2010 (11) TMI 342 - AT - Central Excise

Waiver of pre-deposit - Exemption - Loss of customs duty and wrong availment of CENVAT credit - The impugned goods were imported at Chennai port by availing concessional rate of duty of 5% under Notification No. 17/2001-Cus., dated 1-3-2001 - The said concession was subject to the condition that the impugned goods, namely, melting scrap of iron and steel should be for use in or supply to a unit for the purpose of melting and further condition that the importer should furnish an undertaking to that effect and also subsequently the importer should produce an end-use certificate - The detailed investigation carried out and proved that the impugned goods after import from Chennai were diverted and sold and they never reached the manufacturing units - Prima facie,unable to see any cogent evidence to prove that the impugned goods have originated from place of import to reach at its destination in absence of chain of evidence, hence the importer violet the notification No.17/2001-Cus and violate of the provisions of the Customs Act, 1962 and also violators of provisions of Central Excise Act, 1944.- appellants has produce end-use certificates were obtained by the concerned melting units, the matter remanded to rule out unreliability . Prima facie, from the contentions of the appellants we are unable to find any balance of convenience tilting in their favour, who caused prejudice to themselves following dilatory tactics to avoid consequence of adjudication - it would be appropriate to send the matter back without keeping the matter pending with Tribunal. Hence, to protect interest of Revenue,direct the appellants to deposit 25% of the customs or excise duty demands - Subject to compliance with the direction, the requirement of pre-deposit of the balance amounts, including penalties shall stand waived and all the appeals shall stand remanded for fresh decision to the adjudicating - Fresh orders will pass after granting reasonable opportunity of hearing to the appellants.

Issues Involved:
1. Violation of principles of natural justice.
2. Wrong availment of credit without receiving goods.
3. Non-allowance of cross-examination and imposition of penalties on high sea sales.
4. Fraudulent use of customs duty exemption by diverting imported goods.
5. Delay in passing adjudication orders.
6. Requirement of pre-deposit for remand.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The appellants argued that they were not granted a fresh hearing date after requesting an adjournment, despite the adjudicating authority taking nine months to pass the order. This was claimed to be a violation of natural justice. The appellants contended that they could have argued that end-use certificates were valid and that demands under Section 28 of the Customs Act, 1962, were unsustainable. They offered to pre-deposit additional amounts but sought remand for fresh adjudication.

2. Wrong Availment of Credit Without Receiving Goods:
One appellant contended that the Central Excise duty demand was confirmed without listing the wrong availment of credit in the relevant statutory RG-23 register. The order was passed nine months after the hearing, contrary to a Bombay High Court decision stipulating a time limit for passing orders. However, it was noted that this decision pertained to the Tribunal, not adjudicating authorities under Customs and Excise statutes.

3. Non-Allowance of Cross-Examination and Imposition of Penalties on High Sea Sales:
Some appellants adopted the arguments of others and added that the adjudicating Commissioner did not allow cross-examination. Penalties were imposed on high sea sales, which were neither importers nor recipients of the impugned goods.

4. Fraudulent Use of Customs Duty Exemption by Diverting Imported Goods:
The department argued that the goods were imported at a concessional rate under Notification No. 17/2001-Cus., dated 1-3-2001, but were diverted and sold without reaching the manufacturing units. The end-use certificates were based on fabricated records. Investigations revealed that the goods did not reach the claimed destinations, and the importers fabricated records in connivance with the melting units. The adjudicating authority concluded that there were violations under both the Customs Act, 1962, and the Central Excise Act, 1944.

5. Delay in Passing Adjudication Orders:
The department justified the delay in passing the adjudication orders, stating that the appellants themselves were responsible for the delay. The adjudicating Commissioner granted hearings on multiple dates, but the appellants attempted to malign the Commissioner to delay the process.

6. Requirement of Pre-Deposit for Remand:
The Tribunal noted that the case involved fraudulent transactions leading to loss of customs duty and wrong availment of CENVAT credit. Even if the case required remand, there was justification for pre-deposit to secure government revenue. The Tribunal directed the appellants to deposit 25% of the customs or excise duty demands (less amounts already paid) within eight weeks. Subject to compliance, the requirement of pre-deposit of the balance amounts, including penalties, would be waived, and the appeals would be remanded for fresh adjudication.

Conclusion:
The Tribunal decided to remand the appeals for fresh adjudication, directing the appellants to make a partial pre-deposit to secure government revenue. The adjudicating Commissioner was instructed to pass fresh orders after granting a reasonable opportunity of hearing to the appellants. Non-compliance with the pre-deposit direction would result in dismissal of the appeals.

← Previous Next →