2006 (5) TMI 340 - AT - Customs

Summary

Issues:
1. Requirement of pre-deposit of duty amount and penalties.
2. Confiscation of capital goods and duty demand due to unfulfilled export obligation.
3. Challenge against transfer of company shares.
4. Failure of the Commissioner to file a report.
5. Consideration of goods in bonded warehouse and legal implications of transfer of shares on capital goods.

Analysis:
1. The appellants were required to pre-deposit a duty amount and penalties. The Revenue proceeded with confiscation of capital goods and duty demand due to unfulfilled export obligation. The challenge against these actions was raised by the appellant, leading to an interim stay order being granted after a preliminary hearing on 10-3-2006. The matter was adjourned to 5-4-2006 for the Commissioner to file a reply, which was not done. An order was passed questioning the confirmation of demand and calling for an explanation from the Commissioner.

2. The learned JDR confirmed the Commissioner had not sent a reply, and the stay application was requested to be allowed for out-of-turn hearing, pending the Commissioner's reply. The learned Counsel sought the stay application to be granted, allowing waiver of pre-deposit of the balance amount and penalties. The Revenue had already appropriated a certain amount, which would remain in deposit until the appeal's disposal.

3. The learned JDR contested the facts, arguing it was a case of the sale of the factory, not a transfer of shares as claimed. However, it was noted that the goods were still in a bonded warehouse, preventing the initiation of proceedings. The mere transfer of shares was deemed not to amount to the sale of capital goods, supported by various rulings cited. Due to the Commissioner's failure to file a report, the appellant's contentions were accepted, and the stay application was allowed unconditionally.

4. The judgment emphasized that when goods are in a bonded warehouse, proceedings cannot be initiated, as highlighted in a previous bench decision. The legal distinction between the transfer of shares and the sale of capital goods was crucial in this case, with the Commissioner's failure to file a report leading to the acceptance of the appellant's contentions. The waiver of pre-deposit and penalties was granted, with the appeal scheduled for hearing on 17th July 2006.