- (1.) THE petitioners carry on business of import of "Vatted Malt and Grain Spirit Compound", hereinafter referred to as the said goods, which is sold to different distilleries for manufacture of whisky.
(2.) PRIOR to 1st January, 1996, the said goods admittedly fell under Tariff Heading 2208.10 and were finally assessed to duty as "Compound Alcoholic preparations of a kind used for the manufacture of beverages", under Tariff Heading 2208 of the first schedule to the Customs Tariff Act, 1975. Goods which fell under Tariff Heading 2208 were freely importable and no licence was required for importation of the same. After the amendment of the Customs Tariff Act, 1975 with effect from 1st January, 1996, alcoholic preparations (other than those based on Odoriferous substance), used in the manufacture of beverages, with an alcoholic strength exceeding 0.5% was transferred from Heading 22.08 to Heading 21.06. Between March, 1997 and October, 2000, consignments of the said goods imported by the petitioners, covered by 54 bills of entry, were provisionally assessed under Heading 21.06 as per the order of the Commissioner of Customs (Port) in File No.S202 Gr.I(P) 29/97A dated 27th March, 1997.
(3.) HOWEVER, after provisional assessment, the Department contended that the goods imported by the petitioners should be classified under residuary item 2208.90 and since the petitioners did not have the licence required for import of goods falling under the aforesaid tariff item, the said goods became liable to confiscation. Even before finalization of assessment, a demand-cum-show cause notice dated 4th July, 2001 was issued to the petitioners under section 28 of the Customs Act, 1962, inter alia demanding Rs.4,15,03,279/- along with penalty and interest.;