UNITED SPIRITS LIMITED Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) The Appellants herein, were formerly known as "Maharashtra Distilleries Limited" (MDL). They are engaged in the business of manufacture, sale and distribution of Indian Made Foreign Liquor (IMFL) and have been manufacturing "Royal Challenge Whisky" since 1982. The manufacture of "Royal Challenge Whisky" requires the addition of undenatured Ethyl Alcohol (malt spirit) which is the essence. The essences added are procured locally from manufacturers and suppliers in India. Some of the essences required and purchased by the Appellants, in fact, are imported by various suppliers and subsequently sold to the Appellants.

(2.) On or about 07.10.1991, the Senior Superintendent of the Department visited the Appellants' factory in Aurangabad in respect of investigation regarding purchase of essences from M/s Finacord Chemicals Private Limited and M/s S.R.Nagpal and Company. According to the Appellants, they cooperated with the officers and furnished whatever documents which were available. The officers required the Appellants to furnish the copies of bills of entries and the purchase orders for the essences. The Appellants could not furnish the same as they were not the importers. Subsequent thereto, the officers made out the Panchanama and Supratnama for safe custody and handed over the same to the Factory Manager of the Appellants. The Appellants made a request for release of the essences against security. However, the Officers of the Department indicated that it would not be possible. After exchange of correspondences, the Appellants opposed the seizure by filing Writ Petition No. 3220/1991. An order came to be passed in terms of the minutes. This Court ordered that upon the Appellants (MDL) depositing an amount of Rs. 1,56,64,500/with the Additional Collector of Customs, Mumbai, the Appellants be allowed to utilize the undenatured Ethyl Alcohol which was the subject matter of the Supratnama dated 07.10.1991. A further application was made praying that the amount be deposited in Nationalized Bank in fixed deposit. This plea was rejected by the order dated 30.10.1991. This Court, however, issued the following direction:

(3.) Subsequent to that, an order of adjudication came to be passed against M/s Finacord Chemicals Private Limited by the Commissioner of Customs whereby the transaction value declared by the Appellants was rejected and the goods were reassessed by taking higher assessable value and the goods were ordered to be confiscated and a fine was imposed and also penalty. By the said order of 28.02.1995, the Collector of Customs appropriated a sum of Rs. 1,05,02,087/out of the amount deposited pursuant to the order of this Court. M/s Finacord Chemicals Private Limited preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). CESTAT by its order dated 10.09.2003 was pleased to hold that import of goods was unauthorized and therefore, upheld their confiscation. CESTAT, however, recorded a finding that the goods were not undervalued and accordingly, set aside the demand for differential duty. Insofar as the redemption fine is concerned, after going into the issue, the fine was reduced insofar as M/s Finacord Chemicals Private Limited to Rs. 10 Lac. In the other appeal filed by M/s S.R.Nagpal and Company the fine was reduced to Rs. 15 Lac. The imposition of penalty was set aside. Revenue has preferred appeals before the Supreme Court which are admitted and pending for final decision.