ORDER
S.L. Peeran, Member (J)
1. Both these appeals arise from common Order-in-Original No. 24/93, dated 11-1-94 passed by Collector of Central Excise (Judicial) confirming duty demand of Rs. 9,76,622/- being the differential duty towards 55.315 MTs. of Zinc/tin coated sheets/coils and uncoated coils under Section 28 of the Customs Act, 1962. Besides, there is order of confiscation of the said goods which are valued at Rs. 7,62,551/- under Sections 111(d), (f), (l) and (m) of the Customs Act, however, granting redemption on payment of fine of Rs. 1 lakh. Further ordered for confiscation of 155.685 MTs. of Bushling scrap imported under Bill of Entry No. 5281, dated 15-2-93 under Section 119 of the Customs Act. However, they were directed to redeem the same on payment of a fine of Rs. 40,000/-. The Bank guarantee furnished by the appellants for Rs. 1,85,745/- has been adjusted towards the redemption fine. A penalty of Rs. 1 lakh has been imposed on the appellant factory and Rs. 25,000/- on Shri Puneet Bhatia under Section 112(a) of the Customs Act, 1962. The Company and the Director are in appeal against the impugned order.
2. The short facts of the case are that the appellants had imported 211 MTs. of Bushling steel scrap and cleared the same by filing the benefit of Notification No. 142/90 and executed End use bond and an undertaking to pay the differential duty if the goods are not utilised in terms of the Notification. This bond and undertaking had been executed in favour of the Commissioner of Customs, Madras. The Bill of Entry had been assessed by the Proper officer under the Customs Act. However, after the goods reached the factory of the appellants, the officers of the Central Excise visited the factory and seized these goods under reasonable belief that the goods are not the same as declared in the Bill of Entry and as claimed under the Notification and in terms of the bonds executed to the Commissioner of Customs. Thereafter, proceedings were initiated and the appellants were called upon to explain by the Collector of Central Excise (Judicial), Madras as to why the differential duty should not be demanded in terms of the grounds made out in the show cause notice. The appellants had taken various pleas regarding the nature of the goods. They had specifically contended that the goods satisfied the declaration filed by them and in terms of the Notification and hence they were not liable for seizure or for levy of short duty as alleged in the show cause notice. The appellants have also asked for mutilation claim of the goods to an extent of 55.31 MTs. of Zinc/tin coated sheets/coils and uncoated coils for the purpose of end use, i.e. for the purpose of melting. Various evidences were also placed by the appellants to contend that there is no violation of any provisions of law. However, the Collector in his order did not agree with the appellants and held that material to the extent of 55.315 MTs. cannot be considered as Bushling scraps and that they are required to pay duty as short levy. The plea for mutilation was also rejected and the Collector proceeded to impose penalties and fine as indicated above.
3. The matter was argued on behalf of the appellants by Shri M.S. Kumaraswamy, Consultant at great length. He took up a preliminary objection that the Collector of Central Excise (Judicial) had no territorial jurisdiction or jurisdiction under the Customs Act to proceed with the issue of show cause notice and adjudicate the matter. It is his contention that the Proper officer to initiate the proceedings was the Commissioner of Customs to whom an undertaking had been executed, he submitted that the Bill of Entry was cleared only after examination of the Proper Officer under the Customs Act under Section 47 of the Customs Act. He pleaded that the matter was to be decided on the aspect of jurisdiction and that this aspect can be raised even at the Appellate stage as per law. It was his contention that this being a legal plea can be raised even for the first time at the Appellate forum. This plea was recorded when he made the argument on 3-9-99 and ld. DR was asked to get the report on this matter. Further arguments were heard on 29-9-99 and again the matter was adjourned to 11-10-99. By Note Order the ld. DR was called upon to get a specific report from the Collector of Central Excise (Judicial) to explain as to how the Collector has got jurisdiction to initiate proceedings when the Bill of Entry had been cleared by the Collector of Customs under a bond and it was the Collector of Customs who was required to have initiated the proceedings under Section 28 of the Act and in terms of the bond and undertaking executed by the appellants. The matter was again adjourned to 2-11-99. Ld. DR had taken time for filing a memo on 2-11-99 and requested for taking up the matter on today.
4. Ld. Consultant again reiterated his preliminary objection with regard to the jurisdiction.
5. Ld. DR Ms. Aruna Gupta submits that she had addressed a letter to Commissioner of Central Excise, Chennai on 12-10-99 seeking a report on this aspect of the matter. The said letter addressed by her had been duly acknowledged by Tax Assistant Shri D. Sridhar of Judicial Cell, Chennai-II. As there was no response, another reminder was sent on 4-11-99 by Shri S. Kannan, ld. JDR calling upon the Commissioner to immediately sent the report by fax and had noted it as “Most Urgent”. Ld. DR points out that the Commissioner has not responded to both the letters and prays for some extension of time so that she can persuade the Commissioner to file the report in the matter.
6. We have considered the request of ld. DR for adjournment of the matter. We notice that the matter has been heard partly from 3-9-99 and we have already given 3 adjournments in the matter. Ld. DR has done her best in addressing letters to the Commissioner to respond urgently as the matter has been part-heard. As the Commissioner of Central Excise has not responded, we are of the considered opinion that the Commissioner has nothing to say on this aspect and that the Tribunal can draw an adverse inference in the matter. In view of this position, we have to accept the plea of ld. Consultant that the Collector of Central Excise (Judicial) had no jurisdiction to raid the premises and to seize the goods as well as to issue show cause notice and adjudicate in the matter and to order for confiscation, imposition of short levy, imposition of fine and to impose penalties, etc. The reason being that the appellants had executed a bond to the Commissioner of Customs after the goods were assessed in the Bill of Entry, the proper officer had examined the goods and after examination had ordered for clearance on execution of the bond. The Proper course was that the proper officer was to have proceeded with the investigation on the matter and by issuing show cause notice under Section 28 of the Customs Act on allegation of misdeclaration, etc. But the proceedings had been taken over instead by the Collector of Central Excise without reference of the matter to the Collector of Customs to whom the appellants had executed the bond. The Collector of Central Excise (Judicial) who was issued the show cause notice ought to have explained to the Tribunal on being called upon that a special order has been issued by the Board to the Central Excise authority to issue show cause notice under Section 28 empowering the Collector of Central Excise to initiate the proceedings under the Customs Act. But the Commissioner even after specifically called upon to file the report on the jurisdiction issue has failed to report and therefore we are constrained to draw adverse influence to hold that the Collector of Central Excise (Judicial) had no jurisdiction to initiate the proceedings under Section 28 of the Act and to proceed and adjudicate the same in the manner indicated above. Therefore, the appellants’ appeals succeed on this short point. Hence, we set aside the impugned order by allowing the appeals.