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TMI Blog2000 (5) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer to customers. The concessional rate of Customs duty under this notification was 50% ad valorem. 2.By a Show Cause Notice dated 14-9-1992, the appellants were called upon by the Department to show cause why differential Customs duty should not be demanded from them with regard to the quantity of components imported in CKD condition under Notification No. 222/87 as amended and used for purposes of supplies to the spare parts requirements of dealers/depots. It was alleged that the appellants had used components of CKD kits imported under the concessional rate available under Notification No. 222/87 for meeting the spare part requirements for vehicles under the warranty scheme. The Department alleged that diversion of components of CKD kits for the said purpose amounted to non-fulfilment of the conditions prescribed under Notification No. 222/87 and consequently differential Customs duty between the full tariff rate of Customs duty normally applicable on such components and the concessional rate availed by the appellants under Notification No. 222/87 was required to be discharged by the appellants. The duty demand was worked out at Rs. 24,57,753.09 on the basis of ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts were also simultaneously eligible for the concessional rate of Customs Duty under Notification No. 74/85 relating to import of such components for after-sales service requirements. Therefore the appellants were entitled to the concessional rates available under Notification No. 74/85. The differential rate of duty confirmed by the Commissioner between the tariff rates and the concessional rates under Notification No. 222/87 was, therefore not maintainable since in any case the concessional rates under Notification No. 74/85 could not be denied to the appellants and the difference if any, that could be demanded would only be the differential rate between the rates chargeable under Notification No. 222/87 and Notification No. 74/85. 7.Further, it was submitted that the Commissioner had failed to take note of the fact that the appellants had replaced the quantity of components that was lying outstanding as on 1-5-1992 and hence no duty demand could have been confirmed. This would, in effect, completely neutralise any differential in duty since the appellants had cleared the subsequent imports after payment of duty at the relevant rate. The appellants also contended that none of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatute book at the time of passing the impugned order and there was no illegality in invoking the same in the facts and circumstances of the case. 10.We have considered the submissions. On merits we find that the Department's case is well founded. The fact has not been disputed that the appellants had diverted the goods imported under concessional rate of duty under Notification No. 222/87 for uses other than those allowed under that Notification. The fact that there was another notification viz. 74/85 which also allowed a concessional rate of duty (albeit less favourable) and the diversion was for purposes covered by that Notification will not absolve the appellants of the duty liability arising from such diversion. The question then arises whether the rate of duty chargeable in the case of goods diverted will be the rate of duty normally chargeable or it will be the rate chargeable under Notification No. 74/85. In terms of the opening para of Notification No. 222/87, the exemption is from the duty of Customs leviable under the Customs Tariff Act, 1975 and the additional duty leviable under Section 3 of that Act. Since the said notification does not make it a condition that wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to demand raised by Show Cause Notice dated 5-9-1981 would be valid especially when the assessee had requested well before personal hearing held in 1989 for copies of the RT 12 returns etc. (which assessee claimed were lost during a fire in 1984) was not respondend to by the Assistant Collector. It was held that the fact that no limitation was provided in the law for conclusion of adjudication proceedings did not mean that there was no time limit at all. It was held that in such circumstances the concept of reasonable time would apply. The adjudication was set aside in those circumstances. We note that in the instant case that though there was a gap of nearly 4½ years between the dates of holding of the two personal hearings, this by itself cannot be made a ground for setting aside the impugned order in the absence of any irrepairable damage caused to the appellants due to such delay. The case law relied on does not advance the case of the appellants in the facts and circumstances of the case. 13.As regards liability to pay interest under Section 11AB of the Central Excise Act, we have gone through the case law relied on by the ld. Consultant viz. (a) Maruti Udyog Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant's defence on the ground that according to Notification No. 222 of 1987, if the components imported for manufacture was not used for that purpose, the appellants "shall pay an amount equal to the difference between the duty leviable on such quantity of the said imported goods but for the exemption" and the amount paid at the time of importation. 21.From the records of the case and the submissions made, I find that both the sides are agreed that what is involved is essentially an interchange of components imported under two streams - manufacture of new vehicles and supply as spares. As both the imports were eligible for concessional assessment, if the goods diverted from manufacture to supply as spare parts was to be assessed to differential duty, the goods diverted from imports for supply as spare parts to use in manufacture would also have to be re-assessed at the concessional rate applicable to them and short and excess payments adjusted. Thus, the short levy claimed under one count would be liable to be given back under the other count of excess levy, thus, making the reassessments a revenue neutral activity. Even if the reassessment is undertaken only in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int whether in the facts and circumstances of the case, differential duty demand would arise since the assess simultaneously was eligible for exemption under a second exemption notification and had replaced the diverted components with components imported under the second exemption thus making the inter change Revenue neutral. The ld. Member (Judicial) is of the view that the fact that there was another notification viz. 74/85 which also allowed a concessional rate of duty (albeit less favourable than Notification No. 222/87) and the diversion was for purposes covered by that notification will not absolve the appellants of the duty liability arising from such diversion. He has also not found any merit in the contention of the appellants that they would in any case be entitled to the rate applicable to import under Notification No. 741/85 and has upheld the levy of duty to such diverted components at the tariff rates. The ld. Member (Technical) on the contrary is of the view that this essentially is a case of interchange of components under two streams - manufacture of new vehicles and supply as spares. As both the imports were eligible for concessional assessment if the goods diver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account within a period of 3 months or such extended period as allowed; and (d) he shall pay, on demand, in the event of his failure to comply with any of the stated conditions, an amount equal to the difference between the duty leviable on such quantity of the said imported goods but for the exemption contained herein and that already paid at the time of importation (emphasis added). Therefore, in terms of the provisions of the notification itself, the party is liable to pay the differential duty as demanded from them. The ld. Counsel of the appellants places reliance on the Tribunal decision in Gujarat State Fertilizer Co. Ltd. v. CCE, Vadodara [1996 (83) E.L.T. 159 (T)] in which it is held that if the appellants had not filed their classification list claiming the benefit of the notification, the consequence thereof could not be to deprive them of the benefit thereof while responding to the Show Cause Notice. The cited decision is rendered under the Central Excise Act and Rules and the facts therein are not pari materia to the ones under consideration. Besides, as analysed above, the estoppel against giving the benefit of any other exemption is built in the Notification No. 222/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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