METLEX INDIA (P) LTD Vs. CC

JUDGEMENT

(1.) M /s. Metlex India (P) Ltd. have challenged Order -in -Original dated 24.10.1996 passed by Commissioner of Customs, IGI Airport, New Delhi holding that an amount of Rs. 11,37,824.00 being amount of customs duty short levied on 3,600 pieces of "INTERMETALLIC COMPOSITES METALLIZING BOATS" (IMC boats), imported by the appellants is liable to be paid by them. He also directed confiscation of another 300 pieces of IMC boats seized by the DRI Officers with option to get them redeemed on payment of redemption fine of Rs. 25,000/ - Customs duty on the said 300 pieces of IMC boats amounting to Rs. 98,504/ - was also confirmed. Penalty of Rs. 4 lakhs was imposed on the appellant firm and a penalty of Rs. 2 lakhs was imposed on Shri Jamna Datwani, Chairman of M/s. Metlex (India) Pvt. Ltd. under Section 112(a) of the Customs Act.

(2.) APPELLANTS are engaged in the manufacture of Hot Stamping Foils and in metallising bare plain films of plastics. For purposes of metallising, evaporation boats known as 'Intermetallic Composites Metallizing boats' (IMC boats) were imported from U.S.A. and bought from M/s. Advance Ceramics Corporation in Cleveland -Ohio, USA. IMC boats are made of ceramics and ceramics are composed of two or three major ceramic powders. On the basis of specific information collected by DRI that the imports of IMC boats by the appellants was heavily under -invoiced, a Show Cause Notice was issued to the appellants to show cause why the differential duty between the duty already paid on 3,600 pieces of IMC boats cleared from foreign Post Office and the actual duty which was payable thereon should not be demanded as also the appropriate duty for 300 further pieces of IMC Boats seized by the Officers on 19.5.1995 and 30.5.1995 should not be demanded apart from confiscation and penalty. The Department alleged that the invoices did not represent the true and real value of the goods; that the actual value thereof had been misdeclared by the appellant importer, that the said IMC boats were in fact sold by the U.S. supplier M/s. Advance Ceramics Corporation, to another U.S. firm viz., M/s. Whistles, New York and M/s. Non -Fiction Unlimited Ltd., New York, both of which were owned by Shri Kishan Datwani, son of Jamna Datwani, Director of M/s. Metlex (India) Pvt. Ltd., the appellant. The FOB price of each IMC boat as per manufacturer's invoice in USA was US 14. The price remained the same till 1993 when it was reduced by the original manufacturers by 30% from US 14 per piece to US 9.65. However, the appellants, M/s. Metlex (India) Pvt. Ltd., accepted an offer from Mr. Kishan Datwani for supply of IMC boats @ US 5 per piece from September, 1993. SCN also alleged that the importers had thereafter shifted the import of the said goods from Air Cargo to Foreign Post Office as per the request of the suppliers of IMC boats viz., M/s. Non Fiction Unlimited Limited, USA.

(3.) DURING the adjudication proceedings before the Commissioner of Customs, appellants contended that the Department's allegation was on the ground that the entire supplies of IMC boats manufactured by M/s. Advance Ceramics Corporation, USA were routed through M/s. Non Fiction Unlimited Limited and M/s. Whistles, New York both owned by Shri Kishan Datwani, son of Shri Jamna Datwani, Director of M/s. Metlex (India) Pvt. Ltd. Appellants had contended that all the IMC boats were not of the same grade and quality as these boats were composed of two or three types of Ceramic Powders, though they may look alike physically. Whereas Titanium Diboride is an electrically conductive powder that is mixed with Boron Nitride Powder, these are mixed together in appropriate proportions to achieve a specific temperature bulk resistivity. This blended powder mixture is heated to over 1900C in a mould and pressure is applied. Once the mix is cooled, it becomes extremely hard. This hard piece is cut into plates and machined and finally a cavity is ground into a boat. The physical design of the boat depends upon its application, clamping system, power supply and operating conditions. The boats are used in high vaccum Metallising Plants. Though they may look alike, the boats which are of inferior quality when connected with electricity may not resist the high temperature. Aluminium wire is continuously fed to the boat where it is liquefied and evaporated and such evaporated vapours are deposited on the polyester Films. Since Aluminium melts at 1000C, but evaporates at 1500C, in the inferior boats and the Aluminium may not melt properly and evaporation may be defective. Metallic Films manufactured by the appellants are used generally for Zari work, packaging and decorations. Just because the boats look alike physically they cannot be placed on the same footing as far as valuation aspect is concerned. Appellants further submitted that there was nothing on record to show that Shri Kishan Datwani had managed to supply the boats at lower rates in connivance with his father Shri Jamna Datwani, Director of Metlex (India) Pvt. Ltd. Even if Shri Kishan Datwani had purchased the items in USA at higher rate and supplied them to the appellants, at a lower rate, there was no charge or any evidence to show that he had passed on any extra money to the manufacturer (appellants) or to the supplier. The appellant also disputed the Department's stand that the price remained uniformly at US 14 or that there was a 30% reduction in price in 1993 bringing down the price to US 9.65.