Customs, Excise and Gold Tribunal - Delhi
Crompton Greaves Ltd. vs Collector Of Customs on 26 March, 1996
Equivalent citations: 1996(87)ELT249(TRI-DEL)
ORDER J.H. Joglekar, Member (T)
1. This appeal is against the order of the Collector (Appeals), dated 28-4-1986. The brief facts leading to this order are that M/s. Crompton Greaves Ltd. Transformer Division, Bhandup imported on behalf of M/s. Gujarat Narmada Valley Fertilisers Ltd., Gujarat one load tap changer Type 8 with motor drive and other accessories. They claimed assessment of these goods under Heading 84.66 of C.T.A. 1975, after applying for and getting registered the requisite contract under the relevant rules. The lower authority denied the benefit of assessment under this heading on the observation that the plant of M/s. Gujarat Narmada Valley Co. Ltd. had already been set up fully and had started commercial production as early as in 1980. She held that the impugned goods imported in 1985 were the power plant and could not be termed to be goods imported for initial setting up or for substantial expansion of the fertiliser plant. This order was upheld by the Collector (Appeals) resulting in this appeal being filed before us.
2. Ld. Advocate referred to Public Notice No. 164, dated 19-11-1985 issued by the Collector of Customs, Bombay. He claimed that as per this notice captive power plants were to be treated as part of the project in which such a captive power plant was to be set up. It was further stated that such power plant would be assessed at the rate applicable to the project of which such power plant formed a part. Referring to the judgment in the case of Asiatic Oxygen [1992 (57) E.L.T. 563 (Cal.)] later imports could be made for phased importation. The plant manufacturing fertiliser had gone into commercial production in 1980. A captive power plant could not be termed to be machinery related to manufacture of fertiliser. It could also not be called a machinery for substantial expansion of the fertiliser plant. This importation five years later would not qualify under the project imports. He further stated that the fertiliser plant has been set up by M/s. Gujarat Narmada Valley Fertiliser. M/s. Crompton Greaves Ltd. could not claim importation under the project who were admittedly not agents of the importers. In support of his contention, Ld. DR referred to a judgment of the Tribunal in Punjab State Electricity Board v. Collector of Central Excise, Bombay - 1987 (27) E.L.T. 432. He claimed that the goods sought to be imported relate or pertain to the project undertaken by the importers. In this case, the project was for manufacture of fertiliser and not for generation of power. Therefore, the impugned goods do not qualify for assessment under Heading 84.66. Referring to the judgment of the Tribunal in the Toyo Engineering Ltd. - 1994 (70) E.L.T. 769. Shri Ali claimed that for benefit under this heading a contract must exist and the contract must be registered. In the present case, the existence of a contract has not been shown. In the case of Collector of Central Excise, Madras v. Vijaywada Printers -1995 (78) E.L.T. 516 also it has been held that the contract could not be registered only on the basis of a purchase order. Referring to the judgment of Bombay High Court in Subhash Photographics - 1992 (62) E.L.T. 270, he claimed the benefit of classification under project import would not be available where only a part of the project was imported. The same view has been taken, he submitted, in the case of Collector of Central Excise, Madras v. Srisarathi Studio Pvt. Ltd. - 1994 (73) E.L.T. 382 (Tribunal). In this connection he also cited the judgment in the case of Collector of Central Excise, Bhubaneshwar v. P.F. Associate Processing Lab - 1996 (81) E.L.T. 257 (Tribunal).
3. Citing the judgment of the Tribunal in the case of National Electronics v. Collector - 1995 (77) E.L.T. [650], he argued that where the machinery imported was neither for initial setting up nor was [for] substantial expansion, the classification under Heading 84.66 could not be attracted.
4. Countering the argument of the ld. DR, ld. advocate stated that the status of M/s. Crompton as importers, under the project import scheme was not questioned either by the original authority or at the appellate stage. Referring to the trade notice cited he stated that captive power plant should be given the same status as the project in which same plants are meant to be used. Therefore, the admissibility of the captive power plant as qualifying goods under project imports should not be doubted.
5. We have carefully perused the documents before us, the relevant judgments and have given careful attention to the arguments advanced by both sides.
6. Ld. DR has claimed that M/s. Crompton Greaves Ltd. were not-competent to seek assessment under Heading 84.66 on two counts. Firstly that they were not the people who had set up the plant for manufacture of fertilisers and secondly they did not enter into the contract with the supplier.
7. In the case of Vijaywada [Offset] Printers also registration was sought to be made only on the basis of a purchase order. This was held to be satisfactory fulfilment of the condition under Heading 84.66. From the lower order also it is clear that initially while lower authority has agreed to register the contract under 84.66, on careful scrutiny of the documents she had refused to extend the benefit of such assessment. On this count, we find substantial merit in the arguments of the ld. DR.
8. The second issue is whether the captive power plant is an integral part of a project for manufacture of fertiliser or not. The trade notice referred to by the Ld. advocate extended the benefit to such captive power plants of assessment at the rate applicable to main plants. Therefore, it would appear that captive power plant could be the integral part of the fertiliser project. In order for captive power plant to so qualify it has to be a part of the initial proposal. Thus if a captive power plant has been requisitioned as part of the entire fertiliser plant and has been registered as such there could have been no difficulty in the benefit of Heading 84.66 assessment being extended to such captive power plant. There is nothing on record to show that the provision had been made for induction of such a power plant by M/s. Gujarat Narmada Valley F. Co. Ltd. when they initially set up the fertilisers plant. In case of such an inclusion there would have been no difficulty even if the parent plant had been imported earlier and this part imported later. In that case the importation would have been in stages over a long period and the benefit of ratio of the Asiatic Oxygen Ltd. could have been available to the importers. But this is not the case here. The [captive] power plant is not shown to be an integral part of the fertiliser power plant when it was concieved and imported. On this ground, the denial of assessement at the rate of Heading 84.66 is with sound basis.
9. The next issue is whether the impugned goods were imported for substantial expansion of the initial plant or not. Although such plants have been admitted to be a part of the parent plant by virtue of the public notice, dated 11-10-1985, it is clear that such plants do not conform a part of the producing machinery. In other words, these are peripheral plants and do not contribute to manufacture of the goods in the case of fertilisers. On this count also, the impugned goods do not qualify for the benefit of assessment under the benefit.
10. The judgment of the Calcutta High Court in the case of Asiatic Oxygen Ltd. does not apply to the facts of the case before us. In the cited case the petitioner was manufacturing diverse gases. The contract was registered. The petitioner could not achieve full licenced capacity because they were unable to import. The import of gas cylinders was made at a later date. Their proposal for importation of empty gas cylinder was approved by the DGTD and by CCI & E. The customs however refused to register the contract. The Hon'ble High Court held that the phrase "initial setting up" must be construed liberally. The Hon'ble Court observed that if the petitioners had imported all the cylinders at the time of importation of the main plant, the Customs would have had no objection to their importation. The Hon'ble Court held that the empty cylinders imported at a later date also were capable of falling under the umbrella of the phrase initial setting up.
11. The facts in the case before us are radically different. In the cited case, the empty cylinders were an absolute necessity. Otherwise the gases manufactured by Asiatic Oxygen Ltd. could not be sold. In the case before us the power plant was not an integral requirement but was, as the lower authority has observed, was later thought to be imported to overcome "the existing fluctuations or rather voltage differences and power failures". In the cited case the contract was duly registered with the customs authority. In the case before us the registration was sought merely on the basis of an invoice. On these two counts, ratio of the cited judgment would not apply. On the other hand, the citations made by the ld. DR squarely apply to the facts before us.
12. In the result we find no merit in the appeal and reject the same.