UNITED TELECOM LTD. Vs. COMMISSIONER OF CUSTOMS, BANGALORE

JUDGEMENT

(1.) THE appellants have prayed for waiver of pre -deposit of duty demand to an extent of Rs. 2,52,17,948/ -. The appellants had imported parts of cellular phones under 18 Bills of Entry during the period from September 2003 to January 2004. The Department has fully assessed the same and cleared the consignments as parts of cellular phones under chapter sub -heading 852520.17 and granted benefit of Notification No 21/2002 -Cus., dated 1 -3 -2002. Later show cause notices were issued alleging that the goods they had imported were not merely parts; that the parts as imported had the essential character of cellular phones and the cellular phones themselves are not entitled for the benefit of the said Notification. The demands are within time. The learned Counsel at the time of hearing contended that without challenging the order of the assessment, the Department cannot issue show cause notice in terms of the ruling rendered by the Apex Court in the case of Priya Blue Industries - 2004 (172) E.L.T. 145. The Revenue was directed to file comments with regard to the applicability of ratio of the Apex Court judgment in the Priya Blue Industries Ltd. case (supra). The Joint Commissioner of Customs has filed the comments today before the Bench. It is contended that even from last 40 years and more, the procedure is to reopen the assessment in terms of Section 28 and therefore, the ruling of the Apex Court in the case of Priya Blue Industries would not be applicable. The Apex Court ruling, decided during 1972 in the case of Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd. which has been reported in 1978 (2) E.L.T. (J 416) (S.C.) has been relied.

(2.) WE have heard both the sides in the matter. The learned Counsel submits that the appellants have invested Rs. 50 crores to set up their plant to manufacture the fully finished products, namely cellular phones. The Revenue has not specified as to how the parts of cellular phones are not entitled to the benefit of exemption. Therefore on this ground alone, the assessee has a strong prima facie case in their favour. The appellants are not pleading with regard to the financial hardship. The learned Counsel submits that the appellants have strong prima facie case in their favour on merits in the light of the judgement of the High Court of Judicature at Allahabad rendered in the case of I.T.C. Ltd. v. Commissioner (Appeals), Customs and Central Excise, Meerut -I reported in 2005 (184) E.L.T. 347 (All.) wherein the High Court after due consideration has noted that if an appellant has a strong prima facie on merit and if he is asked to deposit the amount, it would cause undue hardship to the assessee. Therefore, he prays for full waiver of pre -deposit of the duty amount.

(3.) THE learned SDR submits that the grounds raised by the assessee pertaining to reopening of assessment by issue of show cause notice without filing appeal against finalisation is a question of law which is to be gone into in detail at the final stage. He submits that by applying Rule 2(a) of the General Rules of Interpretation, the parts as imported had the essential characteristic of the final products. Therefore they have to be treated as cellular phones and therefore, the benefit of notification is not available. He submits that the Revenue interest is required to be safeguarded as the amount involved in the matter is huge. As the appellants are not pleading any financial hardship, they should be put into terms. He relies on the written submissions filed by the learned Joint Commissioner.