2008 (7) TMI 106 - AT - Customs

Whether the appropriation of cash deposit made at the time of provisional release of the seized goods is correct in law or not - No SCN was issued to them within 6 months from the date of seizure as required u/s 124 - Once it is accepted that the director & company are two distinct legal entities, receipt of SCN and OIO by the director cannot fulfil the requirement of Section 124 revenue is directed to release the goods unconditionally & return the cash deposit made by the company

Summary

Issues:
1. Confiscation of MS Ingots due to parallel invoices and excess availment of cenvat credit.
2. Appropriation of cash security for non-production of goods released provisionally.
3. Rejection of appeal by Commissioner (Appeals) based on delay and lack of show cause notice.
4. Dispute over the requirement of show cause notice and jurisdiction of Assistant Commissioner.
5. Appropriation of cash deposit made at the time of provisional release.

Analysis:
1. The case involved the confiscation of MS Ingots due to the discovery of parallel invoices during a search, leading to excess availment of cenvat credit. The show cause notice was issued to the relevant parties, and subsequent investigations confirmed the excess quantity of goods. The Central Excise duty was paid, and penalties were imposed on the involved parties. The Commissioner (Appeals) rejected the appeal based on delay in filing and awareness of the order against them.

2. The appropriation of cash security for non-production of goods released provisionally was a key issue. The order-in-original (O.I.O.) confiscated the goods and adjusted the duty paid by one of the parties towards the duty liability. Penalties were imposed, and the cash security was utilized. The Commissioner (Appeals) highlighted the violation of natural justice in appropriating the cash security without a show cause notice, leading to the rejection of the appeal.

3. The rejection of the appeal by the Commissioner (Appeals) was based on the delay in filing the appeal beyond the prescribed time limit. The appellant argued lack of awareness due to non-receipt of the order and show cause notice. However, the Commissioner (Appeals) deemed the delay unjustified and rejected the appeal on both procedural and merit grounds.

4. Both the Revenue and the party involved filed appeals, with the Revenue contesting the appropriation of cash security and the party challenging the rejection of the appeal based on time bar. The jurisdictional issue regarding the Assistant Commissioner's authority to pass orders against the petitioner company was also raised, emphasizing the mandatory requirement of a show cause notice.

5. The main issue for decision was the correctness of appropriating the cash deposit made at the time of provisional release. The Tribunal ruled that the lack of a show cause notice within the specified period mandated the unconditional release of the goods and the refund of the cash deposit. The distinction between the director and the company as separate legal entities was crucial in determining the necessity of proper service and notice requirements. The decision emphasized the importance of following legal procedures and the consequences of non-compliance, ultimately leading to the disposal of both appeals in favor of refunding the cash deposit to the company.