Decided on July 08,1991

Avtar Singh And Co. P. Ltd. Appellant


P.K. Desai, Member (J) - (1.) THIS appeal is directed against the order in original bearing No. 19 of 1989, dated 2 -2 -1989 passed by the Addl. Collector of Central Excise, Bombay -I confirming the demand of duty of Rs. 23,533.13 in respect of 163 video cassettes vide Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944 and also imposing personal penalty of Rs. 5,000/ - on the present appellants.
(2.) ON the information received, the business premises of the appellants were searched on 23 -6 -1984, when 163 Video Cassettes of Tamil Film 'Darling Darling Darling' were found. The appellants stated that they had purchased the video rights from M/s. Vigranth Creations, Madras and had recorded the cassettes without payment of central excise duty. They, however, claimed exemption under Notification No. 102/82, dated 28 -2 -1982 pleading that the cassettes were not intended for sale or for promotion of sale but were meant to be rented out to Cassette Libraries. A show cause notice dated 17 -12 -1985 was issued and in reply to that also, the appellants reiterated the same plea. The authorities found from the copy of the agreement entered into between M/s. Vigranth Creations and the appellants that the video cassettes were only intended for sale. The authorities below, therefore, interpreting the proviso II to the said notification, held that the appellants were not eligible to get exemption and passed the impugned order.
(3.) SHRI Hariram Gorwani, the authorised representative of the appellants, submitted that the video cassettes were not intended for sale or for promotion of sale and therefore they were squarely falling within the ambit of proviso II to the Notification No. 102/82 and were therefore eligible for exemption. Shri Naik, the Id. JDR for the Department submitted that these video cassettes were put into circulation in the form of commercial transactions and therefore they were not eligible for exemption under the said notification. He also referred to decision of the Special Bench in the case of Prabhat Associates and Ors. reported in 1985 (22) E.L.T. 465 (Tri.) and invited my attention to paras 22, 23 and 24 and pleaded that in that particular case Audio cassettes were being supplied by the Customers, which were being recorded by the appellants there and were being returned. He submitted that here is the case where the appellants have outright purchased the video rights of a particular film and have recorded the cassettes without payment of duty on their own and then by way of commercial transactions have been giving the Video cassettes to the Cassette Libraries, to run their own business. In his submission, the entire transaction is a commercial one, which is intended by proviso 2 to the Notification to be excluded from the benefit of exemption available thereunder. He, therefore, submitted that the appeal of the appellants should be rejected.;

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