2004 (12) TMI 564 - AT - Customs

Summary

Issues Involved:
Application for Stay Order and Dispensing with Pre-deposit under Section 35F of the Central Excise Act; Confiscation of goods, imposition of redemption fine, and penalty under Sections 112 and 114A; Jurisdiction of adjudicating authority and Officer issuing Show Cause Notice.

Analysis:

1. Application for Stay Order and Pre-deposit:
The case involved an application for granting a Stay Order from implementing the impugned order passed by the Commissioner of Customs (Appeals), Ahmedabad, and dispensing with the pre-deposit order under Section 35F of the Central Excise Act. The Tribunal considered the request and the arguments presented by both sides before reaching a decision.

2. Confiscation, Redemption Fine, and Penalty:
M/s. Shabnam Synthetics, engaged in the manufacture of twisted yarn and grey man-made fabrics, faced allegations of clearance of imported yarn without duty-paying supporting documents. Show Cause Notices were issued, leading to confiscation of seized goods, imposition of a redemption fine of Rs. 2,50,000, and a penalty of Rs. 1,50,000 under Section 112 on the partner. The Commissioner (Appeals) upheld the confiscation and fine while setting aside the duty demand and penalty under Section 114A, prompting the appellants to file appeals.

3. Jurisdiction of Adjudicating Authority and Show Cause Notice:
The appellants relied on a decision by the Larger Bench regarding the scope of Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules. The Tribunal observed that when the demand of duty is dropped, penal provisions cannot be sustained, and confiscation of goods, being penal in nature, cannot be upheld. It was noted that the adjudicating authority and the Officer issuing the Show Cause Notice lacked jurisdiction. The Tribunal, following precedent, emphasized that a Show Cause Notice cannot be divided for the purpose of duty demand and confiscation proceedings, rendering the entire notice invalid if found to lack jurisdiction.

4. Decision and Precedent:
Considering the strong prima facie case presented by the appellant and following previous judgments, the Tribunal waived the redemption fine and pre-deposit of penalty, staying their recovery. The applications for Stay Order and dispensing with pre-deposit were allowed, with the decision pronounced in court on 14-12-2004.