Per J.H. Joglekar :

M/s. Nalanda Pen Mfg. Company Private Limited manufactured, among other articles, ball point pens and refills for ball point pens. One of the important part of the refills namely brass tips was got manufactured by them from seven Private Limited Companies on job work basis. The job workers were operating as Small Sector Industries. They were also buying such tips on out light basis from another manufacturers. M/s. Nalanda Pen Mfg. Co. Pvt. Ltd., were filing classification lists from time to time. The job workers in the Small Sector Industries were exempted from licencing control having filed the requisite declarations from time to time in which the goods manufactured were declared as "Brass tips of the ball point pens" and benefit of notification No. 74/86 as amended by another notification was claimed for their duty free clearances. The classification of such goods was shown under sub-heading 9608.00.

2. M/s. Nalanda started manufacturing pens and refills from the year 1984 but commenced practice of supply of raw materials and getting the brass tips made from the job workers only from 1988. The notification No. 104/82 dated 28.2.1982 exempted pens including ball point pens and refills thereof from payment of duty. This notification was superseded by notification No. 146/82 dated 22.4.82 which exempted the pens, ball point pens, part of such pens and refills for such ball point pens. The description of the exempted products continued unchanged over later years until the issue of notification No. 156/90 which for the first time excluded parts of the refills also.

3. On 24.12.1990 jurisdictional authority issued a show cause notice demanding duty on the brass tips manufactured during the period March, 1986 to November, 1989. In making this demand, a specific allegation was made of deliberate and wilful intent to evade payment of duty by way of suppression of facts. The allegations as to the penalty were also raised. It was also alleged that land, building etc. were liable to confiscation. This show cause notice was issued to the assessee company and its three Directors namely Shri C.O. Shah, Shri A.D. Sanghavi and Smt. Geeta A. Sanghavi. The Collector after hearing the assessees passed the impugned order whereby he confirmed the demand of duty amounting to Rs. 81,75,492.58, imposed penalty of Rs. 27 lakhs on the Assessee Company and also imposed penalty of Rs. 5 lakhs each on the three Directors. He ordered confiscation of land, building etc. but permitted their redemption on payment of fine of Rs. 25,000/-. The Assessee Company and three Directors have filed separate appeals against this order. These four appeals are, therefore, taken up by us for disposal by this common order.

4. Shri J.J. Bhatt, Senior Advocate, appeared for all four appellants alongwith Shri S.S. Kalambi, Advocate. Arguing on merits Shri Bhatt claimed that brass tips were part of refills and refills were part of ball point pens. In this way, brass tips were part of parts. He relied upon the judgement of the Tribunal in the case of Collector of Central Excise Vs. Mahendra Engg. Works - 1993 (67) E.L.T. 134 in which the Tribunal had held that where the notification does not make distinction between parts and sub-parts, there was no justification in denying the benefit to the sub-parts. He stated that ratio of the Tribunal's decision in the case of Audio Vision Electronics Vs. Collector of Customs, Madras (1987-31-ELT.796) was also the same where examining the admissibility of certain imported goods under O.G.L. the Tribunal had held that component of a component is also a component of machine and hence importable. It was his claim that even before notification No. 156/90 specifically extended the exemption to the parts of the refills applying the ratio of these judgements it should be held that the preceding notifications extended their benefit to such parts also. He stated that this fact was acknowledged by the department. He referred to