Lajja Ram, Member (T)
1. M/s. Halonix Electric Ltd. being aggrieved with the Order-in-Original dated 14-10-1992 passed by the Collector of Customs, New Delhi had filed the present appeal. The matter relates to the classification and applicability of exemption Notification No. 67/83-C.E., dated 1-3-1983 to the goods imported insofar as the levy of countervailing duty was concerned. In his Order-in-original the Collector of Customs, New Delhi had demanded duty of Rs. 9,58,810.18, disallowed the already granted refund of Rs. 1,67,227.15 and imposed a penalty of Rs. 5,00,000/-. The appellants had filed stay application and the Tribunal had directed the appellants to pre-deposit the entire duty amount. The appellants challenged the stay order in the Hon’ble Delhi High Court and the High Court asked the appellants to deposit a Rs. 5,00,000/- and to furnish the security of plant and machinery to the satisfaction of the Collector, Customs. High Court ordered that after the Collector Customs was satisfied that the security of the plant and machinery being adequate the appeal of the petitioner (appellant before us) will be decided on merits.
2. We have heard Mrs. A. Singh, Advocate for the appellants and Shri S.N. Ojha, JDR is present for the respondent Revenue.
3. Mrs. A. Singh, Advocate submitted that the goods imported by them were bulbs and they were correctly eligible for the benefit of exemption under Notification No. 67/83-C.E., dated 1-3-1983 as amended, under SI. No. 4 of the Table under that notification. It was her plea that the goods imported were covered by the term vacuum and gas filled bulbs not exceeding 60 watt. There was nil duty for such bulbs and, therefore no countervailing duty was chargeable thereon. As regards the limitation, she contended that there was no suppression on the part of the importers, the Revenue had taken different stand at different points of time and the matter had to be referred to the Collector Tariff Conference. She submitted that the whole of the demand was beyond the normal period of limitation. She also argued that there was no justification for imposing any penalty.
4. Shri S.N. Ojha, JDR replied that the goods imported were inputs for manufacturing automobile bulbs and in the form imported they were not bulbs for the purposes of SI. No. 4 of the Table under Notification No. 67/83-C.E. He referred to the HSN explanatory notes and submitted that as the goods were correctly classifiable in terms of the headings and Section/Chapter notes, there was no question of resorting to the General Rules of Interpretation except Rule 1 of the said rules. It was also his plea that the General Rules of Interpretation were only for determining the classification under the Tariff and not for extending the benefit of exemption notification. He referred to the Tribunal decision in the case of Maruti Udyog Ltd. v. Collector of Customs reported in 1996 (16) RLT 646 (Tribunal). He pleaded that the importers had not correctly described the goods imported and there was suppression of the facts as discussed by the Adjudicating Authority in his order. It was his submission that Under Section 46(4) of the Customs Act, 1962, it was incumbent on the importers to correctly described the goods. In this case, the parts had been imported while the goods had been described as bulbs. He also pleaded that the duty involved was about Rs. 11,00,000/- and the penalty of Rs. 5,00,000/- was fully justified.
5. We have carefully considered the matter. The appellants M/s. Halonix Electric Ltd. were engaged in the manufacture of automobile lamp. They had imported the goods which they had described in the Bill of Entry as bulbs for automobile head lamps. In the Bill of Entry they subscribed to the declaration that they intended to avail themselves of the credit under Modvat Rule 57A of the Central Excise Rules, 1944 in respect of the goods covered by the Bill of entry. The goods imported were fitted to a base depending upon the type of vehicle in which the finished product bulb was required to be used. The top portion was painted to avoid refraction. The final product was cleared as a bulb.
6. We have seen the sample of the goods imported and the resultant product. The resultant product was classifiable as bulb and we consider that what the importers had imported was not a finished bulb as known commercially and that the goods imported were parts for manufacturing the final product/automobile bulb.
7. The ld. Advocate have argued that in terms of the Rules of Interpretation even unfinished goods were to be treated as the finished goods. Under the General Rules of Interpretation as per Rule 1 for legal purposes the classification has to be determined according to the terms of the headings and any relevant section or chapter notes and the resort to other rules, other than Rule 1 can be had only when the goods are not otherwise classifiable in terms of the headings read with applicable section/chapter notes. In this case the goods imported were solely and predominantly usable with the automobile bulb. The goods in the form imported were not covered by any specific heading/sub-heading. They had to be classified in terms of Note 2(b) Under Section XVI of the Tariff.
8. The Departmental Representative had referred to the Tribunal decision in the case of Collector of Customs, Bombay v. Maruti Udyog Ltd. 1996 (16) RLT 646 (Tribunal) where the Tribunal had observed that the interpretative Rule 2(a) of the Tariff was not applicable to exemption notification. As we have observed above in terms of the Rule 1 of the General Rules for Interpretation the classification had to be determined in terms of the headings in the Tariff read with applicable section/chapter notes, we also consider that when the parts are taken for classification as the machine or goods in terms of Note 2(b) Under Section XVI they do not become the final product as such. In the exemption Notification No. 67/83-C.E. parts of the flourescent lighting tubes were covered by SI. No. 11 of the Table and other parts other than those of flourescent lighting tubes were covered by SI. No. 12 of the Table aforesaid : the parts of the bulbs were separately described in the Table, we consider that they were not covered by SI. No. 4 of the said table.
9. We find that in the Bill of entry the goods had been described as bulb for automobile head lamp. In the show cause notice it had been alleged that the importes had intentionally declared the item under import i.e. Glass Shell (capsule) having filament fitted inside and three metal leads coming out of capsule as bulbs for automobile head lamps whereas the same was component/parts of the bulb so as to evade countervailing duty at the rate of 15% thereon under SI. No. 12 of the Table under Notification No. 67/83-C.E. It has been further alleged that the importers had mis-declared the description of the goods under import and suppressed the actual facts while filing the Bills of entry. The show cause notice had been issued on 3-2-1992 and the duty had been demanded from November, 1988 to January, 1990. It is seen from the statement that Page 27 of the paper book that the assessment from 29-9-1989 were provisional assessment. The limitation thus for the period from 29-9-1989 onwards will be relevant. As regards the period 22-11-1988 to 31-1-1989 it is seen that the countervailing duty was levied and paid and was specifically refunded. For the period from 21-2-1989 to 7-9-1989 the countervailing duty was not levied and the goods were cleared after extending the benefit of exemption under Notification No. 67/83-C.E. The date on which the duty was refunded to the appellants in respect of the Bill of entries dated 22-11-1988,3-1-1989 and 30-1-1989 is not on record. We specifically asked the ld. Advocate with regard to the date on which the refund was sanctioned and she was unable to give the exact date on which the refund was sanctioned to the appellants.
10. Further we find that for the Bill of entries dated 21-2-1989 to 7-9-1989 the CV duty was not levied by the Revenue themselves. Subsequently the assessments were made provisional. From the discussion in the Order-in-Original it is seen that the Department has to seek clarification from the DGTD and then the matter had to be discussed in the conference of the Collector of Customs and Central Excise. We also observe that on the Bill of entry the appellants while giving the description as bulb has subscribed to the declaration that they were going to avail the benefit of Modvat credit. Even otherwise the goods imported by them were declared to be inputs for the purpose of Rule 57A of the Central Excise Rules, 1944. As we have observed above the assessments from 29-9-1989 onwards were provisional and will not be hit by time bar. For the earlier period we consider that the demand was hit by time bar.
11. In view of the above discussion we consider that only the demand when the assessment were provisional is sustainable.
12. In the facts and circumstances of the case we also consider that there was no ground for imposing penalty.
13. Taking all the relevant facts and considerations into account the demand with respect of the bill of entries where the assessments were provisional is confirmed. The order relating to the imposition of penalty is vacated. Ordered accordingly.