2008 (1) TMI 807 - AT - Central Excise

Summary

Issues:
Applicability of establishment charges to 100% EOU, Correlation between inputs and outputs affecting the need for departmental officers, Liability for establishment charges when officers not posted, Nature of the amount demanded, Coercive action for recovery.

Analysis:
The judgment addresses the issue of establishment charges imposed on a 100% EOU. The advocate argued that due to a direct correlation between inputs and outputs, the services of departmental officers were no longer required. The Commissioner had previously dispensed with officer postings. However, the department later demanded establishment charges for three officers, leading to a significant financial burden on the appellants.

Upon careful consideration, the Tribunal found it unjust to demand establishment charges when officers were not posted at the unit. Moreover, the amount demanded was not related to customs or excise duty. The Tribunal acknowledged the appellants' strong case on merit and ordered a complete waiver of the amount until the case's final disposal. Additionally, no coercive action for recovery was permitted until the appeal's decision by the Tribunal, ensuring relief for the appellants during the legal proceedings.

This judgment highlights the importance of considering the specific circumstances of a case, such as the direct correlation between inputs and outputs in the context of 100% EOU operations, in determining the applicability of establishment charges. The decision to waive the demanded amount and refrain from coercive recovery actions demonstrates the Tribunal's commitment to ensuring fairness and justice in resolving disputes related to financial obligations imposed on entities like EOUs.