Custom, Excise & Service Tax Tribunal
Shreeji Construction vs Mumbai on 7 July, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/1170/2012
[Arising out of Order-in-Appeal No: 765/MCH/DC/GR.VA/2012 dated 11/09/2012 passed by the Commissioner of Customs (Appeals), Mumbai.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri Anil Choudhary, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Shreeji Construction
Appellant
Vs
Commissioner of Customs (Import)
Mumbai
Respondent
Appearance:
Shri Deepak Kumar, Advocate for the appellant Shri V.K. Agarwal, Addl. Commissioner (AR) for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of hearing: 07/12/2012 Date of decision: 02/01/2013 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
The appeal is directed against Order-in-Appeal No: 765/MCH/DC/GR.VA/2012 dated 11/09/2012 passed by the Commissioner of Customs (Appeals), New Custom House, Mumbai.
2. The appellant, M/s. Shreeji Construction imported Hydraulic Piling Rig B 170 and filed a bill of entry No. 4513339 dated 30/08/2011. They also claimed benefit of Notification 21/2002-Cus dated 01/03/2002 (serial No. 230). The bill of entry was assessed without granting the benefit of exemption as the importer did not have a valid contract at the time of importation and he did not satisfy the condition 40(b) stipulated in the said Notification. Accordingly, the claim of the appellant was rejected and duty demand of 56,42,968/- was confirmed against the appellant. The appellant preferred an appeal before the lower appellate authority. The lower appellate authority held that the appellant did not satisfy condition No. 40 which stipulates that only a person who has been awarded a contract for the construction of roads in India by a or on behalf of the Ministry of Surface Transport, by the National Highway Authority of India, by the Public Works Department of a State Government or by a road construction corporation under the control of the Government of a State or Union Territory is eligible for the exemption. Inasmuch as the person who awarded the contract was Mumbai Metropolitan Regional Development Authority (MMRDA) which is a local authority and there is a separate Corporation for construction of roads in the State of Maharashtra, namely, Maharashtra State Road Development Corporation, hence the appellant is not eligible for the benefit of the exemption. Accordingly, the lower appellate authority dismissed the appeal. It is against this order the appellant is before us.
3. The learned counsel for the appellant submits that the Mumbai Metropolitan Regional Development Authority has been constituted under Act No. IV of 1975. The said Act envisages establishment of an Authority for the purpose of planning, coordinating and supervising the proper, orderly and rapid development of the areas in that region and of executing plans, projects and schemes for such development and to provide for matters connected therewith in the Mumbai metropolitan region. As per Section 3(2) of the said Act, the said authority is a body corporate having perpetual succession and a common seal, with power to acquire, hold and dispose of property, both moveable, and immoveable and to contract and may sue or be sued by its corporate name aforesaid. The amenity which may be provided by the authority includes roads, bridges and any other means of communication, transport, supply of water and electricity, any other source of energy, street lighting, drainage, sewerage and conservancy and any other convenience as the State Government in consultation with the authority may from time-to-time by notification in the official gazette specify to be amenity. Since MMRDA is the authority for development of roads in the Mumbai metropolitan region, they should be considered as a road development corporation specified in condition No. 40 applicable to serial No. 230 of Notification No. 21/2002. The learned counsel further points out that while in the case of other authorities mentioned in condition No. 40, the article used is the whereas in respect of road construction corporation the article used is a. In other words, any corporation which undertakes road construction would be covered by the entry a road construction corporation. Since they are under the control of the Government of Maharashtra from whom they receive funds, they are eligible for the benefit of Notification mentioned above.
4. The learned Addl. Commissioner (AR) appearing for the Revenue, on the other hand, strongly refutes the arguments made by the appellant. He submits that MMRDA is a Metropolitan Regional Development authority and it is not a road construction corporation. There is a separate corporation in Maharashtra under the name of Maharashtra State Road Development Corporation entrusted with the task of construction of roads and, therefore, MMRDA cannot be considered as a road construction corporation for the purposes of Notification. Metropolitan Regional authority has not been named as one of the authorities who can award the contract in the said Notification at the time of import of the goods. The learned AR further points out that Notification 21/2002 was re-issued in the budget 2012 and in the new notification No.12/2012, in addition to the National Highway Authority of India, Public Works Department, and Road Construction Corporation, Metropolitan Development Authority was also specifically included. Therefore, it is clear that the notification distinguishes between a Metropolitan Development Authority and a Road Construction Corporation. Otherwise, there is no need to use these two expressions specifically and separately and, therefore, he contends that prior to Budget 2012, when Notification No. 21/2002 was in force, benefit was not be available in case the contracts for road construction were awarded by MMRDA.
5. We have carefully considered the rival submissions.
5.1. We reproduce below the relevant portion of the Notification No. 21/2002 as it existed and also after its supersession by Notification No. 12/2012 vide entry No. 368 of the said Notification.
"S. No. Chapter or Heading or sub - heading Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6)
230. 84 or any other Chapter Goods specified in List 18 required for construction of roads Nil Nil 40 Condition No. 40
40. If,-
(a) the goods are imported by-
(i) the Ministry of Surface Transport, or
(ii) a person who has been awarded a contract for the construction of roads in India by or on behalf of the Ministry of Surface Transport, by the National Highway Authority of India, by the Public Works Department of a State Government or by a road construction corporation under the control of the Government of a State or Union Territory; or ..
Notification No. No. 12/2012 which replaced 21/2002-Cus in the Budget 2012 reads as follows:-
S. No. Chapter or Heading or sub heading or tariff item Description of goods Standard rate Additional duty rate Condition No.
368. 84 or any other Chapter Goods specified in List 16 required for construction of roads Nil Nil 9 Condition
9.
If,-(a)the goods are imported by-
(i)the Ministry of Surface Transport, or
(ii) a person who has been awarded a contract for the construction of roads in India by or on behalf of the Ministry of Surface Transport, by the National Highway Authority of India, by the Public Works Department of a State Government, Metropolitan Development Authority or by a road construction corporation under the control of the Government of a State or Union Territory; or 5.2. A reading of the above two notifications makes it clear that prior to budget 2012 the notification specified only the following authorities, namely, National Highway Authority of India, Public Works Department of a State Government or a road construction corporation under the control of the State Government or Union Territory. However, after budget 2012, the authorities specified are: National Highway Authority of India, Public Works Department of a State Government, Metropolitan Development Authority or a road construction corporation under the control of State Government or Union Territory. From this it is clear that the Notification differentiates between a Metropolitan Development Authority and a Road construction corporation. Otherwise there was no need to specify both these agencies as the persons who can award the contract for the purpose of the Notification. If the intention was to consider Metropolitan Development Authority as a Road construction corporation, the language used would have been different for e.g. a road construction corporation including a Metropolitan Development Authority or by way of an explanation. That has not been done in the instant case. Therefore, we are of the view that the notification considers a Metropolitan Development Authority and a Road development construction as distinct and different entities.
5.3. This view is further strengthened for the reason that in the State of Maharashtra there is a separate corporation, namely, the Maharashtra State Road Development Corporation. There are such corporations in other States also, for e.g. in Gujarat, Rajasthan and so on. If one carefully examines the creation of the road development corporations and their objectives, it can be seen that both legally and functionally, road development corporations and a metropolitan regional development authority are distinct entities. The major differences are summarized in the table below.
S. No. Characteristics Maharashtra State Road Development Corporation Mumbai Metropolitan Regional Development Authority (MMRDA) 1 Nature of the organization Created under a Resolution of the State Government as a State Govt. undertaking Created under a separate statute as a local authority 2 Treatment under the Companies Act, 1956 Registered as a company under section 3 of the Companies Act.
Not a company - it is a body corporate and deemed as a local authority 3 Liability Limited liability Not specified 4 Functions/Responsibilities Construction and maintenance of roads Development of the metropolitan region and the major projects undertaken include transportation, water resources management, public housing, environmental management, urban land policy, industrial growth policy and office location policy 5 Jurisdiction Entire State of Maharashtra Mumbai Metropolitan Region Note: As per information obtained from the web-sites of various road development corporations and MMRDA Thus both legally and functionally, a road development corporation is distinct and different from a Metropolitan authority. Thus to equate MMRDA with a road construction corporation would be an insult both to the common sense and to the said organization, especially when one considers the vast and varied nature of the activities undertaken by the said authority.
5.4 Another argument has been made about the use of the indefinite article a before the State Road Development Corporation which indicates that the said expression includes all corporations which undertake road development. There is no warrant in law to take such a view. In English language, the definite article THE is used when both the writer/speaker and the reader/listener know what is being referred to. If neither of them knows or only one of them knows what is being referred to, then the indefinite articles A or AN are used. Since there are many States/UTs in India which have their own Road Development Corporations, instead of specifying all of them individually, the expression a State Road Development Corporation has been used prefixed by the indefinite article A. That by no means expand the scope of the expression road development corporation to cover a regional development authority as contended by the ld. Counsel for the appellant.
5.5 The honble apex Court in the case of Gammon India Ltd. vs. Commissioner of Customs, Mumbai 2011 (269) ELT289 (SC) was considering the scope of the said Notification 17/2001-Cus dated 01/03/2001 which was the predecessor to Notification No. 21/2002. In that case the contract was awarded to a joint venture consisting of Gammon India Ltd. and M/s. Atlanta Infrastructure Ltd. each of them sharing financial responsibilities to the extent of 50% of the project value. The goods were imported by one of the parties to the joint venture, namely, M/s. Gammon India Ltd., who claimed exemption under Notification No. 17/2001. The honble apex Court held that import of the machinery by Gammon India Ltd. cannot be considered as an import by M/s. Gammon-Atlanta Joint Venture. In that context the apex Court laid down the principle of interpreting the exemption Notification as under:
22. As regards the plea of the appellant that the Exemption Notification should receive a liberal construction to further the object underlying it, it is well settled that a provision providing for an exemption has to be construed strictly. In Novopan India Ltd. (supra), dealing with the same issue in relation to an exemption notification, a three-Judge Bench of this Court, stated the principle as follows:
16. We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals-- and in Union of India v. Wood Papers referred to therein -- represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee -- assuming that the said principle is good and sound -- does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption.
23.Applying the above principles, we are of the opinion that since in the instant case the language of condition No.38 in the Exemption Notification is clear and unambiguous, there is no need to resort to the interpretative process in order to determine whether the said condition is to be imparted strict or liberal construction. 5.6 If we apply these principles to the facts of the present case, it becomes clear that the term road construction corporation has to be strictly interpreted and the metropolitan regional development authority, which undertakes several activities apart from road construction, cannot be construed as a road construction corporation which is meant for construction of roads alone.
5.7 One of the cannons of statutory interpretation is Expressio unius est exclusio alterius - the express mention of one thing excludes all others. The express mentioned in the notification is road construction corporation which implies that others which are not road construction corporations stand excluded from the scope of the notification. Thus if one applies the above principle, it is evident that a Metropolitan Regional Development Authority does not come within the purview of the notification.
5.8 When the notification was re-issued in the budget 2012 to include metropolitan regional authority, the same was mentioned specifically in the Finance Ministers budget speech as also in the Explanatory Memorandum explaining the provisions of the Finance Bill. In para 187 of the Finance Ministers Budget Speech, it was stated as follows:-
Roads
187. Full exemption from import duty on specified equipment imported for road construction by contractors of Ministry of Road Transport and Highways, NHAI and State Governments is being extended to contracts awarded by Metropolitan Development Authorities. Similarly in the Explanatory Memorandum, in the portion relating to changes in Customs Duties, under section V relating to CAPITAL GOODS/INFRASTRUCTURE, in serial no.6, it is explained as follows:-
6) Full exemption from basic customs duty, CVD and SAD is being extended to equipment imported for road construction projects awarded by Metropolitan Development Authorities. The expression used in both the Budget Speech and the Explanatory Memorandum is exemption is being extended. The question of extension of exemption would arise, only when it is not available. If it is already available, there is no need for extending the exemption. Thus the legislative intention is very clear. Prior to budget 2012, customs duty exemption was not available on road construction equipment imported under a contract awarded by a Metropolitan Development Authority.
5.9 This statement given by the Government at the time of extending the benefit to the metropolitan development authority is very relevant for interpreting the notification and needs to be given due weightage and consideration. In the case of K.P. Varghese vs. Income-tax Officer [1981] 131 ITR 597 (SC), the supreme Court, based on the earlier judgment in the case of Baleshwar Bagarti vs. Bhagirathi Dass [1908] ILR 35 Cal 701/703 expounded the principle of administrative construction, i.e., contemporaneous construction placed by administrative or executive officers charged with executing a statute, as follows:-
It is a well-settled principle of interpretation that courts in construing a statue will give much weight to the interpretation put upon, it, at the time of its enactment and since, by those whose duty it has been to construe, execute and apply it. 5.10 In the case of Collector of Central Excise, Guntur vs. Andhra Sugar Ltd. 1988 (38) ELT 564 (SC), the honble apex Court re-iterated the same as follows:
It is well settled that the meaning ascribed by the authority issuing the Notification, is a good guide of a contemporaneous exposition of the position of law. Reference may be made to the observations of this Court in K.P. Varghese v. The Income Tax Officer, Ernakulam,[1982] 1 SCR 629. It is a well settled principle of interpretation that courts in construing a Statute will give much weight to the interpretation put upon it at the time of its enactment and since, by those whose duty has been to construe, execute and apply the same enactment.
6. In the light of the foregoing, we hold that prior to budget 2012, benefit of customs duty exemption on road construction equipment was not available in cases where the contract for such construction was awarded by a Metropolitan Development Authority. Thus the appellant in the present case is not eligible for the benefit of duty exemption under notification No. 21/2002-Cus. Accordingly, we dismiss the appeal as devoid of merits.
(Pronounced in Court on 02/01/2013) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 15