Full Judgment
2. The facts of the case briefly stated are that the appellant is engaged in the manufacture of glass panels, glass funnels, glass shells etc. For manufacture of the above items they import certain raw material at concessional rate of duty in terms of Notification No.64/95-Cus. as amended by Notification No. 13/97-Cus., dated 1-3-97 for manufacture of glass shells for TV picture tubes.
3. During the course of scrutiny of records of the manufacturer it was noticed that the appellant had used some quantity of the above raw material in the manufacture of glass shells for computer monitor for which concession was claimed and availed. The assessee paid differential duty, CVD and interest on the inputs contained in glass shells for computer to the extent of 40% of the weight of the imported inputs other than cullet It was noticed that the appellant had not paid the differential duty on inputs in the manufacture of goods part of which contained in the cullet which was subsequently used for manufacture of glass shell for computer on the ground that cullet used in the said product had been bought out from the local market.
Investigations however revealed that the appellant had misdeclared that the cullets used in the glass shell were bought out from the local market. Private records showed that the cullets used in the manufacture of glass shell for computer monitor had not been bought out from the market but had actually been generated within factory out of the raw materials imported at concessional rate of duty during the course of manufacture of glass shells for TV picture tubes. A show cause notice was accordingly issued to the appellants asking them to explain as to why customs duty amounting to Rs. 15,17,942/-and CVD amounting to Rs. 63,647/- should not be recovered from them, why penalty should not be imposed and why interest should not be charged. In reply to the show cause notice the appellant submitted that glass shells for monitor of computer cannot be used for TV picture tubes. Cullets generated in the manufacture of glass shell for manufacture of TV picture tubes cannot be used in the manufacture of computer monitor for technical reasons.
It was also contended by the appellant that cullet used by them came from two sources - namely, those bought out from the market and those generated within factory. It was also submitted that cullet purchased from market cannot be used in the manufacture of glass shells for computer monitor. After careful consideration of the submissions made the learned Additional Commissioner confirmed a demand of duty of Rs. 15,81,589/-, imposed a penalty of Rs. 15,31,589/-, ordered recovery of interest and also imposed a penalty of Rs. 10,000/- on Shri O.P.Kanojia.
4. Arguing the case for the appellants Shri B.L. Narasimhan, learned Counsel for the appellant submits that the appellant had already paid duty and interest thereon and therefore, he was not pressing the point in so far as the demand for duty and charging interest is concerned.
Learned Counsel submits that the fact remains that cullets generated in the process of manufacture of picture tubes are of different quality of glass and cannot be used for manufacture of computer monitor. He submits that for manufacture of computer monitor the appellants used cullets bought out from the local market. He submits that looking to this aspect the penalty was very much on the higher side. He, therefore, prays that the imposition of penalty may be set aside.
5. Shri Hitesh Shah, learned DR appearing tor me respondent Commissioner submits that the fact remains that the appellant had been importing raw material at concessional rate of duty; that this concessional rate of duty was applicable only to such raw material which was used for manufacture of shells for colour picture tube. He submits that the claim of the applicant that the cullcts generated in the process of manufacture of colour picture tubes are different from those generated in the process of manufacture of computer monitors. He submits that the fact remains that the appellants were using cullets generated in the process of manufacture of glass shells for picture tubes and those generated in the process of manufacture of glass shells for computer monitor got mixed up, therefore, the demand of duty was rightly calculated and confirmed. He submits that having regard to the fact that cullets were generated in the process of manufacture of glass shells for picture tubes were used in the manufacture of glass shell for computer monitor. Therefore, the demand has rightly been confirmed.
He, therefore/ prays that the duty may be sustained and since the quantum of duty was substantial imposition of penalty may also be upheld.6. We have heard the submissions of both the sides. We note in the instant case that concessional rate of duty was available only on the raw material used in the manufacture of glass shells meant for colour picture tubes. In the instant case the fact remains that part of the cullets was used in the manufacture of glass shell for computer monitor. Since raw material for computer monitor was not exempted, therefore, duty on inputs that went into generation of cullet further used in the manufacture of computer monitor is sustainable in law. We hold accordingly. Interest also becomes chargeable and we sustain the charging of interest.
7. In so far as imposition of penalty is concerned, looking to the facts and circumstances of the case we find it on the higher side inasmuch as the raw material, which was being imported at concessional rate of duty, was mainly going for the manufacture of glass shells for colour picture tubes. Ac cordingly, we reduce penalty on M/s. Samcor Glass Ltd. to Rs. 1,50,000/- (Rupees One lac fifty thousand). Penalty imposed on Shri O.P. Kanojia is set aside. The appeals are disposed of in the above terms.