Custom, Excise & Service Tax Tribunal
Commissioner Of Customs, Chennai vs M/S. Jsw Steel Ltd on 8 October, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No.C/41006/2012
(Arising out of Order-in-Appeal C. Cus. No. 325/2013 dated 1.3.2013 passed by the Commissioner of Customs (Appeals), Chennai)
Commissioner of Customs, Chennai Appellant
Vs.
M/s. JSW Steel Ltd. Respondent
Appearance Shri M. Rammohan Rao, DC (AR) for the Appellant Shri C. Manickam, Advocate Shri Ajay Kumar Gupta, Consultant for the Respondent CORAM Honble Shri R. Periasami, Technical Member Honble Shri P. K. Choudhary, Judicial Member Date of Hearing : 08.06.2015 Date of Pronouncement : 08.10.2015 Final Order No. 41362/2015 Per R. Periasami Revenue filed this appeal against Order-in-Appeal dated passed by the learned Commissioner (Appeals).
2. The brief facts of the case are that the respondents filed 7 Bills of Entry for clearance of goods declared as supply of equipment for continuous annealing line / galvanizing line for cold rolling mill classifying the goods under CTH 84559000 and claimed clearance under Status Holder Incentive Scheme (SHIS) scheme vide Customs Notification No. 104/2009 dated 11.9.2009. The adjudicating authority denied the benefit of exemption notification and also ordered for classifying the goods under various chapters 73, 85, 90 etc. The adjudicating authority held that the goods imported under the said Bills of Entry are not capital goods and not eligible for clearance under SHIS scheme. On appeal, learned Commissioner (Appeals) in the impugned order allowed the appeal of respondents and held that the imported goods are capital goods. Hence, Revenue has preferred this appeal against the order of the learned Commissioner (Appeals).
3. The learned AR reiterated the grounds of appeal and submits that the SHIS exempts the capital goods imported into India against duty scrip issued under SHIS scheme. As per clause b(4) of the notification, iron and steel are excluded as per clause 3 which is non-transferable and shall be used for import of capital goods relating to the sectors mentioned in condition (i). He reiterates the findings contained in Order-in-Original where the adjudicating authority described description of each items under 7 Bills of Entry. She relied paras 2 and 9 of Order-in-Original. He further submits that as per the description of the items bolts, nuts, parts, valves etc. what is allowed under SHIS scheme are only capital goods. He further submits that as per the policy what is allowed under EPCG scheme is permissible for import of capital goods not applicable under SHIS scheme. The definition of capital goods given under para 9.1.2 of the FTP is only for import under EPCG scheme and not related to clearances under SHIS scheme. Customs has to classify the goods as per the description presented at the time of clearance of the goods and they are rightly classified under the respective chapters. Once the goods are not capital goods, SHIS scheme is not applicable. She relied on the following decisions:-
(a) IVRCL Infrastructure and Projects Ltd. Vs CC Chennai 2015-TIOL-73-SC-CUS.
(b) Kirloskar Pneumatic Co. Ltd. Vs CC Bombay 1997 (90) ELT 428
(c) CC New Delhi Vs Sony India Ltd.
2008 (231) ELT 385 (SC) He also submits that entitlement of CENVAT credit is different for capital goods whereas the import under SHIS scheme 100% credit is allowed. Therefore, import under both cannot be treated at par.
4. On the other hand, learned Advocate for the respondent reiterated the findings of the impugned order. He further submits that as per 9.1.2 of FTP, the capital goods has been defined and the definition is wider and includes whole plant and machinery and not confined to single capital goods or parts. He further submits that the respondents have entered into a contract with foreign supplier for setting up of a new plant at their Hospet unit. He submitted a copy of agreement dated 23.2.2011. The agreement is meant for supply of equipment for continuous annealing line / galvanizing line for cold rolling mill. Therefore, they have entered into a contract with the supply and those goods cannot be imported in a single consignment. As per the contract and purchase orders the whole plant and machinery was imported. He also submits that 90% of the plant and machinery have been imported and cleared under EPCG licence for which they are registered with the central excise authorities. Only the small quantity they have filed under SHIS scrip. He further submits that as per amendment of Notification No. 104/2009 as amended vide Notification No. 42/2012 dated 22.6.2012, the original restriction has been relaxed both on actual user condition and transferability of the scrip have been relaxed. He submits that no doubt the goods imported under 7 bills of entry are parts but they are parts of capital goods covered under the purchase order. Each invoice refers to the contract and purchase order. He also submits that these goods are specific tailor made for only this plant. These are not parts of general uses and essential and integral part of capital goods which they have posed to set up. He further submits that due to the logistics these goods have to be imported in a phased manner through various shipments. He also submits that after importation of these goods they have been used in setting up of plant and machinery and they have also submitted certificate to the central excise authority for installation certification in compliance of the EPCG licence. He relied on para 9 of Order-in-Appeal. He further submits that definition of capital goods cannot vary from one scheme to another scheme as the FTP is one and when the Department has accepted the same consignment and accepted as capital goods and allowed clearance of same goods when imported and filed SHIS scrip the department cannot deny. He also submits a worksheet submitted before jurisdictional authorities for fulfillment of SHIS scheme showing the list of Bills of Entry and the items imported and the uses, and the installation certificate. As per Sl. No. 3, 5, 7, 8 to the Annexure to Bill of Entry are covered under the present dispute. He further submits that they have complied and the Commissioner (Appeals) rightly allowed their appeal and held as capital goods by taking into totality of the agreement, purchase order and nature of the imports and prayed that the appeal of the Revenue should be dismissed.
5. Learned AR countered the argument of learned counsel and submits that law treats the capital goods separately under the Customs and parts separately. The concept of SHIS is different and as per the scheme it is only meant for upgrading the existing technology and not for new plant and machinery. EPCG is for importing capital goods under the scheme whereas SHIS scheme is sector specific.
6. We have carefully considered the submissions of both sides. The short issue in this Revenue appeal is whether the respondents are eligible for clearance of the imported goods under SHIS Scheme as per Customs Notification No.104/2009 dt. 11.9.2009. The adjudicating authority has denied the benefit of Customs Notification pertaining to SHIS Scheme for clearance of goods covered under 7 Bills of Entry imported and cleared by the respondent and also ordered for classifying the goods under respective chapter headings instead of capital goods under Chapter 84. The LAA in his impugned order has set aside the OIO and held the goods are capital goods and allowed the SHIS benefit under the said notification and allowed respondent's appeal. Revenue in the grounds of appeal seeks to set aside the impugned order and pleads to restore the OIO contending that the goods imported by the respondents are not "capital goods" and not covered under SHIS Scheme. On a perusal of the OIA of the LAA, we find that he has discussed and recorded a detailed findings and also discussed the definition of "capital goods" provided under the policy governing SHIS Scheme at paras 7 to 11 and examined the contract agreements with the foreign supplier for arriving at his conclusion as 'capital goods'. On a perusal of copy of the agreement dt. 23.2.2011, we find the respondents had entered into agreement with M/s.JFE Shoji Trade Corporation, Japan for supply of capital goods of Continuous Annealing Line (CAL) and for Continuous Galvanizing Line (CGL) for Cold Rolling Mill Complex. Respondents also entered into agreement with the supplier for providing technical advisory for erection and testing and definition of the capital goods.
7. The preamble of the agreement at (A) & (B) is reproduced as under :-
A. The Purchaser has decided to purchase the Equipment for Continuous Annealing Line #1, (CAL#1) and Continuous Galvanizing Line (CGL) for Cold Rolling Mill Complex # 2 Project which will be located at Vijayanagar, Toranagallu, District Bellary, Karnataka, India; and B. The Seller has agreed to sell the Equipment for Continuous Annealing Line #1 (CAL #1) and Continuous Galvanizing Line (CGL) for Cold Rolling Mill Complex #2 Project in accordance with the terms and conditions of the contract.
From the above agreement, it is very clear that the contract is for the supply of CAL & CGL for the project which is set up at Vijayanagar, Toranagallu, District Bellary, Karnataka. On a perusal of the Article 4.0 of the Agreement, the consideration of the entire plant and machinery has been quoted single price which is known as "Contract Price". We also find that the entire contract is also covered under EPCG licence and majority of the goods were cleared as "capital goods" under EPCG. The Revenue's contention is that these are only individual parts and articles consisting of bolts, nuts etc. and they cannot be considered as 'capital goods' and same is not covered under SHIS Scheme.
8. In this regard, we find the Notification No.104/09-Cus. dt. 14.9.2009 clearly allows exemption of capital goods imported into India against Duty Credit Scrip issued under SHIS Scheme. As per para 3.16 of Foreign Trade Policy the definition of "capital goods" and the definition of "capital goods" as provided in the Explanation under the Notification 104/2009-Cus. are identical to the definition given in the FTP and covers capital goods "plant, machinery, equipment or accessories required for manufacture, production, either directly or indirectly, of goods and includes those required replacement, modernization, technological upgradation or expansion etc.. On a perusal of the contract, it is abundantly clear that respondents are setting up the plant and machinery of the Expansion Project for CAL& CGL in the Cold Rolling Mill Complex. It is pertinent to state that respondent has set up integrated steel plant at Vijayanagar, Karnataka. The contract clearly shows the import of entire supply of equipments of plant and machinery of CAL & CGL. Obviously when the respondents are to import as per the contract the whole plant and machinery for CAL & CGL, the entire goods cannot be imported in one lot under single Bill of Entry. The LAA has brought out a detailed findings on this issue and we find that equipments imported under the invoices are nothing but CAL & CGL and also considering the price, it is a single contract price and the goods are rightly to be considered as capital goods. The definition of "capital goods" given in Foreign Trade Policy are one and the same for EPCG licence or for SHIS Licence. The department cannot take a different stand for the same goods as 'capital goods' in EPCG scheme and not capital goods under SHIS Scheme. Revenue's contention is that the goods imported are general purpose items i.e. Bolts & Nuts is not justified. Obviously, continuous annealing line has various sections as detailed in the impugned order. After assembly, it becomes a single Annealing Line. It is not the case of the department that respondent has placed orders for only spares or bolt and nuts and claimed as 'capital goods' under SHIS Scheme.
9. Revenue's relying Hon'ble Supreme Court decision in the case of Sony India (supra) which relates to import of components of Colour TVs in CKD condition and the same cannot be made applicable to this case. The Hon'ble Supreme Court in that case held that those goods which are brought not having essential character of colour TV, it cannot be taken as Colour TVs whereas in the present case, it is the plant & machinery for setting up of new CAL/CGL for Cold Rolling Mill and as per the contract respondent set up expansion project of Cold Rolling Mill Complex where entire plant and machinery including technical advice for installation has been obtained from the supplier as per their agreements. Therefore, the Hon'ble Supreme Court decision relied by Revenue is distinguishable and not applicable to the present case. Further, the present case relates to allowing benefit of exemption under SHIS as per Notification No.104/09 and the policy allows import of 'capital goods' under SHIS scheme. Further, we find that on a perusal of the Chartered Engineer certificate dt. 31.3.2014 and 10.10.2014 wherein he has categorically certified that entire capital goods imported under SHIS scheme have been installed and commissioned in the respective projects and the department has also accepted as a fulfilment of towards licence. We are of the considered view that the goods imported are capital goods as per FTP Policy and the respondents are eligible for benefit of Customs Notification No.104/2001 under SHIS Scheme for the clearance of the imported goods covered under 7 Bills of Entry. The LAA has given a clear finding on the issue and we do not find infirmity in the order of LAA.
10. In the result, the impugned order is upheld and the Revenue's appeal is rejected.
(Proceedings dictated in open court on 8.6.2015
and the order pronounced on 8.10.2015)
(P.K. CHOUDHARY) (R. PERIASAMI)
Judicial Member Tehnical Member
Rex/gs
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