TITAN INDUSTRIES LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE subject appeal seeks to vacate the Order -in -Original No. 89/2005 (ACC) dated 01.02.2005 passed by the Commissioner of Customs, Chennai. In the impugned order, the Commissioner demanded differential additional duty of customs amounting to Rs. 3,75,45,395/ -on button cells imported by M/s. Titan Industries Ltd (TIL) under 62 Bills of Entry during the period 01.03.2001 to 31.12.2002. The Commissioner also demanded interest under Section 28AB of the Customs Act (the Act) and imposed a penalty on TIL equal to the duty demanded, under Section 114A under the Act.

(2.) THE facts of the case are that the appellants, manufacturer of Titan brand watches, had imported button cells declaring them as for own use. The appellants had cleared the goods on payment of all duties based on the transaction value. The button cells are specified under Section 4(A)(1) of the Central Excise Act '44. Rule 33 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 applied to all prepackaged commodities imported into India and required declaration of their retail price. It was therefore tentatively decided that in respect of the button cells cleared under the subject 62 Bills of Entry, the appellants had short paid CVD to the tune of Rs. 3,75,45,395/ -. The retail sale price (RSP) for the above purpose had been ascertained from the appellants. It transpired in investigation that the button cells were not used in the manufacture of watches but were used in their service centres as spares for replacement. Adjudicating a show cause notice issued the Commissioner found that the TIL had misdedared the use of the button cells to avail assessment of CVD on the basis of transaction value and to avoid payment of full duty due based on MRP. The adjudicating authority found that the imported goods were packed in bulk in a carton and were therefore "commodity in packaged form" as per Section 2(b) of the Standards of Weights and Measures Act, 1976 (SWMA). The imported goods were 'commodity packaged, whether in any bottle, tin, wrapper or otherwise, in units available for sale whether wholesale or retail' as defined in the said Section 2(b). He found that the button cells imported were pre -packaged commodity which was required to carry a declaration including retail sale price on their import in terms of Rule 33 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Accordingly, he concluded that the impugned imports attracted assessment of CVD based on retail sale price as provided under Section 3(2) of the Customs Tariff Act, 1975 and demanded differential CVD short paid at the time of their clearance.

(3.) THE impugned order has been assailed in the appeal mainly on the following grounds. Button cells were not imported in prepackaged form. The Hon'ble Andhrapradesh High Court in its judgment reported in AIR 2003 AP 175 had decided that to attract the provisions of SWMA and Rules made there under it was essential that the commodity was notified for the purpose under Section 1(3)(d) SWMA. No such notification was issued as regards button cells. Ministry of Commerce had clarified that components of watches were not prepacked commodity. Therefore Rule 33 of Standards of Weights and Measures (Packed Commodities) Rules, 1977 did not apply to button cells. The goods imported were found on inspection by customs authorities to be in non -retail packing. Proposal in a show cause notice issued to assess Bill of Entry No. 303656 dated 8.5.01 on MRP basis in the wake of a Central Revenue Audit objection had been dropped. Therefore, the demand was barred by limitation.