ORDER
U.L. Bhat, J. (President)
1. The order impugned in the above appeals confirms duty demand of Rs. 92,47,100/- on M/s. Pawan Foam Products Pvt. Ltd. imposes mandatory penalty of an equal amount on the same manufacturer under Section 114A of the Customs Act, 1962 and imposes penalty of Rs. 1 lakh on one of the Directors of the manufacturer, who is also an appellant. Appellants seek waiver of the requirement of pre-deposit of the amount of duty and penalty. We have heard both sides.
2. The dispute arose in relation to 10 out of 24 consignments of a chemical, TDI, imported by the appellant ostensibly for the manufacture of TPU and cleared on payment of concessional rate of duty under Notification 36/94. The notification granted concessional rate of duty for TDI imported for the purpose of manufacture of TPU.
3. The sum and substance of the case of the Department is that import was not made for the purpose contemplated in the notification and the imported goods were not used in the manufacture of TPU and therefore concessional rate was not admissible and differential duty should be paid.
4. Appellants streneuously contended that 10 consignments of TDI were in fact used in the process of manufacture of TPU, but the attempt was not successful and the process led only to generation of waste products and not TPU. According to them, bulk of the imported material was so used and only a small part was left by the time production The production was stopped in 1995. Even the small balance quantity as well as relevant documents were destroyed in a fire which gutted the factory in April, 1996.
5. Commissioner rejected the appellants case on consideration of various facts and circumstances. The reasons relied on are that the appellant had no facility for manufacture of TPU as admitted, that the entire quantity had been transferred to M/s. Maruti Foam Pvt. Ltd. for manufacture of T.U. Foam (which is outside the scope of notification) as admitted, that the appellant had no technical expertise for the manufacture of TPU, that the earlier statements had not been retracted, since there was no reliable documents, the explanation that there was a fire and the balance TDI waste generated and documents were destroyed, is not acceptable. The Commissioner also invoked larger period of limitation on the allegation of wilful misstatement and suppression of facts.
6. According to the appellants there were no admissions as alleged by the Commissioner either that the appellant had no facility for manufacture of TPU or that the entire quantity was transferred for some other purpose, there was no material to show absence of technical expertise, that documents relating to fire are irrelevant since the show cause notice itself admitted the fire incident in April, 1996.
7. All the above questions require proper consideration at the stage of hearing the appeals. Broad facts are that the manufacturer purported to import TDI for the purpose of manufacture of TPU and availed the benefit of concessional rate which was available only where the imported article is so used. Ordinarily, appellants would have been required to produce documentary evidence to show actual user of the imported TDI. It is contended that all the relevant papers kept in the factory got burnt on account of fire. The appellant has not merely a factory but a separate office also. According to Shri P.K. Jain, SDR it is unlikely that all relevant documents had been kept in the factory and burnt and in any view of the case the appellant could have produced evidence of the scientists and other staff who would have attended to the manufacturing process if there was really any such manufacturing process undertaken and such evidence was not produced.
8. We find that the provisions for mandatory penalty came into effect in September, 1996. Therefore, prima facie such penalty could not have been imposed in respect of mis-conduct committed during any precedent period.
9. Having regard to all the circumstances referred to above, we are of opinion that the manufacturer should be required to deposit 25% of the amount of duty demanded and the Director who has been penalised should be required to deposit Rs. 10,000/- towards penalty imposed.
10. The applications are disposed of directing M/s. Pawan Foam Products Pvt. Ltd. to deposit 25% of the amount demanded within three months from today and Shri Amit Kaka, Director to deposit Rs. 10,000/- within three months from today and report compliance on or before 27-4-1998. On such deposit requirement of pre-deposit of the balance amount will stand waived.
The matter will be called on 27-4-1998.