ORDER
P.G. Chacko, Member (J)
1. Examined the records and heard both sides.
2. The applicants, manufacturers of Vanaspati (Sub-heading 1504 of the Central Excise Tariff Schedule), imported a consignment of crude palm oil (raw material) and cleared the same under few Bills of Entry at concessional rate of duty under a Customs notification which prescribed end-use of the goods. The total quantity of crude palm oil covered by the Bills of Entry was 6200.735 MTs, out of which a quantity of 6157.560 MTs only was received in the applicant’s factory. The differential quantity (43.175 MTs) was claimed to have been lost in transit, by the party, who accordingly filed an application for remission of duty with the Assistant Commissioner concerned. Meanwhile, the department took the stand that the quantity of 43.175 MTs of crude palm oil was not put to the intended use and hence the benefit of concessional duty was not available to such quantity. On this basis, the department, by show cause notice, demanded duty amounting to Rs. 1,75,627/- and proposed to impose penalty on the party under Section 117 of the Customs Act. The demand of duty and the proposal for imposing penalty were resisted. The adjudicating authority confirmed the demand of duty under Rule 9 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 read with Section 28 of the Customs Act and also imposed a penalty of Rs. 30,000/- on the party under Section 117 of the Act. The appeal preferred by the aggrieved party against the decision of the original authority did not succeed before the Commissioner (Appeals). Hence, the appeal and the present application before the Tribunal.
3. Ld. Consultant for the applicants submits that the remission application is still pending and hence the demand of duty is unjustifiable. The differential quantity of 43.175 MTs of crude palm oil was lost in transit from the Customs barrier to the factory and hence not available for the intended use under the notification. Hence, the department’s allegation that the end-use condition under the notifications had been violated with intent to evade payment of duty cannot be sustained. Ld. Consultant further submits that there is no reason whatsoever to impose any penalty on the applicants under Section 117 of the Customs Act. Further, he questions the applicability of Board’s Circular No. 46/96-Cus., dated 30-8-96 to the facts of this case and also claims support from the decisions of the Tribunal in Century Textiles & Industries Ltd. v. CC, Mumbai [1998 (100) E.L.T. 466] and Madras Petrochem Ltd. v. CC, Mumbai [1999 (112) E.L.T. 336]. Ld. Consultant submits that the applicants have a strong prima fade case on merits warranting waiver of pre-deposit and stay of recovery in respect of the duty and penalty amounts. He also points out that an amount of Rs. 50,000/- is already lying in deposit with the lower appellate authority.
4. Ld. SDR opposes this application and submits that Section 23 of the Customs Act, relied on by the applicants, is not applicable to this case at all. On the admitted facts of this case, the differential quantity of 43.175 MTs. of crude palm oil was imported at concessional rate of duty under the notifications for a specified purpose. That the intended purpose was not fulfilled in respect of this quantity of the raw material is not in dispute. Hence, this quantity of the raw material was chargeable to duty of Customs at full tariff rate and, therefore, the demand of duty cannot be faulted in any way. The penalty imposed on the party is only marginal.
5. After carefully examining the records and submissions, I find that the applicants do not have a strong prima facie case. It appears from the record that the imported raw material was cleared under more than one Bills of Entry during the period January to March, 2000. For the period prior to 1-3-2000, it appears, the raw material was chargeable to duty at concessional rate under Notification No. 84/98-Cus., dated 2-11-98, and, for the remaining period, Notifications 16/2000-Cus., dated 1-3-2000 (as amended) and 18/2000-Cus., dated 1-3-2000 (as amended) provided concessional rates of duty for the goods. It is an admitted fact that, under each of these notifications, there was an end-use condition which was to the effect that the crude palm oil would be used in the manufacture of Vanaspati (final product). It is again not in dispute that the entire consignment was cleared under Bills of Entry for home consumption and that the alleged loss of material occurred in transit of the goods from the Customs barrier to the factory. This loss was to the extent of 43.175 MTs, in respect of which the remission application filed by the party is said to be pending with the department. It has been fairly conceded by Id. Consultant that the loss occurred after clearance of the goods for home consumption. Section 23 of the Customs Act which is claimed to be the relevant provision of law governing such remission applications, is apparently not applicable to these facts inasmuch as the loss did not occur prior to clearance for home consumption. Ld. Consultant has not been able to cite any other provision of law which entitled the party to claim remission of duty of Customs on the raw material lost in transit from the Customs barrier to the factory. In the circumstances, apparently, pendency of the remission application is immaterial to this case. Since, the end-use condition under the notifications, admittedly, has not been fulfilled in respect of the differential quantity 43.175 MTs of crude palm oil, the benefit of concessional duty under the notifications appears to be unavailable to this quantity and the demand of differential duty is prima facie sustainable. In this case, the penalty of Rs. 30,000/-imposed by the original authority has been reduced to Rs. 1000/- by the Commissioner (Appeals). There appears to be no valid reasons stated in the impugned order as to why the residual provisions of Section 117 for imposing penalty were invoked in this case. There is no plea of financial hardships in the present application. Having regard to the totality of the facts and circumstances already recorded, I am of the view that the applicants should be directed to pre-deposit a substantial part of the duty amount. They have already deposited Rs. 50,000/- with the lower appellate authority. I direct the applicants to deposit an amount of Rs. 25,000/- for the purpose of this appeal under Section 129E of the Customs Act within six weeks from today and report compliance on 35-6-2003. There will be waiver and stay in respect of the penalty amount and the balance amount of duty in the event of due compliance with this direction.