TaxTMI 
TaxTMI 
2004 (11) TMI 259
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....e a bond with the Assistant Commissioner of Customs for producing evidence to the effect that the imported components have been used in the manufacture of watches. The evidence is in the form of a certificate to be issued by the jurisdictional Assistant Commissioner of Central Excise where the factory manufacturing watches is situated. Once the certificate is produced, the bond executed with the Assistant Commissioner of Customs in the port of import is cancelled. The present appeal covers the period form 1989-1990 to 1990-1994. In the impugned order, the Commissioner of Customs has decided three show cause notices issued by the Commissioner of Customs, Bangalore and one show cause notice dated 21-3-1995 issued by the Commissioner of Customs, Chennai. 3.The Directorate of Revenue Intelligence, Bangalore conducted investigations on the basis of certain intelligence into the imports made by the appellant under the above mentioned three customs notifications. The investigations revealed that the appellants have not used all the goods imported in the manufacture of watches, as some of the imported components have been rejected. The rejected components were re-worked and some of them....
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....ppellants diverted materials imported under concessional rate of duty for supply as spare parts. The total demand on account of this factor is Rs. 1,09,40,000/-. (3) The appellants sent watch movements etc., to their Dehradun factory and watches were assembled at Dehradun from the movements manufactured at Hosur. But the appellants produced certificate only from Assistant Collector of Central Excise Hosur. Hence the appellant is not entitled for concessional to the tune of Rs. 40,09,916/-demanded in the show cause notice dated 4-12-1995. The learned advocate for the appellants dwelt at length on the interpretation of the words "Used in the manufacture" mentioned in the relevant notification. He said that the words "used in the manufacture" should not be taken to mean only raw-materials consumed in the final product but covers all goods subjected to any process of manufacture. It is not necessary that the goods or inputs should be present in the final product or that the process of manufacture of finished goods should be complete. It was submitted that the watch making being a high precision industry, all the parts and components were sub....
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....d agencies and such certificate is obtained it is not open to the department to question such satisfaction. In MRPL v. [1991 (55) E.L.T. 437] the Supreme Court has laid down the test to determine whether the conditions prescribed in the notification is mandatory and substantive or merely procedural. The Hon'ble Supreme Court observed that stringency and mandatory character must be justified by the purpose intended to be served. The mere fact that it is statutory does not matter one way or other. There are conditions and conditions. Some may be substantive and mandatory and based on consideration of public policy and some others may merely belong to the procedure. It has been held that what has to be considered is whether the use to which the products were put was the prescribed end use in fact and the mode prescribed for showing that this was so is only procedural. Consequently, the goods had to be regarded as being put to the prescribed end use if in fact they were so used regardless of whether the prescribed mode of establishing fact was satisfied or not. The learned Advocate relied on the following decisions : (1) Breach Candy Hospita....
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....tions of the notification and hence they are not entitled for the benefit of notification in respect of items not used in the manufacture of watches. It was further contended that a distinction should be made between the phrases "Used in the manufacture" and "Used in relation to manufacture". A very strict interpretation should be given to these words and if the imported parts are not found in the finished products, no benefit of concessional rate of duty should be given to the appellants. It was further urged that inasmuch as some of the imported items have been re-exported they could not said to have been used in the manufacture of watches. Moreover when the department seized the goods the bond had already been cancelled. This clearly indicates that the appellants have violated the conditions of the notification as they had got the bonds cancelled, even when some of the items were not put to use in the manufacture of watches. 10.We have considered the rival submissions. There are three main issues to be decided in this appeal. We shall deal with them one by one. (1) The first issue is whether rejects should be deemed to have been us....
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.... that no concessional rate of duty can be given as the notification are clearly violated. If the appellant is able to prove that quantity sent as spares is much less than the quantity imported after paying import duty then the department has no case. No concessional rate of duty is admissible to goods imported under exemption notification and which were written off. Hence, these points have to be re-examined by the Original adjudicating authority. This can be done only by remanding the matter to the commissioner. (3) The third point relates to end use certificate. The adjudicating authority holds that the appellant suppressed the fact of diverting the components to Dehradun from the Assistant Commissioner and wrongly got the end use certificate from him. The appellant strongly contended that the department knew that some of the goods were sent to Dehradun for assembly of watches. While going through the enormous evidence produced before us, we find that the order in Original No. 27/93 dated 20-4-1993 has been passed by the Assistant Collector of Central Excise Hosur, with regard to the wrong availment of Modvat credit by M/s. Titan Watch....