Shivaraj V. Patil, J. - (1.)The appellant imported 100 kits of VTR with colour monitors in disassembled condition. These items were described in invoices and bills of entry as "sets of assembly, sub-assembly and other hardware items for assembly of complete VTR and colour monitors". The said goods were subjected to countervailing duty @ 8% ad valorem falling under tariff item No. 68. During the period 2-12-1981 to 26-2-1982, the appellant started assembling these goods into VTRs and colour monitors at their factory at Palghat and cleared the sets without payment of duty, without intimation and without observing the Central Excise formalities.
(2.)The Superintendent of Central Excise, Range-II, Palghat, while perusing advice notes of the factory observed that certain VTRs and colour monitors were manufactured and cleared by the appellant during the period June, 1982 to August, 1982 and issued letter dated 12-8-1982 asking the appellant to furnish details of the sets cleared and to explain why duty should not be demanded on such sets and why action should not be taken for contravention of Central Excise Rules. However, the appellant did not furnish the required information. Thereafter, the Superintendent issued a show cause notice dated 6-12-1982 asking the appellant why a duty of Rs. 5,58,000/- due on 56 sets of VTRS and colour monitors should not be demanded under Section 11-A of the Act and another show cause notice dated 2-4-1983 was issued for Rs. 1,78,500/- due on 17 sets of VTRs and colour monitors. The appellant in response gave replies by letters dated 31-1-1983 and 11-2-1984 respectively.
(3.)On 9-6-1983, the Central Excise Officers searched the factory of the appellant and on 14-6-1983 the Offices of the Directorate of Anti-Evasion searched the factory premises on 20, K.H. Road, Bangalore. 20 Nos. of VTRs were detained which were reported to have been brought there from the factory of the appellant at Palghat. The Manager was not able to produce any document to show that the Central Excise Duty had been paid in these sets. In subsequent investigations, it was found that the appellants had manufactured and cleared VTRs and colour monitors without disclosing details thereof to the Department and without observing the Central Excise formalities. Evidence to show actual price at which VTRs and colour monitors were sold to independent wholesale buyers was also collected during the course of investigation. One more notice was issued on 20-2-1986 by the Collector, Central Excise, in continuation of show cause notices dated 6-12-1982 and 2-4-1983 issued earlier giving the detailed facts asking the appellant why Central Excise duty of Rs. 9,43,884.38 on 100 VTRs and 100 colour monitors cleared without payment of duty should not be demanded. In reply dated 7-4-1986 given on behalf of the appellant, it was stated that two show cause notices were already issued and replies were furnished and request was made to dispose of the earlier show cause notices before deciding the last one. A further reply dated 14-7-1986 was furnished by the appellants.