2010 (8) TMI 309 - HC - Central Excise

EOU DTA clearance - penalty and interest removal of non-duty paid goods as defective goods to the original suppliers - stay of the order Tribunal directed Revenue not to take any coercive measures and observed that the interim stay shall continue even after lapse of 180 days Held that - Tribunal stay order cannot be continued in absolute terms as there is a contentious issue as to whether the respondent returned the goods to the manufacturer or not - direct the respondent to furnish unconditional bank guarantee Appeal disposed of accordingly

Summary

Issues:
1. Alleged contravention of paragraph 8(3)(iii) under Notification No. 22/2003-C.E., dated 31-3-2003.
2. Appeal against the order of the adjudicating authority.
3. Stay application and interim order by the Customs, Excise & Service Tax Appellate Tribunal.
4. Challenge to the interlocutory order under Section 35(G) of the Central Excise Act.
5. Examination of the Notification No. 22/2003-C.E., dated 31-3-2003.
6. Decision on the continuation of the stay order by the Tribunal.
7. Direction to furnish unconditional bank guarantee.

Analysis:

1. The respondent, a manufacturer of drug formulations, was issued a show cause notice by the Commissioner of Customs and Central Excise for allegedly contravening paragraph 8(3)(iii) under Notification No. 22/2003-C.E. The allegation was related to the removal of non-duty paid goods as defective goods without following the necessary preconditions. The respondent contended that they cleared defective goods under AR 3A to the original suppliers, which was certified by Range Officials. The adjudicating authority confirmed the proposed show cause notice levy.

2. Aggrieved by the order, the respondent appealed before the Customs, Excise and Service Tax Appellate Tribunal. The Tribunal, in an application for stay, directed the Revenue not to take any coercive measures, with the interim stay to continue even after 180 days. This order was challenged under Section 35(G) of the Central Excise Act. The High Court suspended the interlocutory order of the Tribunal pending appeal.

3. After perusing Notification No. 22/2003-C.E., the High Court found that while not setting aside the Tribunal's order, the orders of stay granted by the Tribunal could not be continued in absolute terms due to the contentious issue of whether the respondent returned the goods to the manufacturer.

4. To balance the interests of the revenue and the assessee, the High Court directed the respondent to furnish an unconditional bank guarantee of one crore rupees within four weeks. This was subject to which the interim order passed by the Tribunal would continue.

5. The High Court disposed of the appeal and requested the Customs, Excise & Service Tax Appellate Tribunal to expedite the disposal of the appeal itself, preferably within three months from the date of receipt of the High Court's order.