Customs, Excise and Gold Tribunal - Delhi
Western India Plywood Ltd. vs Collector Of Customs on 22 March, 1990
Equivalent citations: 1990(27)ECC160, 1990(47)ELT617(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. This is an appeal against the order of Appellate Collector of Customs, Madras dated 26-4-1982 confirming the lower authority's rejection of the appellants request for registering the subject consignment under Project Import.
2. The appellants imported a Klockner Drum Chipper under Bill of Entry No. 82/5-2-81-HD. No. 49/12-2-81. Before clearing the goods under the Bill of Entry, the Appellants had filed an application dated 17-1-1981 to the Asstt. Collector of Customs, Import Department, Cochin requesting that the application filed by the Appellants may be registered for Project Imports and a Project Import Number allotted, so that the benefit of the lower rate of duty applicable to Project Imports would be available to the import of the machine at the time of clearance. The appellants also wrote a letter to the Assistant Collector on 4-2-1981 explaining the circumstances in which the Chipper machine was imported and requesting for registration and the benefit of Project Importation contracts.
3. The Assistant Collector rejected the request of the importer for registration of Project contract and for classifying the goods as Project Imports under Heading 84.66 of the Customs Tariff, on the ground that the goods imported were not meant for the substantial expansion of the existing Industrial Plant and that the item imported was only substitution of an indigeneous type of same machinery.
4. In order to save demurrage charges and also in view of the urgent need for the Chipper machine without which the entire machine assembly had become non-functional the full duty demanded by the Assistant Collector was paid under protest, and the machine cleared. Thereafter the Clearing Agents - M/s. Aspinwall & Co. Ltd., filed on behalf of the Appellants an appeal to the Appellate Collector of Customs, Customs House, Madras.
5. The lower Appellate Authority rejected the appeal holding that the import does not qualify for Project Import concession because only the single unit has been imported, there is no contract, the machinery is for increasing the installed capacity and it does not fulfil the scope for which the Project Import Regulations were framed. Aggrieved by this order, the appellants have preferred the above appeal.
6. We have heard Shri S. Venkatraman, learned Conslt. and Shri M.K. Sohal, learned JDR.
7. The Consultant submits that the circumstances which necessitated the import are as follows :-
(i) The Government of India had issued the Appellants an Industrial Licence dated 3-5-1977 for the manufacture of Fibre Board (Hardboard, Semi Hardboard and Soft Boards) for 20,000/- tonnes -12,500 tonnes being the additional capacity.
(ii) To implement this an Import Licence, dated 8-8-1977 (except for the Drum Chipper) was issued for the import of all machinery required for the expansion from Sweden.
(iii) The Chipper forms an essential link in the operation of the machinery for the manufacture of Fibre Boards, since the first step in the manufacturing process involves converting wood (the basic raw material) into chips before they are defibrated into fibres, which is achieved by the Chipper.
(iv) The Appellants, placed an order for the Chipper with M/s. Utkal Machinery, Orissa, an associate Company of M/s. Larson & Toubro Ltd., since the Company had a collaboration with M/s. Maier Chipper, West Germany, one of the leading manufacturers abroad in this field.
(v) Chipper supplied by M/s. Utkal Machinery, Orissa had a number of design and manufacturing defects. The defective Chipper resulted in frequent failures and break down of the machine thereby bringing the entire plant to a standstill.
(vi) The New Hardboard Plant was commissioned in July 1979. Initially the Plant could not be put into operation as 110 KV electric supply from the Kerala State Electricity Board was available only by early 1980. When the Appellants thereafter tried to put the Plant in full load, the indigenous Chipper broke down on 27th February, 1980, with the rotor shaft getting severely bent; the machine became totally inoperative. The entire machine had to be taken to their works at Kansbahl, Orissa for fundamental repairs on 22nd March, 1980.
(vii) Under these circumstances the Appellants approached the Government of India for a C.G. licence for import of the Chipper alone. The licence for the Klockner Chipper, which was indeed part and parcel of the Project was issued.
(viii) It was endorsed as eligible for Project Import consideration after clearance by the Directorate General of Technical Development (D.G.T.D.).
8. The learned Consultant takes us through Purchases Order, order confirmation proforma invoices, letter of credit, sales invoices, packing specification, Bill of Lading and the Bank retirement documents which according to him, constitute a contract under the India Contract Act for the purposes of the Project Import Regulations. He also draws our attention to the Import Trade Control Licence bearing the following endorsement. "Project Import for assessment under Heading 84.66 of Section XVI of the Customs Tariff Act, 1975" and submits that together with the documents mentioned above, this endorsement also satisfies the requirements of the Project Import Regulations. He contends that the lower authorities erred in the interpretation of Regulation 3(4) of the Project Import (Registration of Contract) Regulations, 1965 hi insisting upon a written deed of contract which would be applicable only for the entire project and not for the import in this case, in view of the circumstances necessitating the import of item in question.
9. The learned JDR draws our attention to Regulation 3(4) regarding filing of the original deed of contract and submits that as the importer Appellant did not file a written contract, the benefit of Project Import was denied to the appellant. He further contends that the Bill of Entry itself has not been filed for Project Import under Heading 84.66 and submits that the proviso to Heading 84.66(i)(d) has not been satisfied. According to him the goods imported are only replacement of an indigenous machinery and will not amount to a Project Import.
10. For a proper appreciation of the issue involved in the appeal, it would be useful to reproduce Heading 84.66 of the Customs Tariff Act, 1975 "84.66 (i) All item 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 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:
Provided these are imported (whether in one or in more than one consignment) against one or more specific contracts, which Customs House in the manner prescribed by Regulations which the Central Board of Excise and Customs Act, 1962 (52 of 1962) and such contract or contracts has or have been so registered before any order is made by the proper officer of customs permitting the clearance for home consumption, or deposit in a warehouse of items, components of raw materials."
The proviso stipulates the necessity of one or more specific contracts.
11. Regulation 3(4) of the Project Import (Registration of Contract) Regulations, 1965 reads as follows :-
"(4) The application shall be accompanied by the original deed of contract together with a true copy of, the Import Trade Control Licence for the Import of the articles together with a statement describing the articles licensed to be imported, duly attested by the authority issuing the Import Trade Control Licence."
Regulation 4 deals with assignment of a number to the contract and Regulation 5 provides for amendment of contract and provides that "the application for amendment shall be accompanied by the original deed of contract together with a true copy thereof and the documents permitting consequential amendments to the Import Trade Control Licence and to the list of articles referred to in Clause (4) of regulation 3, duly attested by the authority issuing the Import Trade Control Licence:
Provided that in the case of imports made by the Government Agency, the application shall in addition to the said original deed of contract (alongwith a copy) be accompanied by documents, if any, permitting consequential amendments to the list of items cleared by the Directorate General of Technical Development and the certificate issued by the Project authority concerned.
12. A reading of the relevant tariff heading and the Project Import Regulations, makes it clear that the existence of a written contract is absolutely essential for the purpose of registering a contract as a Project Import under Heading 84.66 of the Customs Tariff Act. A contract in writing is contemplated. The lower appellate authority rightly rejected the appeal.
13. We see no reason for interference with the impugned order. The appeal is dismissed.