2008 (8) TMI 64 - AT - Central Excise

Adjudication done by Commissioner in careless manner EOU - Department has alleged mis-declaration and under-invoicing of value of scrap imported without any basis or evidence - issue was not referred to Development Commissioner unit can be debonded only when LOP is cancelled by Development Commissioner - Commissioner s order cancelling private bonded warehousing license is not valid moreover licence cannot be cancelled when LOP is not expired

Issues Involved:
1. Waiver of pre-deposit of penalties and stay of order.
2. Allegations of under-invoicing and misdeclaration of imported metal scrap.
3. Confiscation of seized goods and denial of duty exemption.
4. Cancellation of private bonded warehouse license.
5. Imposition of penalties on the Appellant company and its officials.
6. Enforcement of bond conditions for provisionally released goods.
7. Adjudication process and compliance with procedural requirements.

Detailed Analysis:

1. Waiver of Pre-deposit of Penalties and Stay of Order:
The appellants sought to waive the pre-deposit of penalties imposed by the Respondent and to stay the operation of the impugned order pending the disposal of the appeals.

2. Allegations of Under-invoicing and Misdeclaration of Imported Metal Scrap:
The main appellant, ARPL, was accused of under-invoicing metal scrap imports to show positive Net Foreign Exchange (NFE) earnings. The Directorate of Revenue Intelligence (DRI) initiated inquiries and seized various consignments of metal scrap. The Commissioner upheld the allegations of under-invoicing and misdeclaration of the grade of scrap, denying the duty exemption under Notification 52/03-CUS.

3. Confiscation of Seized Goods and Denial of Duty Exemption:
The Commissioner ordered the confiscation of the seized goods under Section 111 (d), (m) & (o) of the Customs Act for misdeclaration and violation of post-importation conditions. A redemption fine of Rs. five crore was imposed in lieu of confiscation. The duty exemption under Notification 52/03-CUS was denied for the seized goods.

4. Cancellation of Private Bonded Warehouse License:
The Commissioner ordered the cancellation of the private bonded warehouse license issued to the appellant company. The appellants argued that it is not permissible to cancel the license when the Letter of Permission (LOP) is still valid.

5. Imposition of Penalties on the Appellant Company and Its Officials:
Penalties were imposed on the appellant company under Section 114A of the Customs Act. Additionally, penalties were imposed on Shri R.K. Maheshwari and Shri A.C. Sebastian under Section 112(a)/114A of the Customs Act and Rule 26 of the Central Excise Rules.

6. Enforcement of Bond Conditions for Provisionally Released Goods:
The Commissioner ordered the enforcement of bond conditions for 104.08 MT of goods seized at ICD, Tughlakabad, which had been provisionally released to ARPL.

7. Adjudication Process and Compliance with Procedural Requirements:
The Tribunal noted serious irregularities and defects in the adjudication process. The Commissioner delegated the quantification of duty demand to the Assistant Commissioner, which was found to be improper. The Tribunal emphasized that the Development Commissioner is responsible for monitoring the performance of a 100% EOU in meeting export obligations and achieving positive NFE. The Tribunal also noted that the evidence of under-invoicing relied upon by the Revenue was not properly substantiated.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter for de novo adjudication with specific directions. The Commissioner was directed to:
1. Decide the issue of misdeclaration of value and description of the metal scrap and the linked issue of confiscation and penalties.
2. Provide all relied-upon documents to the appellants and allow cross-examination of DRI officers if requested.
3. Send the adjudication order to the Development Commissioner for calculation of cumulative NFE and directions for debonding if allegations are upheld.
4. Complete the entire adjudication process within three months, considering the significant revenue involved.

Pronouncement:
The judgment was pronounced in the open court on 26-08-2008.

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