RAJASTHAN PETRO SYNTHETIC LTD Vs. COMMR. OF CUSTOMS

JUDGEMENT

(1.) THESE two appeals have been filed by the appellants against the Order -in -Original dated 9 -4 -1997 passed by the Commissioner of Customs vide which he had raised demand for payment of differential duty of Rs. 4,59,449/ - under Section 28(i) in respect of goods already cleared and of Rs. 11,05,868/ - regarding the goods to be cleared under the proviso to said Section of the Customs Act and also imposed penalty of Rs. 5,00,000/ - on the appellant firm and of Rs. 1,00,000/ - on its Manager (Imports) under Section 112(a) of the Customs Act.

(2.) THE facts giving rise to these appeals may briefly be stated as under :

(3.) THE appellants have been importing Polypropylene Dyed Chips through Delhi Port. They filed two Bills of Entry viz. B/E No. 272643 and 272455 both dated 24/23/98 (sic) for CIF value of Rs. 3,11,168/ - and Rs. 2,90,223 / - respectively. The item under import was declared then as Polypropylene Dyed Chips and classified under CTH No. 3902.10. They also claimed benefit of Notification 227/76 (Cus.) but the intelligence report revealed that they were deliberately classifying the item as Polypropylene Dyed Chips wrongly under Chapter 39 but in fact were importing master batches falling under Chapter 32.02/32.06 which were chargeable to duty. Their premises were searched and some documents were recovered. One of the documents recovered pertained to estimate of cost of production and showed that the raw material being used in the production process was master batch of U.V. One telex message 91/6th August from Shri B.B. Verma to Dr. Curone was also recovered. That message had the wording "PLS SND THRU DHL YR PROFORMA" 376/13.07 removing words 'Duty Tariff 32.04/17. The statement of B.B. Verma was thereafter recorded on 10 -1 -1989 under Section 108 of the Customs Act who admitted that PP Chips were Polypropylene coloured and that PP Dyed Chips contained 30% 40% colour. He admitted of having sent this telex message to Dr. Curone of M/s. Sarma SPA, Italy asking him to remove the words "Duty Tariff 3204.17". Thereafter statement of Arun Kumar Mittal, General Manager (Technical) was recorded on 10 -1 -1989 who admitted that the raw materials being used in the manufacture of multi -filament polypropylene yarn were (i) PP Chips, (ii) PP Dyed Chips and (iii) Spin Finish. He also admitted with reference to his letter dated 27 -10 -1987 addressed to M/s. Sarma, SPA Italy that pigment master batches were combination of polypropylene and pigment. Show cause notice dated 8 -2 -1989 was issued to the appellants alleging that they had manipulated certain documents to show master batches as PP Dyed Chips and asked their suppliers to describe the goods in a manner so as to enable them to classify the goods under CTH 3902.10 in order to evade Customs duty. They instead of classifying the goods under 32.02/32.06 has wrongly showed the goods under CTH 3902.10. They were asked to show cause as to why the goods imported vide Bs/E 272455 and 272643 both dated 24 -12 -1998 be not classified under 32.02/32.06 and charged Customs duty accordingly. They were further asked to show cause why the goods of these Bs/E be not confiscated under Section 111(d) and (m) of the Customs Act. They were required to show cause as to why an amount of Rs. 4,59,449/ - on account of short payment of duty in respect of earlier Bs/E, dated 24 -9 -1988,25 -10 -1988 and 12 -12 -1988 be not recovered. They were supplied with details of the 12 Bs/E and extended period of five years on account of wilful misstatement or suppression of facts was also proposed to be invoked. Penalty amount was also proposed to be imposed under Section 112(a) of the Customs Act.