TOSHA INTERNATIONAL LTD Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) TWO stay petitions have been filed by M/s. Tosha International Ltd. one under the Central Excise Act and the other under the Customs Act. One stay petition has been filed by M/s. Essex Marketing (P) Ltd. As the three stay petitions arise out of the same impugned order, they were heard together and are being disposed of by this common order.

(2.) ARGUING the stay petitions in the three cases as above Shri R. Chibber, ld. Counsel submits that M/s. Tosha International Ltd. are engaged in the manufacture of 14" and 17" picture tubes for Black and White TVs and for computer monitors. The raw material and components for the manufacture of picture tubes were either imported or procured through indigenous purchases. A team of Central Excise officers visited the factory premises of M/s. Tosha International Ltd. on 26 -7 -1996. On demand they could produce only some private records. No statutory records were made available to the visiting officers. On checking the records it was found that M/s. Tosha International Ltd. cleared Flared glass neck tubes under cover of invoices to one M/s. Essex Marketing (P) Ltd. In the follow -up action a team of officers visited the premises of M/s. Essex Marketing (P) Ltd. and conducted search of premises. The Godown in -charge Shri Sunil Kumar of M/s. Essex Marketing (P) Ltd. informed that 80 cartons of glass neck tubes were received from M/s. Tosha International Ltd. Each carton was containing 702 nos. of glass neck tubes. The goods i.e. glass neck tubes were Modvatable inputs for M/s. Tosha International Ltd. It was, therefore, alleged that they should have been cleared from the factory under the provisions of Rule 57F(1)(ii). The goods found stored with M/s. Essex Marketing (P) Ltd. were imported by M/s. Tosha International Ltd. at concessional rate of customs duty in terms of Notification No. 64/95, dated 16 -3 -1995. It was noticed that the same were cleared by M/s. Tosha International Ltd. without payment of proper differential duty amounting to Rs. 91,108 and without observing the procedure provided under Rule 57F of Central Excise Rules, 1944. The said goods numbering 56151 pcs. duly packed in 80 cartons were seized in the reasonable belief that they are liable to confiscation. A SCN was issued to the appellants asking them to explain why the seized goods should not be confiscated, why duty should not be demanded and why penalty should not be imposed. In reply the ld. Counsel submitted that the applicants submitted that M/s. Tosha International Ltd. had imported glass neck tubes for manufacture of Black and White picture tubes availing the concessional rate under Notification No. 64/95. He submitted that after sometime, the factory became sick and stopped production; that since running of the factory was not found feasible, M/s. Tosha International Ltd. sold the remaining consignment of glass neck tubes to M/s. Essex Marketing after intimating the Assistant Commissioner on 25 -7 -1996. He submitted that differential duty amounting to Rs. 9,76,021/ - was deposited on 5 -8 -1996; that there was no delay in deposit of duty. He submitted that intimation to the ju -risdictional Assistant Commissioner under Rule 57F(1)(ii) could not be given as the staff dealing with the excise matters had left the factory. He submitted that the condition of Notification No. 64/95 was complied with therefore, confiscation of the goods found in the premises of M/s. Essex Marketing (P) Ltd. was not warranted. He submitted that the allegation that finished goods worth Rs. 14.45 lakhs were unaccounted and were kept for clandestine removal was also baseless; that the goods were kept at various places for quality check. Ld. Counsel submitted that the lower authorities confiscated the finished goods confirmed the demand for duty and also imposed penalties Under Section 112 of Customs Act read with Rule 173Q of Central Excise Rules. Ld. Counsel submits that duty has already been deposited, therefore, the limited issue is the deposit of penalty. He submits that a combined penalty has been imposed both under Customs Act as well as Central Excise Act. He submitted that the jurisdiction is in dispute. Ld. Counsel submitted that insofar as M/s. Essex Marketing (P) Ltd. are concerned, they have absolutely not contravened any provisions of any Rule and therefore, imposition of penalty on them was not warranted. He therefore, prayed that pre -deposit of penalty on M/s. Tosha International as well as on M/s. Essex Marketing Pvt. Ltd. may be waived. Ld. Counsel also submitted that M/s. Tosha International Ltd. has been declared as a sick company by BIFR; that the company was not in a position to deposit any penalty. On this score also ld. Counsel submitted that pre -deposit of penalty may be waived.

(3.) LD . DR Shri Sanjeev Srivastava submits that there is a violation of the conditions of the Notification; that non -accountal of the finished goods is also one of the issues; that the combined penalty also can be levied. He submitted that insofar as the financial condition of the company is concerned; the applicant has got sufficient bank balances and the current assets of the company were more than the current liabilities and that even if they are directed to deposit the entire amount of penalty, it will create no undue hardship.