COMMISSIONER OF CUS., MANGALORE Vs. CHIRAMITH PRECISION (INDIA)

JUDGEMENT

(1.) THE Revenue has preferred this appeal against the order passed by the CESTAT, South Zonal Bench at Bangalore, setting aside the order -in -original passed by the Commissioner of Customs (Mangalore) and holding that the entire proceedings from the issue of show cause notice and the adjudication concluded by non -compliance of binding circular of board are void and setting aside the same. M/s. Chiramith Precision (India) Limited, a 100% EOU is a partnership firm situated at Shilpa Complex, Nagori, Mangalore -3, the firm consists of partners viz., Shri B. Ramachandra, his wife and two sons and the firm manufactures watch screws, tenons chausse, tube Domestic Enquiry centre and other different turned components. The said unit is a 100% EOU exporting their products to INDEC and Tavadec, S.A. in Switzerland. M/s. Tavadec Industries (P) Limited, Maroli, Mangalore is their one more unit of which Shri B. Ramachandra is a partner; Shri Jacques Monnin of Switzerland and his wife are the other partners. This unit manufactures turned components and electronic components meant for domestic market with major customers like Baker Mereer (India), Poona, Protection (India) Bangalore, Integral Systems, Bangalore and Safari, Bangalore, M/s. Chirag Enterprises, situated in the premises of Canara Foundry Industrial Compound, Maroli is their another unit and his wife is the proprietrix of this unit, which manufactures turned components for electronic connectors and electronic switches on job work basis for M/s. Integral Systems and M/s. Protectron India, Bangalore.

(2.) ON 23 -2 -1998, the officers of DRI, Mangalore had during the course of search on the premise of M/s. Chiramith Precision (India) Limited (hereinafter referred to as 'Chiramith') a 100% EOU manufacturer of watch screws and turned components, recovered several incriminating documents showing the misuse of imported machineries, spares and raw materials. Further, also noticed the misuse of the benefits extended to 100% EOU. It was also noticed that M/s. Chiramith had diverted imported raw materials and spares to their another unit viz., M/s. Tavadec Industries Pvt. Ltd., (hereinafter referred to as 'Tavadec'). Search of the above premises by DRI at Bangalore on 23 -2 -1998, resulted in seizure of imported spares and raw materials worth Rs. 7,000/ - under a Mahazar. The imported machineries were clandestinely removed from M/s. Chirag Enterprises (hereinafter referred to as 'Chirag'), which is the sister concern for doing the job work of domestic manufacturers. Hence, the DRI also seized 29 bonded machines of M/s. Chiramith on 8 -7 -1998, valued at Rs. 87,95,628/ - under a proper mahazar and a case has been booked against M/s. Chiramith for contravention of various provisions of Customs Act, 1962 (hereinafter referred to as 'Act').

(3.) IN a further statement recorded on 24 -2 -1998, Shri B. Ramachandra has admitted that M/s. Hawa Industries, Kankanady, Mangalore was functioning from 1 -4 -1987 to 1 -4 -1997 and manufacturing products for Indian market. He was proprietor of the firm. The unit was closed and the existing stock of raw materials and machineries was transferred to M/s. Tavadec and M/s. Chirag. M/s. Chirag was formed in the year 1992 with an intention of diverting the products manufactured in Chiramith for the Indian Market. Chirag Enterprises in fact existed only on paper and all the products which said to have been sold through M/s. Chirag Enterprises were actually got manufactured using M/s. Chiramith's machineries, the raw materials for Chirag Enterprises were procured domestically but the scrap generated out of it was added to the scrap of M/s. Chiramith. M/s. Tavadec started with an intention to divert the products manufactured by M/s. Chiramith to Indian market and also to divert the raw materials imported by Chiramith for manufacturing in M/s. Tavadec and that spares for Tavadec were supplied after taking from the bonded warehouse of M/s. Chiramith; the spares and tools issued from Customs bond is used in all the 3 companies and to that effect a resolution has been passed in the meeting held on 9 -1 -1997 and it was decided that production of M/s. Tavadec for export will be transferred to M/s. Chiramith and reversely production of M/s. Chiramith for Indian market will be transferred to Tavadec and that the balance debit or credit will be settled at the end of each month.