DCW LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) This appeal is against an order passed by the Commissioner of Customs confiscating a quantity of 37.691 MTs of Vinyl Chloride Monomer, [VCM, for short] under Section 111 (I) of the Customs Act, with option for redemption against payment of a fine of Rs. 6.00 lakhs and also imposing a penalty of Rs. 1.00 lakh on the appellants under Section 112(b) of the Act.

(2.) The appellants are manufacturers of Polyvinyl Chloride resin, for which their main input is VCM, a chemical which they used to import. The imported VCM used to be warehoused and stored in a system of spherical tanks interconnected by pipes, the system being a Customs bonded private warehouse. The stock of VCM in these tanks used to be measured by dip reading. A measurement of the VCM stock was made at 6:10 a.m. on 20.5.95 at the instance of Customs Preventive Unit, Tuticorin. The measurement was done (in the presence of CPU Officers and independent witnesses) by the appellants' Assistant Engineer, who noted dip reading, temperature and pressure of all the tanks and arrived at the total stock of VCM, which measured 4100.537 MTs. But the VCM stock as per the appellants' records was 4062.846 MTs. Thus an excess stock was found. The excess stock of 37.691 MTs of VCM was seized under a mahazar on the same day. A statement was recorded from the Assistant Engineer, who could not explain the difference in stock. A statement was also recorded from their DGM In -charge of Operations of VCM Installation. Though he gave an account of their procedure of storage, discharge and transportation of the chemical, he could not explain the excess stock. A show cause notice was issued by the department, whereby the appellants were asked to show cause why the excess stock of VCM should not be confiscated under Section 111(1) of the Customs Act and why penalty should not be imposed on them under Section 112(b) of the Act. The show -cause notice was contested by the party. In adjudication of the dispute, the Commissioner of Customs passed the aforesaid order. Hence, this appeal.

(3.) We have heard both side. Ld. Counsel for the appellants submits that the total capacity of the storage tanks is 5000 MTs and the excess of stock found is only to the extent of 0.6%. The storage and measurements are done under physical supervision of officers of Customs and there is no room for suspicion against the appellants. Any excess stock would be cleared only on payment of duty, leaving no chance of revenue loss. Ld. Counsel has also questioned the reliability of the dip reading method on the strength of a decision of a Ld. Single Member of this Tribunal in the case of IOC Ltd. v. CCE, Calcutta, 2003 (158) ELT 49. He submits that, like mineral oils, VCM is a highly volatile chemical. The dip reading method gives only approximate results. Any difference of stock found by this method cannot be accurate. Even if the accuracy is not doubted, a negligible stock difference of 0.6% is not enough cause for confiscation and penalty.