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TMI Blog1989 (10) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... oners had imported certain watch case components covered by Invoice of the Manufacturers dated 24-5-1986 (placed at p-4). The first two items of the invoice were covered by standard rate of duty as per tariff. The remaining four items of the invoice were eligible for concessional rate of duty, subject to the execution of a bond for the production of end-used certificate. The last item namely O Ring the invoice value of which was 1013.00 US Dollars was the subject matter of adjudication proceedings which led to its confiscation. The applicants did not avail of the option to clear the same by payment of fine in lieu of confiscation. The Item Nos. - 3, 4 and 5 were cleared at the concessional rate of duty on the strength of a bond which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignorance of following the proper procedure. In the process they had lost the chance to obtain re-payment of the duty originally paid by them on the defective parts. They should not be penalised by being made to pay the differential duty on such re-exported goods. He also contended that the differential duty on the re-exported goods would actually work out to about Rs. 20,000.00 whereas they have been asked to pay a sum of Rs. 94,291.53 which represented the differential duty in respect of all the items figuring at Serial No. 3, 4, 5 and 6 of the Invoice as explained by him. Even if the demands were to be held as valid, the amount should be only in respect of the re-exported goods which could not be used in the manufacture of watches in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back shipping bill. 4. Replying to the arguments of the Ld. Counsel, Shri P.C. Jain, the Ld. J.D.R. stated that the objection taken by the Consultant about the non-issue of notice as required under Section 28 of the Customs Act is not tenable as the petitioners had executed a bond to pay the differential duty in respect of the goods not used in the manufacture of watches. The grounds for demanding the differential duty had been made clear in the letters addressed to them by the Assistant Collector and their reply also was taken into account. The confirmation of demand does not suffer from any procedural irregularity. He then proceeded to argue that the demand had been confirmed in terms of the bond in respect of the goods for which the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be defective and had to be returned. It appears that there is no serious objection from the Department about the fact whether the defective goods were in fact re-exported. In the first case, there is clear remark in the invoice as well as the end-use certificate that the defective items had been re-exported for free-replacement. The non-fulfillment of the terms of the bond was because of the goods turned out to be defective and unsuitable for use in the manufacture of watches. Their re-export has also not been doubted. The payment of duty is for import of goods and the differential duty would be demandable on the ground that unaccounted goods had not been used in the manufacture of watches. Where the goods were clearly unaccounted and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants should have re-exported the rejected parts under a drawback shipping bill and not under an ordinary shipping bill places the problem in a queer perspective. The Ld. J.D.R. in reply to a poser from the Bench stated that even if they had followed the drawback procedure, that would not affect the recovery of the differential duty which is covered by the demand issued. This is because the demand has been issued in pursuance of the bond executed by them in terms of the exemption notification. As long as the terms of the bond have not been fulfilled by producing the required end-use certificate, differential duty will be recoverable. The strangeness of this situation will be that that if drawback procedure had been followed, the original ..... X X X X Extracts X X X X X X X X Extracts X X X X
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