Customs, Excise and Gold Tribunal - Delhi
National Aluminium Co. Ltd. vs Collector Of Customs on 30 May, 1997
Equivalent citations: 1997ECR354(TRI.-DELHI), 1997(94)ELT409(TRI-DEL)
ORDER
U.L. Bhat, J. (President)
1. These appeals have come up before us for hearing on reference by a two-Member Bench which disagreed with the decision of a three-Member Bench of the Tribunal in Punjab State Electricity Board v. C.C.E., Bombay 1987 (27) E.L.T. 432.
2. The common appellant, a Govt. of India Undertaking was granted an industrial licence with a view to set up Alumina/ Aluminium Complex consisting of a fully mechanised bauxite mine in Koraput with an annual capacity of 2.4 million tonnes, an aluminium refinery in Koraput 14 KMs away from the mine to extract 8,00,000 tonnes of alumina annually, modern aluminium smelter at Dhenkanol 800 KMs away from the refinery to produce 2,18,000 tonnes of aluminium per year, a 600 M.W. captive power plant to supply power to Smelter Unit and Port facilities at Visakhaparnam Port (150 KMs away from the refinery) for export of 3,75,000 tonnes of alumina per year and import of 1,46,000 tonnes of Caustic Soda lye per year. The import licence granted to the appellant covers equipment for setting up alumina refinery and equipments required for port facility. The list of goods was endorsed by the licensing authority for "Project Imports". By letter dated 27-4-1985, addressed to the Collector of Customs, Visakhapatnam, the Joint Secretary in the Ministry of Mines and Coals (Department of Mines) recommended grant of facility for the goods to be imported for the Project against import licence. Appellant thereupon applied to the Assistant Collector of Customs for registration of their contracts under the Project Imports (Registration of Contracts) Regulation Act, 1965 with a view to secure the benefit of tariff rate of duty for Project Import under Tariff Heading 84.66 of the Customs Tariff Act, 1975.
3. The dispute in these appeals relates to application of registration of contract for the supply of equipment for the port facility at Visakhapatnam. The Assistant Collector rejected the applications holding that "Visakhapatnam Port facilities Alumina Conveying System" of the appellant does not fall under any of the serial numbers of 84.66, that it does not fall in the category of "Industrial Plant" since the port facility project is designed at Visakhaparnam far away from the site of the refinery, for convenient handling, and transport of bulk raw materials and bulk finished materials respectively from ship holds to wagons and vice versa and no manufacturing or extraction or mining operation takes place at Visakhapatnam and hence the port facility project cannot be considered to be a project for industrial plant. Assistant Collector passed 5 different orders on 5 applications. Appellant preferred five appeals before the Collector (Appeals) who dismissed the same by separate orders rejecting the contention that "Visakhapatnam Port facilities Alumina Conveying System" is an extended arm of the industrial plant (refinery) and holding that though the equipment sought to be imported could be considered as auxiliary equipment, that they are more in the nature of equipment for transport from ship to the wagon and vice versa and cannot be considered as required for an industrial plant. Collector (Appeals) commented on the functional }use of the imported equipment and indicated that it is not used in any industrial plant and therefore would not fall under tariff Heading 84.66.
4. When the appeal was argued before a two-Member Bench, on behalf of the Department reliance was placed on a decision of a three-Member Bench of the Tribunal in Punjab State Electricity Board v. Collector of Customs, Bombay 1987 (27) E.L.T. 432 (T). The case related to project for generation of power. The question was whether transmission sub-stations for transmission of power generated in the power generation project would fall under Heading 84.66. The Tribunal held that transmission sub-stations do not play any role in the generation of power and therefore do not fall under Heading 84.66(i) of the Tariff. There was also a question whether special vehicles used for transporting transformers to the project site would be auxiliary equipment as contemplated in Heading 84.66 . This question was also answered in the negative. The two-Member Bench which heard the present appeal, did not agree with the view taken in the Punjab State Electricity Board case and was inclined to hold that port facility at Visakhapatnam cannot be dissociated from the refinery which would be admittedly "an industrial plant" and, therefore, the port facility would fall under Heading 84.66. In this view the Bench referred the case to a Larger Bench.
Relevant portion of Chapter Heading 84.66 of the Central Excise Tariff 1975 reads thus :-
84.66 (i) All items of:
(A) Machinery including prime movers,
(B) Instruments, apparatus and appliances,
(C) Control gear and transmission
equipment,
(D) Auxiliary equipment, as well as, all
components (whether finished or not) or raw
materials for the manufacture of the
aforesaid items and their
components, required for the initial setting
up of a unit, or the substantial expansion of
an existing unit, of a specified;
(1)Industrial plant,
(2)Irrigation project,
(3)Power project,
(4)Mining project,
(5)Project for the exploration for oil or
other minerals, and
(6)such other projects as the Central
Government may, having regard to the
economic development of the country,
notify in the Official Gazette in this
behalf.
The dispute in these appeals relate not to other parts of the project such as mining, refinery or the like but only to the "Visakhapatnam Port facility Alumina Conveying System" installed in a part of the port land leased to the appellant for a period of 99 years. Port facility system is intended for unloading imported raw materials from ship to the wagons for onward transmission to the plant site and for loading finished alumina from wagons to the ship for export. The dispute relates to the equipment imported for the purpose of setting up port facility system. There is no dispute that the aforesaid system and the equipment thereof have no direct bearing on the mining operations or any other part of the larger project which can be regarded as "an industrial plant". The question for consideration is whether the equipment for initial setting up of the port facility system can be regarded as auxiliary equipment required for the initial setting up of a unit of an industrial plant within the meaning of Item (i)(D) of Heading 84.66 of the Tariff 4. It has been brought to our notice that the decision of the three-Member Bench of the Tribunal in Punjab State Electricity Board (supra) has been confirmed by the Supreme Court in the decision reported in 1997 (91) E.L.T. 247 (SC). The case related to an application for registration of the contract for import of special vehicle for transporting transformers from the railway station to the site of sub-station set up by the appellant therein. The Assistant Collector rejected the application on the ground that the vehicle was mainly required for transportation of transformers and had no relation to power generation or power project and therefore would not fall under Item (i)(D)(3) of Heading 84.66. Appellate Collector took the view that the vehicle was not meant for any single project and was intended to facilitate movement of transformers and could not be regarded as a part of the project. The Tribunal had sustained these orders. The Supreme Court confirmed the order of the Tribunal in the following manner:
"2. The relevant part of Item 84.66 of the Tariff Entry was brought to our notice. It provides that "all items of auxiliary equipment", as well as, all components (whether finished or not) or raw materials for the manufacture of the aforesaid items and their components, required for the initial setting up of a unit, or the substantial expansion of existing units, of a specified power project would be eligible for assessment as project import.
3. The very language of the entry would indicate that vehicles which are used in the shifting of transformers would not constitute an integral part of the power project and would therefore not attract the provision of entry 84.66. We are, therefore, of the view that the authorities below have rightly construed the entry and we see no reason to interfere with the view taken by the authorities."
The above observations make it clear that vehicle was not considered to be an item of auxiliary equipment required for the initial setting up of a unit in a specified power project on the ground that it was used only in shifting transformers which would not constitute an integral part of the power project. We would also like to emphasize certain features of that case. Firstly, transformers had nothing to do with the generation of power but had nexus with the transmission of power. Secondly, vehicle was intended to transport specified number of transformers to sites of sub-stations and the utility of vehicle would be over at the end of such transport and thereafter the vehicle would certainly be used for other purposes of the assessee. The transformer which was required to be shifted had nothing to do with the power project and shifting thereof would not constitute an integral activity of the project. According to the learned Counsel for the appellant, these special features in the reported case do .* not exist in the present case and, therefore, the reported decision would not apply to the facts of the present case. We are inclined to agree with the submission. The question still surviving for consideration is whether equipment necessary for the setting up of port facility system would be covered by Item (i)(D)(3) of Heading 84.66.
5. Learned Counsel for the appellant contended that the project import scheme was introduced to ease the complexities in classifying each individual item of equipment or part imported for the purpose of project and at the same time to give some relief in the matter of duty and, therefore, a liberal view has to be taken of the scope of the clause "auxiliary equipment required for the initial setting up of an existing unit of a specified industrial plant". According to him, the project in this case was initially approved by the Government in 1980 and the appellant was formed in 1981 to carry out the project. The project was basically export oriented. In this light, according to the learned Counsel, the import of raw materials and the export of finished goods must be regarded as part of the project and, therefore, port facility conveying system must be regarded as an extended arm of industrial plant, namely, 'Refinery'. Learned Counsel placed reliance on two decisions of the Supreme Court, namely, Indian Copper Corporation Limited v. Commissioner of Commercial Taxes AIR 1965 SC 891 and Chowgule & Co. Pot. Ltd. v. Union of India, AIR 1981 SC 1014. He also placed reliance on the circular issued by the Central Board of Excise and Customs (seen at page 116 of Paper Book No. I). It was also contended that where licensing authority has issued licence for import of equipment for project import, Customs authorities cannot take a different view.
6. Shri K.K. Jha, SDR rebutted the above contention and contended that the project in this case consisted only of extraction of aluminium ore and manufacture of alumina and port facility system had nothing to do with the mining operations or manufacture of alumina and is situated miles and miles away from the former. According to him, the two decisions of the Supreme Court relied on by the appellant were rendered in the context of Central Sales Tax Act and in the light of particular provisions of the Act having nexus with the aspect of sale and have no direct bearing on the dispute at hand. According to him, while due regard may be paid for the presence of items listed in the licence, ultimate decision on the question whether items are covered by particular heading of Customs Tariff is for the customs authorities to take.
7. According to the appellant, project is an integrated project involving mining of aluminium and manufacture of alumina and the project is set up '-% with the intention of selling alumina domestically and to foreign buyers and, therefore, the activity of unloading imported raw materials and loading alumina into ship must be treated as part of the integrated project and in that view the equipment of the mechanised handling system must be treated as auxiliary equipment required for the initial setting up of a unit of a specified industrial plant. Auxiliary means "subsidiary". Auxiliary equipment must mean subsidiary equipment. Subsidiary equipment must be required, for the initial setting up of a unit (or substantial expansion of an existing unit) of an industrial plant. There may be several kinds of machinery and equipment required in an industrial plant. Machinery may be required for being assembled in the unit of an industrial plant, in which case such machinery would be covered by Clause (i)(A) of Chapter Heading 84.66 i.e. "all items of machinery". There may be subsidiary equipment which are not required as part of the assembly of a unit in an industrial plant but may be required to move the machinery or equipment or to assemble the same such as weighing and measuring equipment, cranes for lifting and moving items of machinery etc. Such auxiliary equipment though are not machinery required in the assembly of the unit of an industrial plant contribute substantially to the setting up of a unit in the industrial plant. A plant may have several units and the auxiliary equipment required in any manner for initial setting up of a unit or substantial expansion of an existing unit will be covered by Item (i)(D)(1) of Chapter Heading 84.66. It is pointed out that the Assistant Collector misdirected himself by referring to the geographical distance between this facility and the site of refinery. We are inclined to agree that geographical distance may not always be a criterion. The criterion is the role played by the equipment in the initial setting up or substantial expansion of existing unit of an industrial plant. Unloading raw materials at the port or even at the plant may be necessary for the activity of manufacture or process in an industrial plant; so also loading of finished products at the plant or at the port may be necessary part of the activity of disposal of finished products. If Item (i)(D)(1) of tariff Heading 84.66 dealt with auxiliary equipment required in "connection" with 'industrial plant', the language would be wide enough to cover equipment which handle raw materials for finished products. But the language used restricts the equipment to those required for the initial setting up of a unit or substantial expansion of an existing unit of an industrial plant. Emphasis is on the coming into existence of a unit or substantial expansion of existing unit of an industrial plant and not the manufacture or processing of finished products. Emphasis is on the words "required for initial setting up ... or the substantial expansion ... of an industrial plant". There is nothing in the above-quoted words to take in equipment in setting up a unit necessary only for handling raw materials or finished products.
8. In Indian Copper Corporation Ltd., AIR 1965 SC 891, the appellant sought specification in the certificate of registration, inter alia, of locomotives, motor vehicles and their accessories and spare parts, on the ground that the goods were required for mining operations and manufacture of copper. Section 8(1)(b) of the Central Sales Tax Act, 1956 required every dealer, who, in the course of inter-State trade or commerce, sells to a registered dealer other than the Government, goods of the description referred to in Sub-section (3) to pay Central Sales Tax at one per cent of his turnover. Section 8(3)(b) of that Act provided that the goods referred to in Section 8(1)(b), in the case of goods other than declared goods are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power. Rule 13 of the Rules framed by the Central Government stated that the goods referred to in Section 8(3)(b) of that Act which a registered dealer may purchase, shall be goods intended for use by him as raw materials, processing materials machinery, plant, equipment, tools, stores, spare parts, accessories, fuel or lubricants in the manufacture or processing of goods for sale or in mining, or in generation or distribution of electricity or any other form of power. According to the appellant locomotives and motor vehicles were to be used in carrying raw materials and removing materials during the process of manufacture and thereafter to different places and also in mining operations and in the transport of crude ore and stores for mining operations. The High Court excluded from the items, locomotives and motor vehicles used after the mining operations were concluded and before the manufacturing process commenced and also vehicles used in carrying finished products from the factory on the conclusion of the process of manufacture on the ground that the excluded vehicles were not intended for use in the manufacture or processing of goods for sale or in mining operations. The department had not averred that the vehicles used for the excluded purposes were different from the vehicles used in carrying raw materials during the process of manufacture or on the surface in mining operations. The Supreme Court held :-
"--------where a dealer is engaged both in mining operations and in the manufacturing process - the two processes being inter-dependent - it would be impossible to exclude vehicles which are used for removing from the place where the mining operations are concluded to the factory where the manufacturing process starts. It appears that the process of mining ore and manufacture with the aid of ore copper goods is an integrated process and there would be no ground for exclusion from the vehicles those which are used for removing goods to the factory after the mining operations are concluded. Nor is there any ground for excluding locomotives and motor vehicles used in carrying finished products from the factory. The expression "goods intended for use in the manufacturing or processing of goods for sale" may ordinarily include such vehicles as are intended to be used for removal of processed goods from the factory to the place of storage------------ the restrictions imposed by the High Court - would not be justified."
(Emphasis supplied).
On the basis of the above observations, it is pointed out for the appellant that what is important is the integrated nature of the mining operation and the manufacturing process and vehicles used for removal of ore to the factory and of processed goods from the factory to the place of storage are to be covered by the specification in the registration certificate. We notice that the decision rested entirely on an interpretation of the provisions of Section 8(3)(b) of the Central Sales Tax Act and Rule 13 of the Rules and the application of these provisions to the integral process. The decision related to liability for sales tax of a "dealer" and naturally the emphasis was as much on mining and manufacturing process as the purpose of "sale". It was in this view that the Supreme Court observed that "ordinarily" the phrase may include vehicles intended to be used for removal of processed goods from the factory to the place of storage. Interpretation placed on the language of the provisions of one statute cannot be mechanically applied in the context of a statute with a different scheme and different language. In the cases at hand, we are required to interpret item (i)(D)(1) of Chapter Heading 84.66 which has quite different language and content namely. "Auxiliary equipment required for initial setting up of a unit or ... of a specified Industrial plant". We are of the view that the decision relied on cannot be applied to the language adopted in Chapter Heading 84.66 indicated above.
9. In Chowgule & Co. Pvt. Ltd. AIR 1981 SC 1014 the dispute arose in the context of the provisions of the Central Sales Tax Act and the Rules considered in Indian Copper Corporation Ltd. (AIR 1965 SC 891). The appellant was extracting iron ore from the mines, carrying it to the dressing plant where it was washed, screened and dressed and then it was stacked at the mining site from where it was carried by conveyor belts to the riverside for being carried by barges to the harbour. The stacking would be done according to chemical and physical composition of the ore. The ore was to be supplied to foreign buyers in accordance with the specifications required by them. Therefore blending of ore was carried out in such a manner as to produce ore of the required chemical and physical composition. The blending operation was carried out in the process of loading the ore into the ship through the "mechanical ore planting plant". This plant had dual function, namely, blending of ore and loading of blended ore into the ship. The question for consideration was whether goods purchased by the appellant for use in the blending cum loading operation could be said to be goods purchased for use "in the manufacture or processing of goods for sale or in mining". It was held that blending of ore would not be manufacture but that in the course of blending, the ore underwent "processing" within the meaning of Section 8(3)(b) of the Act and Rule 13 of the Rules. It was further held that the Mechanical Ore Handling Plant fell within the description of "Machinery, Plant, Equipment" used in the processing of ore for sale and goods purchased as being intended for use as machinery, plant, equipment, tools, spare parts, stores, accessories, fuel or lubricants for the Mechanised Ore Handling Plant would be eligible for inclusion in the Certificate of Registration of the appellant. The Supreme Court also held that goods purchased for use in carrying the ore from mining site to the riverside and from there to the harbour cannot be regarded as goods purchased for use in mining but can be regarded as goods purchased for use in processing of ore for sale. The Supreme Court held:-
" Where a dealer is engaged both in mining operation as also in processing the mined ore for sale, the two processes being inter-dependent, it would be essential for carrying on the operation of processing that the ore should be carried from the mining site mined ore for sale, the two processes being inter-dependent, it would be essential for carrying on the operation of processing that the ore should be carried from the mining site where the mining operation comes to end to the place where the processing is carried on and that would clearly be an integral part of the operation of processing and if any machinery, vehicles, barges and other item of goods are used for carrying the ore from the mining site to the place of processing, they would clearly be goods used in processing of ore for sale. It is obvious that in the present case, the mining of ore is done by the assesee with a view to processing the mined ore through the Mechanical Ore Handling Plant at the Marmagoa harbour and the entire operation of mining ore and processing the mined ore is one integrated process of which transportation of the mine ore from the mining site to the Marmagoa harbour is an essential part and, in the circumstances, it, is difficult to see how the machinery, vehicles, barges and other item of goods used for transporting the mined ore from the mining site to the Marmagoa harbour can be excluded from consideration on the ground that they are not goods used in processing of ore for sale."
(Emphasis supplied)
10. The assessee in the above case was carrying on mining operation and processing of blending, both of which were covered by Section 8(3)(b) of the Central Sales Tax Act and Rule 13 of the Central Sales Tax Rules. The two processes were regarded as inter-dependent. The later process of blending could be carried out only if the mined ore was transported from the mining site to the harbour where the Mechanical Ore Handling System was operated. Hence the used vehicle for transportation between the point of mining to the point, of blending was held to attract Section 8(3)(b). We are of the view that the ratio of this decision cannot be applied to a case governed by a provision with a different scheme and language.
11. Learned Counsel for the appellant placed reliance on the difference in Project Imports (Registration of Contract) Regulations, 1965 and the Project Imports Regulations, 1986. Registration sought for in this case was governed by 1965 Regulations. Clause 3 of the Project Imports Regulations, 1965 required every importer claiming assessment of articles under Heading 84.66 on their importation to apply in writing to the proper officer of customs at the port concerned for registration of the contract. He has to apply soon after he has obtained the import licence for the goods covered by the contract and in the case of imports by Government or Statutory Corporation as soon as clearance from the DGTD has been obtained. The application shall specify the location of the plant or project, the description of the articles to be manufactured, produced, mined or explored, the installed or designed capacity of the plant or project and other particulars as may be found necessary. The application shall be accompanied by the original deed of contract, the Import Trade Control Licence together with a statement describing the articles licensed to be imported. In the case of imports by Government agency no licence shall be necessary but there should be list of items for which clearance of DGTD has been taken and a certificate from the head of the Project Authority. According to Clause 4 proper officer being satisfied that the application is in order, may register the contract by entering the particulars thereof in a book kept for the purpose, assign a number in token of the registration and communicate the number to the importer and return the original documents. The provisions in Clause 3 are significant. The particulars to be provided relate to the location of the plant or project, the description of the articles to be manufactured, produced, mind or explored, the installed capacity of the plant or project etc. The Regulations clearly suggest that the registration shall not necessarily follow from Import Trade Control Licence or clearance of the DGTD. Inspite of these documents proper officer has to be satisfied that the application is in order which meant that he has to be satisfied that articles sought to be imported would be covered by Heading 84.66.
12. In Project Imports Regulations, 1986, the expression "industrial plants" has been defined as an industrial system designed to be employed directly in the performance of any process or series of processes necessary for manufacture, production or extraction of a commodity. The definition excludes establishments designed to offer services such a hotels, hospitals, photographic studios, photographic film processing laboratories, photocopying studios, laundries, garages and workshops and a single machine or a composite machine within the meaning assigned to it in Notes 3 and 4 to Section XVI of the First Schedule. 'Unit' has been defined a self-contained portion of an industrial plant or of a project specified under Heading 98.01 and having an independent function in the execution of such project. New Regulations also require an application to be made containing various particulars and supported by various documents as stipulated in the old Regulations. Clauses (5) and (6) of 1986 Regulations also enable proper officer to register the contract on being satisfied that the application is in order. In other words broad scheme of the 1965 Regulations has been followed in 1986 Regulations except that the latter contains definition of industrial plants making it clear that Plant takes in only system employed directly in the performance of any process necessary for manufacture, production or extraction of a commodity. The definition would clearly exclude port facility as in the case at hand. The definition incorporated in the 1986 Regulations appears to be only by way of clarification since doubts had arisen under the 1965 Regulations. Absence of definition in 1965 Regulations cannot be of any assistance to the appellant. Regulations have to be read subject to Chapter Heading 84.66 and we have already indicated that port facility intended for unloading raw materials and loading finished products cannot come under Item (i)(D)(1) of Heading 84.66.
13. It is next contended that once the licensing authority issued licence, customs authority cannot go beyond the same and decline registration. It is pointed out that appellant was granted licence to import capital goods for the entire plant inclusive of the port facility. The copy of the Import Licence dated 27-7-1983 produced before us refers to "capital goods as per list attached". A copy of the attached list is not produced. We cannot proceed on the basis that the licence specifically covers equipment for Port facility as part of Project Import. Reliance is placed on letter dated 27-4-1985 of the Joint Secretary in the Department of Mines (G.O.I.) informing the Collector of Customs, Visakhapatnam that appellant was importing "Wagon Haulage System" as per contract under Import licence dated 22-3-1983 for initial setting up of a Composite Aluminium Complex comprising of Mines, Alumina Plant, Aluminium Smelter, Port facilities and Captive Power Plant in Orissa, certifying that the materials covered under the attached list were essential for Port facilities project and requesting concessional duty for project import may be allowed in public interest for the said imports under Heading 84.66 etc. The attached list refers to three numbers of single or double drum reversible railway wagon haulage equipment etc. We are told that these goods are actually equipment for Port facility. The department of mines might have taken a view that these goods are importable as part of Project Import and desired clearance at concessional rate of duty available for Project Import. The view of the department of mines cannot have any binding effect on the Customs Authority acting under the Customs Act, 1962 whose function is to decide on questions of classification and valuation.
14. In C.O.C., Bombay v. Bharat Heavy Electricals, 1984 (17) E.L.T. 525 (T), the Tribunal held, on an examination of the facts and circumstances that the conditions required for registration had been fulfilled and observed that the licence having been endorsed as Project Import by DGTD, there was no reason for the customs authority to deny registration. The decision does not lay a general proposition of invariable application that the proper officer under the Project Import Regulations is bound, irrespective of the fact-situation, to go by the licence or the endorsement of D.G.T.D. In Uma Arts Studio v. Collector of Customs, 1989 (40) E.L.T. 115 (T) the Tribunal held that mere endorsement by ITC authority is not sufficient to grant benefit of project import and assessment under Heading 84.66. Reliance is placed on behalf of appellant on the decision of a learned single Judge of the High Court of Calcutta in Asiatic Oxygen Ltd. v. Asst. Collector of Customs, 1992 (57) E.L.T. 563 (Cal.HC) holding that it was mandatory for the customs authority to register the contract when so recommended and endorsed by DGTD and CCI & E.
15. A similar question came up for consideration in Jacsons Thevara v. Collector of Customs and Central Excise, 1992 (61) E.L.T. 343 (SC). The appellant, a partnership firm obtained licence to import equipment. The licence bore a specific endorsement "Project Import" by the Deputy CCIE. Appellant placed order with foreign supplier. Subsequently the partners in consultation with parents of two minors who had been admitted to benefits of the firm incorporated a private limited company and transferred all the assets and liabilities of the existing business to the company which, in turn, agreed to take over the same together with import licences etc. The existing business as a going concern was over. A joint application was submitted to the Deputy CCIE for approval of transfer of business and for transfer of the licence. Since the goods had been shipped, they were informed that the question of transfer of licence did not arise. Subsequently, appellant informed Deputy CCIE that the imported machinery was being transferred to the company. The Deputy CCIE informed appellant that the transfer of imported machinery had already been noted by his office. Appellant applied to proper officer for registration of contract under 1965 Regulations and also filed Bill of Entry. The goods were cleared on payment of concessional rate of duty. This was followed by show cause notice alleging non installation of the machinery in the appellant's premises and non utilisation of the same for the substantial expansion of the factory as claimed in the application for registration of contract and suppression of facts in order to secure concessional duty as project import and demanding differential duty and proposing imposition of penalty. The Collector of Customs passed order of adjudication against the appellant. A contention was raised before the Supreme Court relying on the licence and endorsement by Deputy CCI&E to the effect that Customs Authority could not take action for breach of condition of licence. It was noticed that appellant had not informed the Customs Authority before the clearance about the transfer of machinery to the company. The Supreme Court held :-
"The office of the Deputy Chief Controller of Imports and Exports had no role to play in the matter of levy of customs duty on the imported machinery and therefore, the conduct of the appellant in informing the Deputy C.C.I.E. about the agreement dated July 31, 1979, entered into by the appellant and the company with regard to transfer of business can have no bearing on the action taken by the Customs authorities for the contravention of the provisions of the Act".
(Emphasis supplied)
16. The decision in Jacsons Thevara case, 1992 (61) E.L.T. 343, in our view proceeds on the basis that the Customs Authorities are the authorities vested with statutory authority under the Customs Act, 1962 to render decision on questions of classification of imported goods vis-a-vis Tariff Act. Goods imported as project import and cleared on concessional rate of duty under Chapter Heading 84.66 of the Tariff were not used by the importer in the project and were transferred to a different legal person and hence Chapter Heading 84.66 was not attracted and concessional rate of duty and facility of project import was not available. Customs authority was fully competent to arrive at a decision notwithstanding any view taken by the licensing authority since the latter had no role to play in the matter of levy of customs duty. This decision of the Supreme Court in effect upholds the view taken by the Tribunal in the case of Uma Arts Studio, 1989 (40) E.L.T. 115 (T) and goes against the view taken in Asiatic Oxygen Ltd. case, 1992 (57) E.L.T. 563 (Cal. HC). In this view, we hold that the customs authority, though required to consider the opinion of the licensing authority as reflected in the licence or any endorsement, has to arrive at its conclusion on merits on a proper consideration of all aspects. Thus, even assuming that the import licences in these cases referred to "Project Import", it is not mandatory for the proper officer to register the contract unless he is so satisfied on a consideration of all relevant aspects.
17. Reliance is placed on a circular issued by the Central Board of Excise & Customs (seen at page 116 of Paper Book No. 1) giving broad guidelines on the interpretation of Item 72A of the erstwhile tariff which related to Project Import. In paragraph 6 of the circular it was stated that Chief Controller of Imports and Exports has agreed that licence shall be issued on the basis of detailed scrutiny by the sponsoring authorities, of the good sought to be imported with reference to the eligibility for concession under Item 72A. Para 6 proceeded to state that when licences -seeks registration of the contract, the custom authorities shall compare the contract with the proforma invoice received by them from the licensing authority and if there is no variation between the two, such contract shall be registered by the customs authorities and if there is a variation, the matter has to be examined. The Board further indicated that normally it is expected that all goods which are so scrutinised and licenced would be eligible for the benefit of Item 72A assessment and the customs authorities will be normally free to deny assessment to such of the items covered by the licence and the attested proforma invoice which, in their opinion, are clearly and patently outside the scope of Item 72A. The circular emphasised the weight to be attached to the licence and also instructed the customs authorities to examine the entire matter in the light of the tariff entry. Thus, the Board's circular relied on is of no assistance to the appellant.
18. We have adverted to all the contentions urged by the appellant and found the same unsustainable. We hold that equipment necessary for port facility conveying system do not fall under Tariff Heading 84.66 and, therefore, the appellant would not be entitled to seek import of those goods under this Tariff Item. We find no ground to interfere and accordingly dismiss the appeals.