Per J.H. Joglekar:

This bunch of appeals involves the same issue where the appellant is the same. These appeals are therefore being disposed of vide this common order.

2. We have heard Shri J.J. Bhatt, Senior Counsel appearing along with Shri M.P. Baxi and Shri Siraj Salilkar, Advocates. The revenue's arguments were advanced by Shri Deepak Kumar, Senior Departmental Representative.

3. The appellants manufactured paints. Certain paints were supplied by them to the Indian Navy free of duty in terms of Notification 70/77-CE dated 7.5.1977 and entry at Sr. No. 3 of Notification 64/95-CE dated 16.3.1995. The first named notification exempted "goods supplied as stores for consumption on board a vessel of the Indian Navy". The entry in the second named notification was worded identically.

4. Twelve show cause notices were issued during the period 13.9.1993 to 14.6.1995 covering the period September, 1993 to June, 1995. Eleven show cause notices were answerable to the jurisdictional Assistant Collector. The allegations made were identical. It was alleged that the paint was supplied by the appellants to Goa Shipyard Ltd. who in turn had used the goods for painting the Indian Naval ships during their construction. In some of the show cause notices it was alleged that the goods were supplied to the Naval Chemical and Metallurgical Laboratory and after undertaking test they were supplied to Naval Dockyard, Visakhapatnam where the paint was used for application on naval platforms (submarines). The 12th show cause notice (dated 4.10.1995) alleged that such goods were used for painting and maintenance of the existing ships. This notice was answerable to the Additional Commissioner of Central Excise. The show cause notice mentioned that the use as was described thereunder did not amount to that specified as the qualifying use in the subject notifications. On these grounds duties totally amounting to Rs. 32,09,933.86 were demanded in the 11 show cause notices answerable to the Assistant Collector. On similar grounds duty amounting to Rs. 6,40,541/- was demanded in the show cause notice answerable to the Additional Collector.

5. After hearing the concerned persons the Assistant Commissioner confirmed the demands. He interpreted the wording "on board" to mean that the goods should be used for fitment or maintenance of the vessel or be physically consumed by the crew members. He ruled that paint used during construction of a vessel could not be titled as "stores" and could be called as "consumables". He accepted that the goods supplied to Mazgaon Docks or Goa Shipyard were the property of Indian Navy and held that such supply did not amount to supply as stores on board. He also held that docking platforms were not "ships" inasmuch as they were not self-propelled. Citing the Supreme Court judgment in the case of Rajasthan Spinning Mills Vs. CCE, 1995 (58) ECR 569 he opted for liberal construction of the term used in the notification and held that the goods did not pass muster. He therefore confirmed the duty on the goods so cleared; When these clearances were taken into account he found that the assessees had crossed the limits specified as eligible clearances in Notification 1/93 and confirmed the duty not paid on that ground also.

6. The Additional Commissioner also heard the assessees. He did not accept the assessees' contention that the certificates issued by the Indian Navy which categorically stated and certified that such paints were exclusively used on board the Indian naval ships amounted to fulfilment of obligation cast by the notification. He held that in spite of the certificates it was incumbent upon the assessees to verify the correctness of the certificate. He held that presumption was not sufficient to discharge the burden and therefore proceeded to confirm the demand. He also imposed a penalty of Rs. 1,000/-.

7. The orders of the Commissioner (Appeals) now impugned before us deal with both these orders passed by the Assistant Commis