Allegation based on Mere Suspicion “Violates Natural Justice and Manifestation Of Arbitrariness”: CESTAT quashes Notice [Read Order]

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed notice on the ground that allegation based on mere suspicion “violates natural justice and manifestation of arbitrariness”.

The appellant in the present matter is M/s Shree Rishabhdev Marble and Appellant Minerals Private Limited.

The Advocate appearing for the party brought to the notice that the issue arises from a letter by which Department sought to withdraw the permission granted to them dated 13.6.2019 for allowing job work in DTA. The letter clearly mentions that the permission sought to be withdrawn since “it has come to the notice that M/s Shree Rishabhdev Marble & Minerals Pvt. Ltd. is violating the norms of 100% EOU scheme by diverting the material to DTA”.

The Counsel for the appellant argued that the letter does not indicate the basis of forming opinion and evidence of violations as on that date or any detailed narrative about what violation had taken place and that the letter was actually treated as show cause notice by the Department for the purposes of present proceedings.

The Counsel further contended that after the letter which was in the nature of administrative diktat was treated as show cause notice by the respondent – Department, the Department also conducted searches later on the premises of job worker as well as the appellant and found certain discrepancies in the stock position, which is the subject matter of another show cause notice and different proceedings.

The Authorized Representative opposing the position stated by the Advocate, reiterated the findings of the lower authorities and also emphasized the certain violations related to the stock position had come to the notice of the Department and Commissioner (Appeals) and are part of his findings and Department was under compulsion to take prompt action.

The Tribunal of Somesh Arora, Member (Judicial) observed that “The letter cannot be treated as a proper show cause notice. No reason or evidence to support the allegation has been brought on record by the respondent – Department, in the aforesaid letter. While the same has been collated, as per the contention of the learned authorized representative subsequently after search, as allegedly certain discrepancies were found which indicated violations.”

The Tribunal noted that there is violation of natural justice and manifestation of arbitrariness.

To Read the full text of the Order CLICK HERE

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