2018 (11) TMI 728 - AT - Central Excise

Tribunal dismisses appeal on duty demand & seizure of goods in EOU unit, stresses need for detailed legal analysis.

The Tribunal dismissed the revenue's appeal against the Commissioner's order dropping the duty demand and vacating the seizure of goods related to ... Principles of Natural justice - case of Revenue is that the learned Commissioner has erred in assessing the circumstances of the case and dropped the proceeding without assigning proper legal reasoning - Held that:- We are at loss to understand which circumstances have been erroneously assessed by the Commissioner while dropping the demand. The review committee having two Chief Commissioner could have done a better job if they could have at least pointed out a single circumstance which has been wrongly assessed by the Commissioner in his order dropping the demand. The manner in which this appeal has been filed appears to be very mechanical without application of mind to the case - appeal dismissed - decided against Revenue. Issues:Appeal against order dropping demand of duty and vacating seizure - Manufacturing activities in EOU unit post-exit from EOU scheme - Alleged contravention of Custom Act - Seizure of goods - Clearance of goods to DTA unit without permission - Show cause notice for confiscation and duty demand - Adjudication by Commissioner - Challenge to Commissioner's order - Grounds for appeal - Assessment of circumstances - Legal reasoning for dropping proceedings.Analysis:The appeal was filed by the department against the order of the Commissioner Central Excise Aurangabad, dropping the demand of duty and vacating the seizure of goods seized in respect of manufacturing activities in an Export Oriented Unit (EOU) post-exit from the EOU scheme. The respondents were manufacturers of Electrical Motors and had another unit in the adjacent premises engaged in manufacturing activities. The department initiated investigations against the respondents for alleged contravention of various provisions of the Custom Act, 1962, as manufacturing activities were observed post-exit from the EOU scheme without proper documentation. The goods being manufactured in the EOU unit premises were alleged to belong to the adjacent Domestic Tariff Area (DTA) unit, utilizing infrastructure without proper records.The department issued a show cause notice proposing confiscation of seized goods and demanding duty on electric motors cleared by EOU to DTA unit without permission. The matter was adjudicated by the Commissioner, who considered the date of debonding, issuance of no due certificate, and procedural violations. The Commissioner dropped all demands and vacated the seizure, imposing penalties on the EOU and DTA units. The department challenged the Commissioner's order, arguing that procedural violations had occurred without the debonding order from the Development Commissioner.During the appeal hearing, the revenue reiterated the grounds taken in the appeal, while the respondents' advocate presented their case. The Tribunal noted that the appeal lacked substantial grounds challenging the Commissioner's order and criticized the mechanical filing without proper legal reasoning. As no significant grounds were presented challenging the Commissioner's assessment of circumstances, the appeal was dismissed as unsubstantiated. The Tribunal emphasized the lack of specific circumstances pointed out in the appeal memo or review order, indicating a lack of detailed legal analysis in the appeal process.In conclusion, the Tribunal dismissed the appeal filed by the revenue, highlighting the importance of presenting substantial grounds and legal reasoning while challenging a Commissioner's order. The judgment underscored the need for a thorough legal analysis and specific challenges to the assessment of circumstances in such cases to substantiate an appeal effectively.