TITAN INDUSTRIES LTD. Vs. COMMISSIONER OF CUSTOMS, BANGALORE

JUDGEMENT

(1.) THIS appeal is against the OIO dated 1 -2 -2000 passed by the Commissioner of Custom Bangalore.

(2.) THE brief facts of the case are as follows : - The appellant M/s. Titan Watches Ltd., Hosur are engaged in the manufacture of watches and their components. They have also a factory at Dehradun where only assembly of watches is undertaken. The appellant imported wrist watch components, arts and raw materials under concessional rate of customs duty under Notification Nos. 43/85 -Cus., dated 28 -2 -1985, 46/85 -Cus., dated 28 -2 -1985 and 65/87 -Cus., dated 1 -3 -1987. There are certain conditions to be fulfilled for availing the benefit of the above notification. The most essential condition is that the imported goods should be used in the manufacture of watches. At the time of import, the importers execute a bond with the Assistant Commissioner of Customs for producing evidence to the effect that the imported components have been used in the manufacture of watches. The evidence is in the form of a certificate to be issued by the jurisdictional Assistant Commissioner of Central Excise where the factory manufacturing watches is situated. Once the certificate is produced, the bond executed with the Assistant Commissioner of Customs in the port of import is cancelled. The present appeal covers the period form 1989 -1990 to 1990 -1994. In the impugned order, the Commissioner of Customs has decided three show cause notices issued by the Commissioner of Customs, Bangalore and one show cause notice dated 21 -3 -1995 issued by the Commissioner of Customs, Chennai.

(3.) THE Directorate of Revenue Intelligence, Bangalore conducted investigations on the basis of certain intelligence into the imports made by the appellant under the above mentioned three customs notifications. The investigations revealed that the appellants have not used all the goods imported in the manufacture of watches, as some of the imported components have been rejected. The rejected components were re -worked and some of them were put to use, but investigations revealed that some of the rejected goods were sent as spares to various service centers/spare market contrary to the conditions of the said notification. It was also found that the appellant got the bonds executed with the Assistant Commissioner of Customs cancelled on the basis of the end use certificate issued by the Assistant Commissioner of Central Excise Hosur even in respect of the imported goods diverted to their Dehradun Factory contrary to the stipulation in the notification that the end use certificate should be issued by the Jurisdictional Assistant Commissioner of Central Excise. The department also found that some of the rejected goods were re -exported. It is the case of the department that the appellants willfully suppressed information from the Assistant Commissioner of Central Excise Hosur and obtained end -use certificate to cancel the bonds even though some of the goods imported were not used in the manufacture of watches as some of the imported components have been rejected. Imported goods valued Rs. 1,95,21,526/ - and Rs. 16,29,103/ - were seized from the appellant by the Department at Hosur and Dehradun respectively. Hence show cause notices were issued to the appellants. The Commissioner of Customs Bangalore in his adjudication order held that the charges against the appellants have been established and demanded total duty of Rs. 2,11,93,748/ -. The seized goods were confiscated. He imposed a redemption fine of Rs. 34 lakhs under Section 125 of the Customs Act 1962 and penalty of Rs. 75 lakhs under Section 112a(ii) of the Customs Act 1962.