2017 (3) TMI 493 - HC - Customs

Scope of SCN - renewal of bond and bank guarantee - Debonding of unit - 100% EOU to EPCG scheme - Held that - The SCN is confined to the appellant s failure to renew the bond and bank guarantee and the consequential entitlement of the respondent to enforce the bond and bank guarantee. The SCN did not contain any allegation with respect to the eligibility or ineligibility of the appellant for the benefit of the aforesaid notifications or its liability to pay duty. Despite that in the impugned orders, the appellant s duty liability has also been determined by the authorities - in the adjudication, the authorities have gone beyond the scope of the SCN and therefore the orders cannot be sustained - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to order passed by CESTAT, Bangalore; Failure to renew bond and bank guarantee; Duty liability and eligibility for benefit of notifications; Scope of show cause notice.

Analysis:
The appellant challenged the order passed by CESTAT, Bangalore, which upheld the Commissioner of Police's order confirming the Assistant Commissioner of Central Excise and Customs, Ernakulam-II's decision. The appellant, engaged in the manufacture and export of frozen marine products as a 100% Export Oriented Unit, imported 5 refrigerated trucks under Notification No.13/1981 Cus. Upon debonding to the EPCG scheme, the appellant failed to renew the bond and bank guarantee, leading to a show cause notice (Annexure A6) from the Department. The appellant objected, resulting in orders (Annexures A8, A9, A10) confirming the enforcement of the bond and bank guarantee.

The High Court analyzed the orders and found that the authorities had exceeded the scope of the show cause notice by determining the appellant's duty liability and eligibility for notifications 13/1981 and 24/1997. Referring to the judgment in Reckitt & Colman of India Ltd. v. Collector of Central Excise (1997) 10 SCC 379, the Court emphasized that the foundation of the case should be the content of the show cause notice. Since the notice only pertained to the failure to renew the bond and bank guarantee, the authorities overstepped by delving into duty liability issues. Consequently, the Court held the orders unsustainable due to this overreach.

In light of the above, the Court set aside the impugned orders and issued directions for the appellant to furnish a fresh bond and bank guarantee similar to Annexure A3 within four weeks. The Department was given the liberty to issue a show cause notice if they believed the appellant owed duty on the refrigerated trucks, allowing for proper adjudication and enforcement of any liability in accordance with the law.