VIGIRAM CHEM PBT LTD., Vs. COMMISSIONER OF CUSTOMS,

JUDGEMENT

(1.) This appeal has been filed by the appellants who are importers and traders of aromatic chemicals and ingredients for cosmetics. These imported items are repacked into smaller containers and thereafter sold. They had claimed exemption on payment of Special Additional Duty of Customs (here -in -after referred to as SAD) as per notification No. 56/98 dated 01.8.1998. The exemption was claimed under serial No. 12 of the table annexed to this notification which read as follows:

(2.) This exemption was claimed on 14 of the Bills of Entries, which were assessed and cleared during the period from 14.11.1998 to 26.12.1998. Show cause notice was issued on 25.8.1999 by Asst. Collector of Customs, Bangalore. It was reported to him that chemicals cleared under these Bills of Entries had been used as inputs in the manufacture of final products; therefore, it appeared, that the exemption under Customs notification No. 56/98 of SAD on the strength of the declaration on the bills of entry that the particular goods are for sale purpose only and the exemption claimed there has been abused by wilful mis -statement. Therefore, the notice issued under Section 28(1) of the Customs Act 1962 proposed as to why:

(3.) The appellant replied vide letter dated 11.10.1999, denying the allegations in the show cause notice and submitting that since their clients had requested benefit of modvat credit in respect of these aromatic chemicals and cosmetic ingradients which are inputs to them, they got them registered and started issuing invoices with effect from 1.7.1999. Due to a levy by virtue of Chapter note 11 in the Central Excise Tariff Act, re -packing, re -labelling, etc. amounting to manufacture and in terms of this artificial definition, they came under the levy of the Central Excise Duty, even though there is no change in the activity undertaken by processing the chemicals. They had paid taxes as well as other local taxes. As no process is undertaken so as to amount to manufacture and the artificial definition of the Central Excise Tariff cannot be borrowed while interpreting the notification under the Customs law, their declaration made on the Bill of Entry in respect of SAD was correct and proper. Therefore, the allegation of wilful mis -statement was not sustainable and the demand for limitation and penalty proposed was not warranted.