Customs, Excise and Gold Tribunal Tamil Nadu Penta Media Graphics Ltd. (Formerly ... vs Cce, Commissionerate on 11 March, 2003 Equivalent citations: 2003(88)ECC716, 2003(160)ELT980(TRICHENNAI) JUDGMENT Jeet Ram Kait , Member (T) 1. The appellants have filed an application praying for change of cause title from M/s Pentafour Software & Exports Ltd to M/s Pentamedia Graphics Limited. The prayer is accepted and the cause title is changed accordingly. 2. This appeal filed by M/s. Penta Media Graphics Ltd (formerly known as M/s Pentafour Software & Exports Ltd) is directed against the orderinoriginal No. 9/98 dated 29.6.98 passed by the Commissioner of Central Excise, Chennai, by which the Commissioner has demanded a duty of Rs. 20,18,901 under Rule 9(2) of the CE Rules, 1944 read with proviso to Subsection (1) of Section 11A of the CE Act, besides imposing a mandatory penalty of Rs 14,38,561 under Section 11AC of the Act, and a further penalty of Rs 2,00,000 on the appellants under Rule 173Q of the Rules ibid. He has also appropriated a sum of Rs 4.5 lakhs out of the security amount furnished for the B11 bond as the appellants have not produced the provisionally released goods for confiscation. He has also confiscated the plant and machinery with an option to redeem the same on payment of fine of Rs 10,000. The sum of Rs 20,00,000 paid vide TR 6 Challan dated 6.1.97 and 22.2.97 was ordered to be adjusted against the above levies. 3. The brief facts of the case are that the appellants herein have set up a 100 EOU for the manufacture of CD ROMs on their own and also on a job work basis. They were issued with a licence stipulating that 100% of their production shall be exported for a period of five years. They were also permitted to import various capital goods, raw materials/components etc for the purpose oi manufacture and export of the goods. Appellants have manufactured and cleared Compact Disc CD Audio, CD video and CD ROMs classifiable under heading 85.24 and valued at Rs 97,10,315 without payment of duty leviable under Section 3 of the CE Act, 1944, during the period from 30.7.1996 to 28.10.96. They have also cleared CD and Audio CD ROMs valued at Rs 25,05,138 without applying the appropriate rate of duty during the period from 29.10.96 to 24.12.96 by wilfully suppressing the production and clearance of CDs and wilful misdeclaration of the said CDs in violation of Rules 100B, 10C, 100D, 100E, 100F and 100G of the CE Rules, 1944. They have also manufactured 22,936 CDs valued at Rs 44,47,047 without accounting in the statutory records with intention to remove the same without payment of duty in violation of Rule 100B and 173G of CE Rules, 1944. Appellants were, therefore, issued with show cause notice bearing C. No. VIII/10/97 HPU CUS dated 23.6.1997 and on consideration of the reply furnished by the appellants vide their letter No. SRM/155/97 dated 30.8.97 and after personal hearing on 15.5.98, in impugned order was passed as noted above. Aggrieved by the said order, the appellants have come in appeal on the following grounds: (a) The order has been passed in violation of the principles of natural justice inasmuch as the Commissioner has failed to furnish copy of the opinion furnished by Prof. V.V. Shastry on whose opinion the findings have been arrived at. (b) The Commissioner has not appreciated the manufacturing process and the technology involved therein inasmuch as whether a product was called CDROM or CDVideo or CDAudio, the fact remains that they were manufactured by the same process and the goods were identical. They cannot be recognised except through the labels affixed. (c) Valuation of the goods was not an issue in the present case. (d) Classification of the goods merely based on user understanding is against the established cannons of classification. (e) The representative of the Department of Electronics had clarified that the goods manufactured by the appellants were Computer Software but this clarification has not been appreciated by the Commissioner. (f) Merely because the CDAudio and CDVideo can also be played by any other instrument/equipment, that by itself cannot take away the main classification of the items. (g) The opinion given by Prof. Sethuraman was not considered by the department, though it was an unbiased opinion. (h) The denial of the benefit of Notification No. 2/95 on an allegation that no export has taken place is without any basis and in disregard of the orders of the Department of Electronics. (i) All the records required by law were maintained and the same were furnished to the department which shows the bona fide of the appellants and there was no clandestine removal of the goods. (j) Penalty both under the provisions of Section 11AC and Rule 173Q cannot be imposed. (k) Appropriation of an amount of Rs 4.5 lakhs has been done in disregard of the bona fide belief of the appellants. 4. During the arguments on 25.9