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Hmt Watch Factory I and Ii Vs. Commissioner of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Bangalore
Decided On
Judge
Reported in(2002)(84)ECC95
AppellantHmt Watch Factory I and Ii
RespondentCommissioner of Customs
Excerpt:
1. this appeal has been filed by m/s. hmt watch factory i & ii jalahalli, bangalore (hereinafter referred to as hmt) against the order-in-original passed by the collector of customs, bangalore. (a) on 26.10.90, the officers visited the factory premises of hmt on gathering intelligence that huge stock of smuggled watch parts and components such as watch movements (movement sets) stored in the factory premises. on search they found 10,000 sets of components of watch movement of citizen calibre 8200 in ckd condition. on enquiry with mr. b. ahmed jan, manager revealed that 10,000 sets were received in his section on 25.10.90. he produced two bills no. 015/90 dated 16.10.90 of m/s. r.r. corporation, navsari for rs. 20,95,808. another bill no. 010/90 dtd. 22.10.90 of m/s. vespa trading.....
Judgment:
1. This appeal has been filed by M/s. HMT Watch Factory I & II Jalahalli, Bangalore (hereinafter referred to as HMT) against the Order-in-Original passed by the Collector of Customs, Bangalore.

(a) On 26.10.90, the Officers visited the factory premises of HMT on gathering intelligence that huge stock of smuggled watch parts and components such as watch movements (movement sets) stored in the factory premises. On search they found 10,000 sets of components of watch movement of Citizen Calibre 8200 in CKD condition. On enquiry with Mr. B. Ahmed Jan, Manager revealed that 10,000 sets were received in his section on 25.10.90. He produced two Bills No. 015/90 dated 16.10.90 of M/s. R.R. Corporation, Navsari for Rs. 20,95,808. Another Bill No. 010/90 dtd. 22.10.90 of M/s. Vespa Trading Co., Bombay for Rs. 8,57,792 towards purchase. He opined that the goods were of foreign origin (Japanese). On further enquiry, it was learnt they had received another consignment of 5075 sets of Citizen Calibre 3200 components of watch movements from Lakshmi Watches Pvt. Ltd., vide material inwards Slip No. 902891 dtd. 30.8.90 and these were issued for production. Out of the components of watch movements supplied by Lakshmi Watches Pvt. Ltd., M/s. HMT had already manufactured 713 Nos. of watches which were pending strapping, another 82 Nos. were under sampling and testing and 4101 were in the assembly line and were semi-finished. In addition about 15 parts were found as such in specified quantities.

The value of goods supplied by Lakshmi Watches Pvt. Ltd., was estimated at Rs. 28,63,660 based on the sale price of watches supplied by R.R. Corporation and M/s. Vespa Trading Co. were arrived at Rs. 20,15,200 and Rs. 8,16,050 respectively based on supplier bills.

(b) (i) As the components of watch movements in CKD condition supplied by M/s. R.R. Corporation and M/s. Vespa Trading Co. were not covered by any document showing their licit importation other than the invoices, and neither were they obtained under transport documents specified for notified goods, the same were seized under Mahazar.

(ii) As regards the goods supplied by M/s. Lakshmi Watch Pvt. Ltd., watches both finished and semi finished, made out of the components of the watch movements imported by M/s. Lakshmi Watch Co., for which Bills of entry and import documents were produced were also seized under Mahazar dtd. 26.10.90 as the watch movements were sold to HMT in contravention of the provisions of Customs Act and Notification issued there under. In addition, file given by one Shri Kaul containing invoices, bills of entry etc. was also seized.

(c) Based upon the investigation, a Show Cause Notice was issued on 26.2.1991 as to why: (i) the wrist watch movements of 8200 calibre of Citizen Watch Company Japan, supplied by M/s. Lakshmi Watches Pvt. Ltd., Bangalore to M/s. HMT Ltd., Watch Factory I & II, Bangalore valued at Rs. 14,30,916.24 (including the goods under seizure) should not be confiscated under Section 111(o)/111(p) of the Customs Act, 1962.

(ii) the Enduse Bond executed by M/s. Lakshmi Watches Pvt. Ltd , Bangalore on 28.8.90 towards differential duty of Rs. 6.75 Lakhs should not be enforced under the provisions of Section 142 of the Customs Act, 1962 and as to why the bank guarantee for a sum of Rs. 1.35 lakhs executed on 28.8.90 by M/s. Indian Overseas Bank, Jayanagar, Bangalore in respect of the said bond should not be enforced under the provisions of the said section.

(iii) the 10,000 Nos. of ADD wrist watch movements 8200 calibre (in CKD condition) supplied by M/s. Vespa Trading Company, Bombay and M/s. R.R Corporation Navsari, Gujarat to M/s. HMT Ltd., Watch Factory I & II, Bangalore together valued at Rs. 28,31,250 now under seizure should not be confiscated under Section 111(o)/111(p) of Customs Act, 1962.

(iv) the 4896 Nos. of ADD Wrist Watches valued at Rs. 27,49,710 manufactured out of the wrist watch movement supplied by M/s.

Lakshmi Watches Pvt. Ltd., Bangalore should not be confiscated under Section 120(1)/120(2) of the Customs Act, 1962.

(v) the plastic/polythene covers and the other packing materials such as cardboard boxes used for keeping/concealing the goods under seizure, should not be confiscated under Sections 118/119 of the Customs Act, 1962.

(vi) penalty should not be imposed on them under Section 112(a) & (b), (i) & (ii) of the Customs Act, 1962.

(vii) The Show Cause further alleges that the watch movement being notified goods under Section 123 of the Customs Act, 1962 and the same were seized from the possession of M/s. HMT Ltd., in the reasonable belief that they were smuggled goods, the said M/s. HMT Ltd., were also called upon to prove as required under the said section that the goods under seizure were not smuggled into India.

(d) The adjudicator after hearing the parties passed the following order: (i) I order confiscation of the said ADD wrist watch movements of 8200 calibre of M/s. Citizen Watch Company, Japan, supplied to M/s.

Lakshmi Watches (Pvt) Ltd., Bangalore to M/s. HMT Ltd., Watch Factory I & II, Bangalore valued at Rs. 14,30,916.24, under the provisions of Section 111(o)/111(p) of the Customs Act, 1962.

However, I allow M/s. HMT Ltd., Watch Factory I & II, Bangalore to redeem the said ADD wrist watch movements on payment of Redemption Fine of Rs. 3,00,000 (Rupees Three Lakhs only) under the provisions of Section 125 of the Customs Act, 1962, which has to be exercised by M/s. HMT Ltd., Watch Factory I & II, Bangalore within a period of 30 days from the date of receipt of this order.

(ii) A also order M/s. Lakshmi Watches (Pvt.) Ltd., Bangalore to pay differential duty of Rs. 6,75 lakhs (Rupees Six Lakhs and Seventy Five thousand only). The Bank Guarantee for a sum of Rs. 1.35 lakhs (Rupees One Lakh and Thirty Five thousand only) furnished on 28.8.90 by M/s. Indian Overseas Bank, Jayanagar, Bangalore in respect of the end use bond executed under the provisions of Section 142 of the Customs Act, 1962 is ordered enforced towards payment of the differential duty.

(iii) I further order confiscation of the said 10,000 Nos. of ADD wrist watch movements of 8200 calibre (in CKD condition) supplied by M/s. Vespa Trading Co,, Bambay and M/s. R.R. Corporation, Navsari, Gujarat to M/s. HMT Ltd. Watch Factory I & II, Bangalore, totally valued at Rs. 28,31,250 under Section 111(d)/111(p) of the Customs Act, 1962. However, I allow M/s, HMT Ltd., Watch Factory I & II, Bangalore to redeem the goods on payment of a Redemption Fine of Rs. 6,00,000 (Rupees Six Lakhs only) in addition to the relevant Customs Duty applicable as on the date of seizure of the said goods, under the provisions of Section 125 of the Customs Act, 1962, which has to be exercised by M/s. HMT Ltd., Watch Factory I & II, Bangalore within a period of 30 days from the date of receipt of this order.

(iv) I also order confiscation of the said 489S Nos. of ADD wrist watches, under seizure manufactured out of wrist watch movements supplied by M/s. Lakshmi Watches (Pvt.) Ltd., under the provisions of Section 120(2) of the Customs Act, 1962. However, I give an option to M/s. HMT Ltd., Watch Factory I & II, Bangalore to redeem the said ADD wrist watches on payment of a Redemption Fine of Rs. 1,50,000 (Rupees One Lakh and Fifty thousand only) under the provisions of Section 125 of the Customs Act, 1962, which has to be exercised by M/s. HMT Ltd., Watch Factory I & II, Bangalore within a period of 30 days from the date of receipt of this order.

(v) I order confiscation of the plastice/polythene covers and the cardboard boxes used for keeping/concealing the goods under seizure, under the provisions of Sections 118/119 of the Customs Act, 1962.

(vi) I order that no separate duties of Customs be collected while releasing the goods upon realisation of redemption fine, in respect of the goods cited at para (i) and (iv) above.

(vii) I further impose the following penalties in the order mentioned companies/firms under the provisions of Sections 112(b)(ii) and H2(a)(ii) of the Customs Act, 1962 respectively: (1) HMT Ltd. Watch Factory I & II, Bangalore. Rs. 5,00,000 (Rs. Five Lakhs only) (2) Lakshmi Watches (P) Ltd., Bangalore Rs. 1,00,000 (Rs. One Lakh only) (a) (i) Whether the goods under seizure viz., components of watch movements case parts, dial assembly, Hand sets, and Electronic circuit blocks are covered under customs Notification No. 204/84-Cus and Notification No. 205/84-Cus dated 20.7.1984 attracting the provisions of Sections 11B and 123 of the Customs Act, 1962; (ii) Whether the goods under seizure and supplied by indigenous suppliers viz., R.R. Corporation and Vespa Trading Co. are proved to be the goods of foreign origin liable to confiscation? And whether the department has discharged the burden of proving the said goods as of foreign origin? (iii) Whether the goods under seizure supplied by M/s. Lakshmi Watches Pvt. Ltd. are liable to confiscation under Section 111(d)/111(o)/111(p) of the Customs Act? (iv) Whether the order passed by the Collector suffers from the violation of the principles of natural justice, inasmuch as, the cross examination of Mr. Sunil Kothari and Mr. Vaman Gupta was denied to the HMT. (v) Whether the order passed by the Collector directing the confiscation of 4895 watches of 8200 calibre manufactured out of CKD movements supplied by Lakshmi Watches Pvt. Ltd., by invoking Section 120 of the Customs Act, sustainable in law? (vi) Whether the order passed by the Collector is without jurisdiction, inasmuch as, the order is signed on 21.7.1993 or any date thereafter, when the signatory Collector Mr. H.N. Rao was transferred and took charge as a Collector of Central Excise on 11.5.93? (vii) Whether the penalty imposed by the Collector on HMT is sustainable in law and in the facts of this case? (b) (i) On application of Sections 11B & 123 of the Customs Act, 1962, contentions of HMT are dealt with by Collector in Para 435(H) and (iii) at Page 44 & 45 of the order. The findings are given In Para 55 of his order. The Collector has held that the entries in the two notifications are identically described as "Watches, Watch movements (including partly assembled movements), dials and cases for watches". The said expression/words are neither explained nor defined within the body of the Notification. After the words "Watch movements" the word "including" is prefixed to the words "partly assembled movements". The said word "include" is generally used to enlarge the ordinary meaning of words or phrases and can be deducted by reference to Dictionaries. Trade/common parlance, and to the context of its use. In para 56, the Collector refers to the dictionary meanings of the word "Watch movements" as the mechanism of a clock not including the case or dial; movement is a device which produces recurring phenomenon and is capable of counting time: Thus the Collector held that the expression "Watch movement" does not in the ordinary meaning indicate completely assembled movement.

It is silent on the sate (sic) of assembly. We have no reason to conclude accordingly as, one cannot read into the notification the un-assumed words or status simply because the said term does not bear such a reading. In net effect the said expression could only be understood by us as watch movements in completely disassembled condition are not covered by the notification.

(ii) While considering the trade parlance meaning of the words "Watch movements" in Para 59 the Collector relied upon the documents relating to the purchase order and invoices etc., the words used therein as "Watch movements in CKD/SKD condition and ready for final assembly; description as calibre 8200 watch movement, also show that what was supplied was only "watch movement" in unassembled form i.e.

set of watch parts which on assembly would result in a watch movement and not partially assembled movement or a CKD movement, as submitted by the learned SDR. These findings of the Collector are, erroneous as submitted by the Sr. Advocate, since all the documents referred to by the Collector only showed as "spare parts of watch movements" and the reliance placed by the Collector on Dictionary meaning cannot be conclusive. We agree that the finding of the Collector, that "Watch movements" would include totally disassembled components also is not sustainable for the reason that the Collector has ignored to give proper weightage to the certificate issued by BIS dtd. 5.9.91, which is a national body regarding formulation and implementation of National Standards in our Country. The opinion furnished by BIS was relevant and reliable as against the dictionary meaning. Further the Collector also ignored the wordings in Notification No. 31/86-Cus dated 5.2.86, and trade opinions in this regard which had proved that the goods in question were not watch movements and were only components of a watch movement and that according to the inventory and also according to the Collector himself, one important part, namely, "winding stem" was missing from the goods which had been brought by M/s. R.R. Corporation and Vespa Trading Corpn. They would therefore constitute only 'Watch Parts'.

Therefore the goods are not be held to be notified under Section 11B or Section 123 of the Act. The binding force as held in the following cases, on market opinion is relied by us to come to such a conclusion.Kirloskar Oil Engines v. UOI (iii) Now in this case one supplier namely M/s. Lakshmi Watches was found by the department and who has also been penalised by the department from whom differential duty has also been demanded. With regard to Shri Sunil Kothari, the department has also contacted him and recorded his statement. A demand draft taken by Shri Sunil Kothari from M/s. HMT's Watch Factory-IV, Tumkur was got encashed through M/s. R.R. Corporation and the money given to him in respect of supplies made to them. Every such fact was well within the knowledge of the department at all times but even then the department does not follow up with an enquiry. They did not issue Show Cause Notice to Sunil Kothari nor did they call him for cross-examination, nor does the department question him about the bona fide nature of his goods. No trade/expert opinion was taken to opine the seized goods to be of Japanese origin. There is no comparison with the goods supplied by M/s. Lakshmi Watches Pvt. Ltd. No labels/markings were found on the consignment seized; the fact of that the seized goods did not contain the "winding stem" for assembly of watch movement has been ignored. Further Shri Devaraju, a technical expert of the department, in his cross examination dated 16.12.92 has categorically said that he cannot identify any seized parts being of foreign origin. All this lead to one inescapable conclusion that the department was not interested in finding out from Sunil Kothari the bona fide nature of goods in question. If Shri Sunil Kothari was a fictitious person and his details are not available with the department, then how could the department in another case record his statement? Relying on the following case law as submitted by the Advocate-- (i) 2001 (136) ELT 1136 (Tri.-Mum) (Paras, 19,20,21) in the case of Dhun Darabshw Randeria v. Commissioner of Cus. (Preventive), Mumbai.

(ii) 2001 (135) ELT 125 (Tri. Chennai) in the case of CH. Sai Srinivasa Rao v. Commissioner of C. Excise, Guntur.

(iii) 2001 (136) ELT 745 (Tri. Kolkata) (Para 4) in the case of Raj Kumar Keshari. Commissioner of Cus. (Prev.), Calcutta.

(iv) 2001 (136) ELT 338 (Tri-Kolkata) (Para 2) in the case of Dwarika P.D. Agarwal v. Commissioner of Customs, Patna.

(v) 1988 (33) ELT 338 (Tri.) (Paras 10 & 11) in the case of Kishan Shamdas Bhatia and Anr. v. Collector of Customs, Bombay.

(vi) (Paras 5 & 9) in the case of Kishore Vrajlal Vithalani v. Commissioner of Cus. (Prev.), Mumbai.

(viii) 7990 (49) ELT 61 (Tri.) (Para 15) in the case of Amar Dutta v. C.C. (ix) 7990 (50) ELT 91 (Tri) (Para 14) in the case of Hindustan Bearing Corp. v.CC. (x) 7997 (51) ELT 594 (Trib) (Para 7) in the case of CC (Prev.), v. Commercial Enterprises.

(xii) 1992 (40) ECC 5 M.P (Para 6) in the case of Mukesh Jain Agarwal v. CCE. (xiii) 7990 (30) ECR 597 (CEGAT ERB) (Para 12) in the case of Mohinder Singh v. Collector of Customs, West Bengal.

Wherein it has been held, that even when suppliers are not found or purchase documents are fictitious the burden remain to the Department to prove smuggled nature, therefore, we cannot uphold the liability of confiscation of the goods supplied by M/s. Vespa Trading Company & M/s. R.R. Corporation as the burden cast on the department to prove the smuggled nature of the parts which are not notified under Section 11B or 123 of the Customs Act, 1962 is not discharged.

(c) (i) As regards the receipt of goods from M/s. R.R. Corporation & M/s. Vespa Trading Company, the contention of HMT are recorded in para 45 (vi) at page 47 of the order. In para 66 the Collector held that HMT have not adduced any proof of licit importation of the goods supplied by R.R. Corporation and Vespa Trading Co. and seized under Mahazar and thus have failed to discharge the onus of proof cast on them. In support thereof, in para 67, the Collector has referred to the circumstantial evidence that would raise presumption against HMT. Relying upon the decision of the Supreme Court in the case of Collector of Customs v. Bhoomal, that the law does not require the prosecution to prove the impossible, and what is required is to establish such a degree of probability that a prudent person may, on its basis, believe in the existence of cat in issue.

Reliance is also placed in para 68 on the Mahazar drawn on 26.10.90 that the goods were of foreign origin. In para 70 the Collector held that though bill of entry was produced in the case of Lakshmi Watches on such evidence was produced in the case of R.R. Corporation and Vespa Trading Co. Further Vespa Trading Co. was found to be fictitious. In para 72 the Collector held that he was satisfied that the goods seized are of foreign origin as far as supplied by Lakshmi Watches, as they were imported in the regular manner, but as far as the goods seized of R.R. Corporation and Vespa Trading Co., the same are illegal imports though there is no direct evidence of the event and process of smuggling of the said goods, the inference that could be drawn from the circumstantial evidence to arrive at such a conclusion.

(ii) The Tribunal in the case of Dhun Darabshaw Randeria v. Commissioner of Customs(Preventive), Mumbai 2001 (136) ELT 1136 have observed that the provisions of Section 123 apply to different items viz. movements, dials and the cases of watches and does not apply to straps, buckles, parts of movements (such as Rots, pile guard, combined bridge, magnetic screen, plates, etc.), cover glass, etc.

In this case they held that watch parts were not covered under Section 123 of the Act and after nothing that the Tribunal and Courts have in a number of judgments held that burdens of establishing unlawful importation in such case squarely rested on the Customs, they further held as follows: 15. We now come to the watch parts under seizure which were not covered under Section 123 of the Act. The Tribunal and the courts have in a number of judgments held that the burden of establishing unlawful importation in such case squarely rested on the Customs.

Various case law has been discussed and summarised in an order of the Tribunal 7999 (85) ECR 85 and . Ravi Mitta v. CC, New Delhi. The Tribunal in this case was discussing the liability to confiscation of ball bearings seized from the Appellant which were admittedly of foreign origin. On discussing the substantial law, the Tribunal held that the Customs had not been able to discharge the burden cast upon them. This judgment is also . In making the judgment the Tribunal had relied upon an earlier judgment in the case of Hindustan Bearing Corporation . Even where the Department had shown that the firm from whom the offender had claimed to have purchased the goods was fictitious and did not exist, the Tribunal held that the suspicion created by this fact could not be a substitute for evidence to be held by the Department.

Thereafter they held that watch parts were sold by various manufacturers and other repairers. Some of the goods available are those seized by the Customs, which-were ultimately sold by the Customs Department in auction, which could be readily re-sold without any further restrictions. Such watch parts, imported and cleared under the Bills of Entry were stock and sale items and could be sold openly. Considering these different source in the market of watch parts and that as established by the Tribunal, application of Section 123 is only to watch movements, dials and cases and not all parts, the Tribunal held that burden of proof was cast upon the Customs for proving illegal importation of 'watch parts' not notified under Section 123 had not been discharged and such parts are not liable for confiscation. Respectfully, following the same, we would also not hold 'watch parts' in this case supplied by M/s.

R.R. Corporation and M/s. Vespa Trading Company & M/s. Laxmi Watches Pvt. Ltd. liable for confiscation, in the facts of this case, specially when we find that on 4.12.90 Mahazar was drawn for obtaining the samples of the goods supplied by R.R. Corporation and Vespa Trading Co.--One set sent to Principal Jayachamarajendra Institute and another for export opinion on the points: (a) Whether 54 components of watch movement put together constituted full watch movement on assembly.

& on 14.12.90 Jayachamarajendra polytechnic opined that the components in cover A and B put together constituted a compete watch movement. The said components are of automatic day and date watch movements of Calibre 8250 and may be of foreign origin. Therefore when the goods under seizure are not 'watch movements' or 'partial watch movements' but only 'watch parts' which would be put together to constitute watch movements. Therefore the goods under seizure are not covered by Sections 11B & 123 of the Customs Act as per the evidence quoted by the Department itself. Once we find that the goods under seizure were watch parts and not watch movements, we find no force in the plea of the learned Departmental Representative that the goods were watch movements in CKD condition since the movements in CKD condition would not have been allowed to be cleared under Notification No. 43/85-Cus dtd. 28.2.85, which cover only clearance of components of wrist watches. No evidence has been led as to what was allowed for clearance to Lakshmi Watches Pvt. Ltd. were in fact movements in CKD and not watch component parts.

Therefore when goods are not found to be covered by Sections 123 & 11B of the Customs Act, we find no justification in upholding their seizure in the reasonable belief that they were smuggled goods on the grounds made out in this case. Since the onus cast by the Department is not discharged we cannot uphold the confiscation of the goods as smuggled goods. They have been received by a Premier Public Sector manufacturer of watches in the course of his normal activity and on payment/vouchers and the department has failed to prove its case. The confiscation held and ordered under Section 111(p) is not upheld. (d) The law on the issues that onus is on the department to prove its case is well settled. One cannot rely on Bhoomal's case (supra) to claim that revealing each link in the chain was not necessary.

The existence of a chain, has to be established, before the case before links are to be considered when relying on Bhoomal's decision. In the case before us, no material to shift the onus on the Public Sector Undertaking has been placed.

We find from the impugned order, that the confiscation have also been considered under Section 111(o) in case of goods imported and supplied by M/s. Lakshmi Watches. These goods were cleared under the provisions of Notification No. 43/85-Cus dated 28.2.85. This Notification exempts components of wrist watches excluding SKD packs and CKD packs and items specified in the table annexed. This indicates that if the goods have been permitted to be cleared under the provisions of Notification No 43/85-Cus dated 28.2,85, then they could not have been sold and is not covering goods shown as SKD packs, CKD packs and the parts specified in the table. Since CKD packs were not permissible to be cleared under this notification we cannot accept the contention of the Departmental Representative that what the goods supplied to the appellants by M/s. Lakshmi Watches and these were completely CKD movements. The goods supplied by M/s.

Lakshmi Watches could be only components and not CKD packs of the movements as pleaded. This notification in condition No (iii) provides reads as follows: (iii). The importer shall, within such period as the Assistant Collector of Customs may specify in this behalf, produce a certificate from the Assistant Collector of Central Excise in whose jurisdiction the factory manufacturing such wrist watches is situated, to the effect that the said imported components have been used in the manufacture of the said wrist watches; and A plain reading of this condition does not convince us that the components imported under the benefit of this notification should be used in the manufacture of wrist watches, only in the premises of the importer. The Ld. SDR on question from the Bench, drew our attention to condition No (i) & (ii) of this Notification and submitted that these conditions indicated therein that Imports under Notification No. 43/85-Cus, could be made by only specific importer and for specific component parts only. Since M/s. HMT were not entitled to this benefit, therefore they were not entitled to do and get what they could not, by obtaining the imports through M/s.

Lakshmi Watches. We have considered these submissions and find the notification does not restrict the use of the parts imported to a particular 'actual user' manufacturer. It permits an importer, imports of parts, who produces the evidence that the import Is under a programme duly approved by the prescribed authorities in the notification, for the manufacture of wrist watches, One cannot Interpret this notification to imply that components cleared exempted under this notification, could not be made into watches at a premises other than the premises of an importer. We also find that the notification benefit was availed by M/s. Lakshmi Watches and same has been denied to them by the Impugned order. The duty liability on M/s. Lakshmi Watches, in terms of the unused bond executed by them has been enforced. Since M/s. Lakshmi Watches are not in appeal before us, we do not proceed further to examine the validity of these findings of the Commissioner. However, we find that Section 111(o) of the Customs Act reads as follows: (o) any goods exempted, subject to any condition, from duty or any prohibition in respectof the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer;"(underline supplied).

From the underlined portion of this provision of the law, we find that when goods are no longer exempted, inasmuch as the duty demand to the extent it was exempted at the time of import has been made, then such goods cannot be said to be exempted any longer. Once they are not exempted they will not come under the purview of the Section 111(o). Therefore, we find, that once duty has been charged and benefit of Notification No. 43/85-Cus is no longer available on the subject imported goods, there could be no case for causing their confiscation under Section 111(o) for the alleged non-compliance of exemption granted under Notification No. 43/85-Cus. Once there is no reason to confiscate the goods for non-compliance of Notification No. 43/85, we cannot held confiscation under Section 111(o) of the goods under seizure. The same is, therefore, set aside.

(f) No material has been brought and or produced as to how the goods are liable for confiscation under Section 111(d) & infringement of Import Trade Control Law, since watch part Imports are not totally banned and there are different source as determined by the Tribunal in Dhun Darabshw Randeria Case 2001 (136) ELT 1136 for the presence & trade in watch parts in Indian Markets. Therefore we cannot find any reason to uphold the confiscation under Section 111(d).

(g) Once the liability for confiscation under Section 111(o)/111(d)/111(p) of the Customs Act, is not being upheld, we find no reason to upheld the confiscation under Section 120 and or under Section 119 of the Customs Act. The same, as ordered, is set aside.

(h) When we find that no confiscation of the goods could be determined and sustained as arrived in the impugned order, we find no reason to upheld the redemption fine and penalties imposed on the appellants before us. The same are also set aside.

(i) In view of our findings, we do not proceed to determine the other issues raised by the appellants, in this appeal.


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