2014 (5) TMI 637 - AT - Customs

100% EOU - Encashment of Bank Guarantee and enforcement of B-17 bond - Held that - It is observed from the show cause notice dt.22.01.2013 and OIO dt.31.04.2013 passed by the adjudicating authority, that no duty demand has been quantified by the lower authorities. As the issue lies in a narrow compass, therefore, after allowing the stay application, appeal itself is taken up for disposal. It is further observed from the Annual Performance Report of the appellant for the year 2003-2004; sent to the office of the Development Commissioner, Gandhidham; that investments made towards the capital goods etc. is available. However, the defense submission and personal hearings recorded in the OIO by the adjudicating authority indicated that all the records available in the present appeals were not produced before the lower authorities. This matter is, therefore, required to be remanded to the adjudicating authority. It is directed that appellant should produce all the records available with him to the adjudicating authority who shall quantify the duty liability of the appellant based on the records available, before enforcing the B-17 bonds and encashing Bank Guarantee, by giving an opportunity of personal hearing to the appellant and following the principles of natural justice - Decided in favour of assessee.

Summary

Issues involved:
Enforcement of Bank Guarantee and B-17 bond for recoveries due to non-compliance with license conditions.

Analysis:
The appellant filed an appeal seeking a stay on the operation of the order passed by the Commissioner (Appeals) upholding the decision to enforce the Bank Guarantee and B-17 bond. The appellant had taken over a 100% EOU and was required to start production within a specified period. However, the appellant failed to submit necessary records for verification despite reminders from the Department. The appellant also did not commence commercial production and later requested to shift the unit to a new location, where it was found that the premises had been demolished for a shopping mall. Due to non-compliance with license conditions, a show cause notice was issued, leading to the decision to encash the Bank Guarantee and enforce the B-17 bond.

The appellant's representatives argued that the duty amount to be recovered was not quantified by the Revenue, questioning the justification for invoking the Bank Guarantee and enforcing the bond. They presented a Settlement Certificate indicating a one-time settlement amount received by the previous entity. The Revenue, represented by Shri Manoj Kutty, defended the actions of the lower authorities.

After considering the arguments and reviewing the case records, the Tribunal noted that the duty demand had not been quantified by the lower authorities. Given the limited scope of the issue, the Tribunal decided to dispose of the appeal while allowing a stay on the operation of the order. It was observed that certain records crucial to the case were not produced before the lower authorities. Consequently, the matter was remanded to the adjudicating authority with directions for the appellant to provide all available records for quantifying the duty liability before enforcing the B-17 bonds and encashing the Bank Guarantee. The adjudicating authority was instructed to afford the appellant a personal hearing and adhere to the principles of natural justice.

In conclusion, the Tribunal set aside the order of the first appellate authority and allowed the appellant's appeal by remanding the case to the adjudicating authority for further proceedings based on the quantification of duty liability and proper consideration of all relevant records.

Judgement:
The order of the first appellate authority was set aside, and the appeal was allowed by remanding the case to the adjudicating authority for quantifying the duty liability and ensuring procedural fairness in enforcing the Bank Guarantee and B-17 bond.