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of <h1>CESTAT New Delhi: Revenue appeal allowed, overturning diversion of goods order. Lack of evidence emphasized.</h1> The Appellate Tribunal CESTAT, New Delhi allowed the appeal by the Revenue, setting aside the order-in-appeal that had overturned the adjudication order. ... Demand - Pendency of investigation Issues:- Appeal against order-in-appeal setting aside adjudication order- Allegation of diversion of goods in domestic market- Basis of Department's action on FIR- Lack of evidence to prove diversion of goods- Completion of police investigation for justifying duty demandAnalysis:The appeal before the Appellate Tribunal CESTAT, New Delhi was filed by the Revenue against the order-in-appeal No. 8(GRM)CE/JPR-I/2007, dated 22-1-2007, passed by the Commissioner of Central Excise (Appeals-I), where the adjudication order was set aside. The case involved the export of 816 cartons of 100% Cotton Terry Towels under ARE-I, dated 23-10-2004. The issue arose when the customer, upon opening the container at the destination, found rock salt instead of the expected towels. A show cause notice was issued proposing duty recovery and penalty on grounds of diversion in the domestic market. The Original Authority confirmed the duty demand and imposed a penalty of Rs. 1,00,000/- along with interest. However, the Commissioner (Appeals) set aside the adjudication order.During the hearing, it was noted that the Department's action was based on the FIR. The advocate representing the respondent clarified that the investigation based on the FIR was still ongoing. The Commissioner (Appeals) highlighted the lack of evidence on record to substantiate that the goods were diverted to the domestic market. Moreover, the FIR itself did not explicitly indicate such diversion. The Tribunal observed that as the police investigation was incomplete, the duty demand alleging diversion was premature and not justified. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the Original Authority for a fresh decision post the completion of the police investigation. The Tribunal allowed the appeal by way of remand, emphasizing the importance of considering the completed police investigation before determining the duty demand related to the alleged diversion of goods in the domestic market.
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