2018 (7) TMI 1542 - AT - Customs

100% EOU - import of Mavowatt meters - benefit of N/N. 53/97 Custom dt. 03.06.97 - it was alleged that the imported meters have been cleared on payment of appropriate duty without undertaking any manufacturing operation - case of appellant is that process of clearance of goods after testing, calibaration amounts to manufacture in terms of Para 9.37 of the Foreign trade Policy and hence the demand is not sustainable. Held that - The contention of the Appellant that they undertook activity of calibaration and testing is absolutely incorrect. The Commissioner (Appeal) also found that the statement of senior functionaries clearly indicated that the goods did not underwent any processing/ testing/ caliberating activity - demand upheld. Penalty - Held that - The appellant tried to mislead by making story of activities carried out on the imported goods which was found contrary to the statements of various persons recorded. Thus appellant did not come with their defence with clean hands - in view of the malafide conduct of the appellant, they do not deserve leniency - penalty also upheld. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether the imported goods underwent manufacturing processes justifying exemption from duty.
2. Whether the penalty imposed on the Appellant is justified.

Analysis:
1. The appeal was against an Order-in-Appeal passed by the Commissioner of Central Excise alleging that imported meters were cleared without undergoing any manufacturing operation, resulting in short payment of duty. The Appellant argued that the goods underwent testing and calibration, constituting manufacturing activity exempt from duty. However, the Commissioner held that no such activity was undertaken, supported by statements from senior functionaries admitting the goods were cleared without any manufacturing. The Appellate Tribunal upheld this finding, noting that the goods were cleared as-is without any processing, testing, or calibration. The Tribunal found the Appellant's contentions incorrect based on their own records and statements, affirming the duty demand and dismissing the appeal.

2. Regarding the penalty, the Appellant claimed no malafide intention and no suppression, thus arguing against its imposition. The Tribunal, after considering both sides, found the Appellant's attempt to mislead by fabricating activities on the imported goods contradictory to recorded statements. As a result, the Tribunal concluded that the Appellant did not present a defense with clean hands, indicating malafide conduct. Consequently, the Tribunal upheld the penalty, emphasizing that the Appellant's actions did not warrant leniency. The impugned order, including the penalty, was upheld, and the appeal was dismissed.