9911796707
TMI Blog1997 (10) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... landestinely removed during the period from 1-3-1986 to 25-5-1987 without payment of duty holding them to be articles of iron and steel classifiable under sub-heading 7308.90 of the Schedule to the CETA, 1985, confiscating 5,130 pieces of cops seized on 28-5-1987 with an option to redeem the same on payment of a fine of Rs. 50,000/- (duty of Rs. 7,695/- on this quantity of cops was paid by the appellants on 24-7-1987) and imposing a penalty of Rs. 5 lakhs on the appellants for contravention of the relevant Central Excise Rules. 2. Shri R. Santhanam, learned Counsel raised the following points : (i) The appellants imported steel tubes on payment of appropriate customs duty and CVD under sub-heading 7304.39 of the Schedule to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returned to the appellants. (vii) If the appellants are held liable to pay duty on the steel cops, the benefit of Modvat credit of duty paid on the tubes is to be extended. (viii) Lastly, he submits that the quantum of redemption fine and penalty are excessive, having regard to the value of the seized goods and the amount of duty confirmed. 3. We have heard both sides and perused the records. Our findings are recorded below : (i) In para 15 of the impugned order the adjudicating authority has recorded that he examined a sample of the item in dispute and it was found that a piece of steel tube undergoes various processes and quite a few precision fittings and designed specifications are fixed to make it capable of be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) to Section XVI which excludes "bobbins, spools, cops, cones, cores, reels or similar supports of any material (Chapter 39, 40, 44 or 48, or Section XV)" (Chapter 73 under which the disputed goods have been classified falls under Chapter XV and, therefore, it excluded from XVI, on an application of above mentioned Section Note). The case law relied upon by the learned Counsel to support his contention that the activity is carried out by the appellants on the imported steel tubes do not amount to manufacture is distinguishable - in the case of Bharat Forge and Press Industries P. Ltd. v. CCE reported in 1990 (45) E.L.T. 525 (S.C.), the Hon'ble Supreme Court held that although pipe fitting, elbow bends, reducers, etc., are produced by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn is marketed after it is wound on the cops. The cops are not used for maintenance of splitting machine. The cops are not required for the purpose of keeping the splitting machine in proper condition or in good order. It can be said that mono-filament yarn cannot be kept in a proper condition without the cops on which it is wound, as the yarn may become tangled unless wound on cops, but this is far from saying that cops are required for the maintenance of the splitting machines. The adjudicating authority has therefore, rightly denied the benefit of Notification to the cops and we uphold his findings on this issue. (iv) The Department has invoked the extended period of limitation on the ground that the appellants suppressed material fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tubes. The appellants were also clearing the yarn on what was described by as cops. Therefore, they had knowledge that they were manufacturing cops and cannot be said to be under any bona fide belief that the cops were nothing but steel tubes. In these circumstances, we hold that there was suppression on the part of the appellants with intent to evade payment of duty and hence the extended period of limitation is attracted and the demand is not hit by limitation. (v) The appellants stand that cops are never sold by them but returned to them by the buyers of yarn is immaterial for the purpose of levy of duty which is attracted as soon as the goods are manufactured - in this case the cops were manufactured by the appellants and they are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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