefore, the demand for fresh bonds was erroneous and contrary to the legislative intent to alleviate hardships faced by EOUs.

Conclusion:
The judgment concluded that the order passed by the A.C.C. Ex. Boisar-I Division was legally improper and incorrect. The appellant had already executed the necessary bonds as per the applicable circulars, and there was no need for fresh bonds. The order was set aside, and the appeal was disposed of accordingly.

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