2014 (8) TMI 613 - HC - Customs

100% EOU - violation of the provisions of the Customs Act and the Central Excise Act - Import of plant and machinery, capital goods and raw materials without payment of customs duty - tribunal ordered pre-deposit of the entire customs and excise duty along with interest - Held that - the Commissioner has given three dates for hearing and the appellants failed to appear. They could have appeared and sought for adjournment. Having not availed the opportunity, the appellants cannot now plead violation of principles of natural justice based on a letter, which never reached the authority in time. Therefore, we reject the plea of violation of principles of natural justice. The present proceedings before the Board for Industrial and Financial Reconstruction dated 8.1.13 is a recent order, which has no relevance for the purpose of adjudication before the Tribunal. Even otherwise, this order has not been produced before the Tribunal to counter the earlier BIFR proceedings dated 21.10.11. Therefore, we are not inclined to accept the present contention raised by the appellants. When the order of the Board for Industrial and Financial Reconstruction dated 21.10.11 provides for recovery of statutory dues, which applies to the present case, we find no reason to hold that Tribunal's order is bad. The third contention relates to confiscation of goods, and it is pleaded that since the goods have been confiscated, the Revenue is safeguarded. However, we find from the records of the original authority that the goods have been removed in violation of the undertaking given and the conditions imposed in the various notifications. Therefore, in such a scenario, the appellants cannot be allowed to say that the interest of the Revenue is safeguarded. - Decided against assessee.

Summary

Issues Involved:
1. Violation of post-import conditions.
2. Violation of principles of natural justice.
3. Impact of Board for Industrial and Financial Reconstruction (BIFR) proceedings.
4. Confiscation of goods and safeguarding of Revenue interests.
5. Order of pre-deposit by the Tribunal.

Detailed Analysis:

1. Violation of Post-Import Conditions:
The appellant, a 100% export-oriented company under the EHTP scheme, imported plant and machinery, capital goods, and raw materials without paying customs duty and procured indigenous goods without paying Central Excise duty. The department's case was that the appellant did not commence manufacturing and disposed of some capital goods and raw materials, violating the Customs Act and Central Excise Act. Upon inspection, the department found the factory locked, with no activity and disconnected power. Unauthorised removal of duty-free purchased generator sets was also noted. Consequently, a show cause notice was issued, demanding customs and excise duties, penalties, confiscation of goods, and interest on the duty demanded.

2. Violation of Principles of Natural Justice:
The appellant contended that the Commissioner's order was ex-parte, claiming they requested more time to verify documents and were not provided with relevant documents. However, the court found that the show cause notice was issued with four sets of documents, and the appellant's initial response did not mention non-receipt of documents. The plea raised later was deemed an afterthought, and there was no proof that the letter requesting more time reached the Commissioner in time. The court concluded that the appellant had been given adequate opportunity but failed to avail it, rejecting the plea of violation of principles of natural justice.

3. Impact of BIFR Proceedings:
The appellant argued that proceedings should have been stayed due to the company's status as a sick industry under BIFR, with assets taken over by the Official Receiver. The court noted that the BIFR order dated 21.12.11 allowed secured creditors and government departments to recover dues, and the Tribunal's order did not conflict with this. The court found no merit in the appellant's argument, as the recent BIFR order dated 8.1.13 was not presented to the Tribunal and did not counter the earlier BIFR proceedings.

4. Confiscation of Goods and Safeguarding of Revenue Interests:
The appellant claimed that since the goods were confiscated, the Revenue was safeguarded, negating the need for pre-deposit. However, the court found that the goods were removed in violation of the undertaking and conditions imposed by various notifications. Therefore, the appellant's argument that the Revenue's interest was safeguarded was rejected.

5. Order of Pre-Deposit by the Tribunal:
The Tribunal ordered the pre-deposit of the entire customs and excise duty along with interest, while waiving the penalty imposed on the Chairman & Managing Director and the Director. The court upheld the Tribunal's order, finding no grounds for interference. The Tribunal's decision to waive the penalty amount was considered reasonable, allowing the Directors to pursue their appeals.

Conclusion:
The court dismissed the appeals, affirming the Tribunal's order of pre-deposit and rejecting the appellant's contentions regarding natural justice, BIFR proceedings, and safeguarding of Revenue interests. The connected miscellaneous petitions were also dismissed, with no order as to costs. The waiver of the penalty amount by the Tribunal was upheld, allowing the Directors to continue their appeals.