Per Justice K.K. Usha : In this appeal at the instance of Seagram Manufacturing Ltd. the importer, challenge is against the order in original dated 31.5.2002/4.6.2002 passed by the Commissioner of Customs, ICD Tughlakabad, New Delhi. Under the above order, the Commissioner had adjudicated two show cause notices, one by DRI dated 19.12.2000 covering imports of alcoholic beverages during the period January, 1995 to June, 2000 and the second issued by Commissioner, ICD Tughlakabad dated 16.8.2001 covering imports during the period July 2000 to May 2001. The provisional assessment of the imports was finalised by the Commissioner taking recourse to Rule 6 of Customs Valuation Rules, 1988. He confirmed an extra duty demand of Rs. 41,70,49,724/- as against the total demand proposed in the two show cause notices of Rs. 50,05,12,913/-.

2. The appellant is a wholly owned subsidiary of Seagram India Ltd. which is turn in a 100% subsidiary of Seagram Company Ltd. Canada. The Foreign Investment Promotion Board S(FIPB), Government of India granted approval for the proposal put forward by Seagram Company Ltd., Canada to set up a wholly owned subsidiary for, inter alia, establishment of a non-molasses based spirit manufacturing/blending facility.

3. The appellant was incorporated on 28.4.94. its main objects were-

(a) to carry on the businesses of manufacturers, merchants, importers, factors and dealers of all kinds of alcoholic and non-alcoholic beverages, including spirits, wines and fruit juices and all products, by-products and ingredients thereof;

(b) To buy sell, deal in and with, manufacture, produce, process, age, blend, rectify, compound, bottle, warehouse, store, import, export, transport and advertise for sale all kinds of alcoholic and non-alcoholic beverages, including spirits, wines and fruit juices and all products, by-products and ingredients thereof.

Pursuant to an application made by the appellant import licence dated 20.12.94 was issued by the office of Controller of Imports & Exports for importing concentrate of alcoholic beverages. Prior to issue of this licence, the Ministry of Food Processing Industries, Government of India had informed the appellant under letter dated 20.10.94 that 'import of concentrate of alcoholic beverages which is on the negative list is permitted to the actual user alone as per the Exim Policy'. It was also suggested that intent issued to the company should be converted into an industrial licence so that the application in question could be further processed on the basis that the appellant is an actual user. Since the above process would have taken some time, the appellant took a decision to take on lease a manufacturing facility to establish its status as an actual user and to that extent sought partial modification of its earlier proposal made under application dated 20.9.94. It was thereafter the import licence was issued.

4. Pursuant to the issue of import licence, appellant imported first consignment of 88 barrels of concentrated alcoholic beverage in two batches of 58 barrels and 30 barrels. They were importing goods from Joseph E Seagram & Sons, Scotland, a related party. The goods were cleared on the basis of provisional assessment in terms of Section 18 of the Customs Act, 1962. Thereafter the DRI conducted certain inquiries and a show cause notice dated 19.12.2000 was issued covering 186 Bills of Entry during the period January 1995 to June 2000. Under the above show cause notice demand of a sum of Rs. 37,96,70.451/- was made under the provisions of Section 28 of the Customs Act. There was a proposal to impose penalty under Section 112 and 114 (a) of the Customs Act and to confiscate goods valued at Rs. 28,32,88,730 and Rs. 14,56,29,785/- under Section 111 (m) and (d) of the Customs Act. In the event of physical unavailability of the said goods, having been released provisionally, appropriate amount of redemption fine should not be imposed in lieu of confiscation. The show cause no