2005 (10) TMI 103 - HC - Customs

Summary

Issues Involved:
Challenge to detention and seizure orders regarding machineries based on alleged violation of Cenvat Credit Rules, 2004.

Analysis:

1. Detention and Seizure Orders:
The petition challenged the detention and seizure orders made by respondent No. 3 regarding machineries purchased from respondent No. 4. The petitioners argued that they acquired the machineries as scrap from respondent No. 4 and were not at fault for the detention and seizure. Respondent No. 3 relied on the violation of Cenvat Credit Rules, 2004, to justify the confiscation and seizure of the goods. However, it was acknowledged during the proceedings that the violation was committed by respondent No. 4, not the petitioners.

2. Application of Rules:
The court noted that the respondent authorities failed to establish that the petitioners had availed of any Cenvat credit wrongly or contravened any provision of the rules. It was explicitly stated that the violation of rules was attributed to respondent No. 4, and the demand for evaded credit of Central Excise duty was directed solely at respondent No. 4. Therefore, the provisions of Rule 15 of the Cenvat Credit Rules and powers under Section 110 of the Customs Act could not be applied against the petitioners based on the actions of respondent No. 4.

3. Legal Action and Conclusion:
The court found that the actions of the respondent authorities lacked factual support and were not in accordance with the law. The detention and seizure orders were deemed unlawful as they were not based on the petitioners' actions but on the violations by respondent No. 4. Consequently, the court quashed and set aside the orders dated 2nd June, 2005, and 5th August, 2005, passed by respondent No. 3. The petition was allowed, and costs were awarded to the petitioners.

In summary, the judgment ruled in favor of the petitioners, highlighting that they could not be held accountable for the violations committed by respondent No. 4. The court emphasized the lack of evidence linking the petitioners to any wrongdoing and concluded that the detention and seizure of machineries were unjust and not supported by law.