Judgment:
1. Jayakrishna Aluminium Ltd., appellant in appeal C/953/97 applied for and was granted four advance licences permitting it to import 393 tons of aluminium ingots. These ingots were to be utilised in the manufacture of 377.25 tons of extruded aluminium products. In accordance with the licence, this appellant imported in January and May 1995 aluminium ingots weighing 395.58 tons cleared them without payment of duty in terms of exemption contained in 204/1992. Out of this quantity, 176 tons was imported through the port of Nhava Sheva and it is this quantity that the Commissioner in his order impugned in this appeal and this Tribunal is concerned with. The officers visited on 27.9.1997 the factory of the appellant and its office and seized various documents relating to imports and exports. The officers also noted that on that date there was no aluminium imported either in the form of ingots extruded product was not available in the appellant's factory or office. The appellant had exported 14.981 tons of extrusions out of the imported material. Mukhopadyay, the executive of the appellant, Vidyasagar, managing director in their statement accepted that on although aluminium had been utilised to make extruded product these goods have been sold in the domestic market. Notice was therefore issued to the appellant proposing to recover on 180.479 tons of aluminium not utilised towards the exported product by denying the benefit of exemption 204/92 and proposing penalty on the importer and Vidyasagar, the managing director. The Commissioner passed orders confirming the liability to duty and imposing penalty on Vidyasagar.
Hence this appeal.
2. Counsel for the appellant first contends that in point of fact in addition to the 14.981 tons that has been accepted as having been exported the appellant has exported a further quantity of 37 tons and this should be taken into account. The Commissioner has not accepted this point which was raised before him. He has found that this quantity was exported in October and November 1995 i.e. after the visit of the factory of the importer by the department officers when no aluminium in any form was found. This is a valid point which the counsel for the appellant is not able to rebut. Further, in their statement of Vidyasagar and Mukhopadyay recorded in September 1995, neither of them had aluminium extrusion have been manufactured. They had on the contrary accepted that the entire quantity of imported aluminium had been utilised in the manufacture of extrusions which, but for the quantity was exported had been disposed in the market. There is no contention at any stage these statements were refracted. In addition, no shipping bills showing export have been produced. It is not therefore possible to interfere with the finding in this regard.
3. It is next contended that even if the 37 tons exported in October and November were manufactured out of aluminium other than the imported quantity it should still be taken towards the export performance.
Counsel for the appellant relies upon the decision of Standard Industries v. CCE 4. In Standard Industries, the Tribunal was of the opinion that notification 159/99 was worded permitted export made out of material other than the imported material to be accounted towards export obligation. On this view and on its further view that on the facts of the case before it, which involved a chemical process in which the exempted material as well as other material not so exempted had been utilised together to make the finished product. Potassium carbonate or potassium hydrochloride the Tribunal found that the imported material would be entitled to exemption contained in notification 159/90. It specifically noted that the condition in notification 203/92 are differently worded and notification 203/92 contained a specific condition absent in 159/90 that the exempted material shall be utilised for export obligation and disposed of such material before such export obligation had been discharged and fulfilled and export procedure clear. Condition 6 of 204/92 is identical worded as condition 7 of 203/92. The ratio of the Standard Industries will not apply to the facts before us. This contention of the appellant therefore cannot be accepted.
5. It is next contended on behalf of Vidyasagar that penalty was not imposable on him because he was only an employee of the company and no penalty has been imposed on the importer. We agree as the departmental representative points out that the penalty was imposable on the importer.
6. There has been in this case a deliberate act by the importer to dispose of the exempted material contrary to law if, as if claimed this was caused by compulsion caused by such factory as financial hardship.
It is not possible to accept that the importer was compelled to sell the goods in the market because of such factors as financial hardship filed in export prices etc. If that were the case, it would have made these facts known to the licensing authority or the customs official and asked for permission to pay duty and dispose of the goods or seek extension of time or export. It has not done any of these things. It is not disputed that Vidyasagar the managing director was responsible for the conduct of affairs of the company including the sale relating to exports and sale of the export in the market. Penalty was therefore rightly imposed on him having regard to the duty involved exceeding 30 lakhs penalty of Rs. 3 lakhs on him is not incommensurate with the gravity of the offence.
7. Demand for interest under Section 28AB of the Act is challenged on the ground that the provisions of Section would only apply to duty which became payable after it was communicated and not as in the present case to duty which became payable earlier. The judgment of the Supreme Court in Commissioner v. Elgi Equipments Ltd. 2001 (128) E.L.T.52 is cited in support. The departmental representative reiterates what the Commissioner has said that, duty only became payable after it was demanded by him in the order.
8. It is not possible to accept this view of the Commissioner. By the application of 204/92 duty became payable when the export obligation was not applied. We have already noted that the goods manufactured out of the imported material had been sold in the market prior to 25.9.1995 when the officers visited the factory. The liability to duty had already commenced accrued by this prior to enactment of Section 28AB.The demand for interest cannot be sustained.