TITAN INDUSTRIES LTD. Vs. CCE-III

JUDGEMENT

(1.) THE appellant M/s. Titan Industries Ltd. (Titan) imported horological raw materials for the manufacture of components of wrist watches in terms of Notification No. 36/96 (Cus) dated 23.07.96 and from 01.03.97, under Notification No. 11/97 (Cus) dated 01.03.97. The imports took place during the period 01.09.96 to 30.03.97. The notifications extended a concessional rate of duty to raw materials and components imported for manufacture of watch parts subject to the condition that the importer followed Customs (Import of goods at concessional rate of duty of manufacture of excisable goods) Rules, 1996 (IMGR). As per the IMGR, the importer is required to register the manufacturing unit with the jurisdictional Assistant Commissioner/Dy. Commissioner, execute a bond with him to secure the differential duty in case of failure of utilization of imported goods for the intended purpose, periodically intimate the jurisdictional Assistant Commissioner/Dy. Commissioner anticipated quantity of goods that would be imported etc. Titan had registered its unit at Hosur under the above rules. However, while most of the goods were consumed in the manufacture of watch parts in the Hosur Unit, a portion of the imported goods was transferred to the adjacent jewellery division at Hosur and another sister unit at Dehradun. After due process of law, the Joint Commissioner of Central Excise, Chennai, passed an order demanding Rs. 6,11,912/ - in terms of Rule 8 of IMGR from Titan and imposed a penalty of Rs. Eight lakhs in terms of Section 112 of the Customs Act, 1962. The Joint Commissioner held that the quantities diverted to its sister concerns were utilized contrary to the requirement prescribed in IMGR. The samples of the imported goods destroyed in tests also were held to have not been used for the intended purpose. In the impugned order, the Commissioner (Appeals), Chennai upheld the order of the original authority.

(2.) IN the appeal before us, the appellant has submitted that the imported components/raw materials were utilized in the manufacture of watch parts at its jewellery division at Hosur and also at Dehradun unit. They had certificates evidencing such usage from the respective jurisdictional Assistant Commissioners. It is submitted that the samples are tested before each lot is put to use for the manufacture to ascertain the quality of the goods imported. Therefore, the goods destroyed in such tests were also used for the intended purpose as per the exemption notification.

(3.) WE have carefully considered the facts of the case and submissions by both sides. We find that the Tribunal in its decision in Titan Industries Ltd. v. Commissioner of Customs, Bangalore reported in , had held in a similar case involving the same assessee in the context of interpreting another notification that the imported goods continued to be eligible for the exemption benefit even if raw materials/components were used in another unit owned by the importer.