1984 (8) TMI 319 - AT - Customs

Issues Involved:
1. Demand of differential Customs duty and imposition of penalty.
2. Alleged mis-declaration of imported goods.
3. Limitation for demand of differential duty.
4. Applicability of Notification No. 240-Cus., dated 30-12-1978.
5. Provisional assessment under Section 18 of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Demand of Differential Customs Duty and Imposition of Penalty:
In Appeal No. 2095/83, the Collector of Central Excise, Jaipur, demanded differential Customs duty amounting to Rs. 5,94,075.90 and imposed a personal penalty of Rs. 1,00,000/- under Section 112 of the Customs Act, 1962. The appellants, M/s. Taito Watch Manufacturing Industries, were accused of importing watch movements and banned items instead of watch parts, thus violating the conditions of Notification No. 240-Cus., dated 30-12-1978. Similarly, in Appeal No. 2096/1983-B, M/s. Rajasthan Watch Manufacturers faced a demand of Rs. 2,74,997.85 and Rs. 1,70,589.51 in differential duty and a penalty for similar violations. Both appellants denied the allegations, claiming the goods were imported and cleared as per prescribed rules and were examined by Customs authorities without objections at the time of clearance.

2. Alleged Mis-declaration of Imported Goods:
The appellants argued that the goods were cleared by Customs after physical examination, and no objections were raised at that time, thus negating any charge of mis-declaration. The invoices described the goods as components of watch movements in CKD condition, and the examination reports confirmed this description. The Tribunal found that the description of goods in the invoices matched the physical verification by Customs authorities, and there was no evidence of collusion or negligence by Customs officers. Therefore, the charge of mis-declaration against the appellants failed.

3. Limitation for Demand of Differential Duty:
The appellants contended that the demand for differential duty was time-barred under Section 28 of the Customs Act, 1962. The Tribunal referred to the decision in M/s. Vikash Watch Manufacturing Industries, where it was held that in the absence of provisional assessment and clear evidence of suppression or fraud, the limitation period for demanding differential duty is six months from the date of payment of duty. The Tribunal applied this principle, concluding that the demand for differential duty in the present cases was time-barred, except where provisional assessments were made.

4. Applicability of Notification No. 240-Cus., dated 30-12-1978:
The concessional rate of duty under Notification No. 240-Cus., dated 30-12-1978, was dependent on the phased production program. The Collector's interpretation that the 'year' referred to the British calendar year was not supported by the authorities' clarification that the phase referred to the completion of the approved quantity, not necessarily within a calendar year. The Tribunal found no clear reasoning in the Collector's orders to conclude that the appellants did not fulfill the phased production program, thus setting aside the denial of the concessional rate of duty under the notification.

5. Provisional Assessment under Section 18 of the Customs Act, 1962:
The Tribunal noted an important fact regarding provisional assessment that was not addressed during arguments or in the Collector's order. An endorsement in the examination report indicated that a bond was executed, suggesting provisional assessment for certain clearances. The Tribunal clarified that the relief granted in respect of differential duty applies only to clearances not subject to provisional assessment under Section 18 of the Customs Act, 1962. For clearances with provisional assessments, the appellants must satisfy the authorities of fulfilling the conditions of Notification No. 240-Cus., dated 30-12-1978.

Conclusion:
The Tribunal set aside the penalties imposed on the appellants and the demand for differential duty for consignments not subject to provisional assessment. The appeals were disposed of accordingly, with the stipulation that for any provisional assessments, the demand for differential duty would be covered by Notification No. 240-Cus., dated 30-12-1978, upon fulfillment of its conditions.

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