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Issues:
- Confiscation of diamonds and imposition of penalties based on violation of conditions stipulated under Notifications. - Challenge against penalties imposed on the Director and Employees of the company. - Dispute regarding the confirmation of demand of duty, penalties, and absolute confiscation of diamonds. - Allegations of manufacturing cut and polished diamonds without evidence. Confiscation of Diamonds and Penalties: The appeals arose from an order-in-appeal that upheld the order-in-original confiscating diamonds and imposing penalties. The appellant company, licensed to set up an industrial unit in SEEPZ, was found with seized diamonds released to an employee, later discovered with the Director. The adjudicating authority confirmed confiscation, demand of excise duty, and penalties under the Customs Act and Central Excise Act. The Commissioner (Appeals) affirmed these decisions, leading to the appeals challenging penalties and confiscation. Challenge Against Penalties: The appellants contested the penalties imposed, claiming they were not manufacturers of cut and polished diamonds but of jewelry studded with diamonds. They argued that the confirmation of duty demand was based on a misconception of importing rough diamonds for manufacturing, lacking evidence. The appellants sought to set aside the confiscation and penalties, asserting the entire case hinged on incorrect grounds. Dispute Over Demand of Duty and Confiscation: The Ministry of Commerce granted the appellant permission to manufacture jewelry, not cut and polished diamonds. The show cause notice alleged the import of rough diamonds for unauthorized manufacturing, leading to confiscation and penalties. However, the Commissioner (Appeals) found discrepancies in the allegations, noting the absence of evidence supporting rough diamond importation or manufacturing facilities. The order to confirm duty demand and penalties was deemed unsustainable, being based on misconceptions. Manufacturing Allegations Without Evidence: The absence of evidence regarding rough diamond imports or manufacturing facilities raised doubts about the allegations against the appellant. The appellant's licensing for jewelry manufacturing contradicted claims of cut and polished diamond production. The lack of mismatch between physical and book stock of diamonds imported for jewelry indicated no cut and polished diamond manufacturing. The order confirming duty demand and penalties was set aside due to misconceived charges. Conclusion: The Tribunal set aside the impugned order, allowing the appeals against penalties and confiscation. The absolute confiscation of diamonds was found unjustified, as the evidence did not support manufacturing claims. The penalties imposed on the appellants were also set aside. The decision left the matter of returning the diamonds to the rightful owner to the authority for proper resolution according to the governing law.
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