INDO JAPAN WATCH COMPLEX LTD Vs. COLLECTOR OF CUSTOMS AND CENTRAL EXCISE

JUDGEMENT

(1.) BOTH these Stay Petitions involve a common issue and are accordingly, disposed of by this common order.

(2.) Shri D.L. Basu Roy, the Ld. Consultant appearing for the petitioners stated that in the matter covered by the Stay Petition No. 304/89 [C-(SB)-503/89] the petitioners had imported certain watch case components covered by Invoice of the Manufacturers dated 24-5-1986 (placed at p-4). The first two items of the invoice were covered by standard rate of duty as per tariff. The remaining four items of the invoice were eligible for concessional rate of duty, subject to the execution of a bond for the production of end-used certificate. The last item namely 'O' Ring the invoice value of which was 1013.00 US Dollars was the subject matter of adjudication proceedings which led to its confiscation. The applicants did not avail of the option to clear the same by payment of fine in lieu of confiscation. The Item Nos. - 3, 4 and 5 were cleared at the concessional rate of duty on the strength of a bond which was executed by them for a total of Rs. 94,000.00, representing differential duty for all these items including the 'O' Ring which item had not been cleared by them at all. The item SI. Nos. 3 and 4 of the invoice were fully utilised by them in the manufacture of watches and they produced suitable end-use certificate. However, as regards Serial No. 5 of the invoice covering 32,540 pcs. 'I' Ring (Gasket) which corresponds to a value of Rs. 2603.20, they found after clearance from Customs that they were not suitable for the manufacture of watches. They took up the matter with the suppliers and the suppliers in turn agreed to take back the defective and unsuitable goods and supplied replacement. Such a replacement consignment was imported subsequently, which was cleared on payment of duty amount. As far as the defective items were concerned they were re-exported to the manufacturer. The appraisers had made the following remarks in the invoice.

(3.) REPLYING to the arguments of the Ld. Counsel, Shri P.C. Jain, the Ld. J.D.R. stated that the objection taken by the Consultant about the non-issue of notice as required under Section 28 of the Customs Act is not tenable as the petitioners had executed a bond to pay the differential duty in respect of the goods not used in the manufacture of watches. The grounds for demanding the differential duty had been made clear in the letters addressed to them by the Assistant Collector and their reply also was taken into account. The confirmation of demand does not suffer from any procedural irregularity. He then proceeded to argue that the demand had been confirmed in terms of the bond in respect of the goods for which the end-used certificate had not been produced. He, however, conceded that the amount confirmed in the demand is for a higher sum than what would be recoverable in respect of the goods which were not utilised by them in the required manner. He indicated that the amount is worked out to about Rs. 25,000.00. He stated that this amount would be recoverable from the applicants irrespective of whether the goods in question had been re-exported or otherwise disposed of so long as they were not put to use in the manufacture of watches. He also expressed the view on a question from the Bench that even if the defective parts had been re-exported under a Drawback Shipping Bill, the differential duty would still be payable thereon. What they would have got as drawback would be only with reference to the duty paid by them, and the demand would be in terms of the bond executed by them. Shri P.C. Jain, the Ld. J.D.R. wound up his argument with the observation that the appeal proper would lie within the competence of the Special Bench as it involves the recovery of the differential duty as between the normal rate and the concessional rate in terms of the Exemption Notification availed of by them by executing an end-used bond.