Customs, Excise and Gold Tribunal - Delhi
Punjab State Electricity Board vs Collector Of Customs on 19 September, 1986
Equivalent citations: 1987(10)ECR120(TRI.-DELHI), 1987(27)ELT432(TRI-DEL)
ORDER D.C. Mandal, Member (T)
1. In this appeal, which was originally filed before the Government of India as a revision application, the appellants have prayed that the impugned order dated 3-4-1982 passed by the Appellate Collector of Customs, Bombay may be set aside and the Assistant Collector of Customs may be directed to register the contract of the appellants under the Project Imports (Registration of Contract) Regulations, 1965 so that the refund of Customs duty already paid in excess can be obtained.
2. The facts of the case, in brief, are that the appellants made an application for registration of their contract No. 15617/PO-411/Spec-973/ DD-166 S-IV dated 25-6-1981 entered into with M/s. Cometto Industraile, Italy through M/s. Salgaocar Engineers Pvt. Ltd., New Delhi for Import of one 200 M/Ton Self-propelled vehicle model Cometto MT-100 etc. They sought clearance of the goods against import licence No. 20394 38 dated 18-6-1981, duly endorsed with "Project Imports" under Heading No. 84.66 of C.T.A., 1975. The goods were required for transporting 100 MVA transformers from Railway Station to the sites of Seven sub-stations which were being set up by the appellants at various places of Punjab and Haryana States under various transmission projects. The application was rejected by the Assistant Collector of Customs with the following observations :
"The goods imported is mainly used as material handling equipment, for transportation of local goods towards the erection site and no power generation or any project is involved in the instant case. The import clearly falls outside the scope of Project Import. Therefore, the question of Registration of the contract under Project Imports (Registration of Contract) Regulations, 1965 does not arise."
The appellants cleared the goods on payment of duty as assessed by the Custom House under protest and then claimed refund of the duty, which, according to them, was paid in excess. The appellants also filed an appeal against the order of the Assistant Collector, but the same was rejected by the Appellate Collector of Customs. While rejecting the appeal he observed as follows : -
"The equipment is not meant for any single project. The vehicle is used to facilitate movement of lifting up heavy local plants and cannot be considered as "Project" by themselves. The order of the Assistant Collector is maintainable."
The present appeal is against that order of the Appellate Collector.
3. We have heard Shri Sorabjee, learned Senior Advocate for the appellants and Shri Gopinath, learned Senior Departmental Representative for the respondent.
4. The learned Advocate has argued that the appellants are a statutory Corporation appearing in Rule 3(2) of the Project Imports (Registration of Contract) Regulations, 1965. According to the proviso to Rule (4) of these Regulations, the application of the appellants was to be accompanied by the list of items, for which clearance of Director General of Technical Development had been taken and a certificate from the Head of the Project Authority to the effect that the items to be imported are covered by the rules. The appellants were granted an import licence No. 2039138 dated 18-6-1981. The goods covered by the import licence were described in details in the list enclosed to the licence and the list " contained the endorsement of "Project Import". Director General of Technical Development's clearance was obtained as stated in letter No. P/Pb-944/B/81-FE (G/A/C/XX/79)-17/5 dated 15-5-1981 from the Government of India, Ministry of Energy (Department of Power) to the Chief Engineer/Transmission systems, Design Directorate Sub-stations, Punjab State Electricity Board and copy endorsed to the CC1 & E, CG-11 Section, New Delhi, etc. In his letter No. 196/21/80-FED-1 dated 15-6-1981, the Deputy Chief Engineer, Central Electricity Authority, Government of India requested the Deputy Chief Controller of Imports & Exports, CG- 11 Section, New Delhi for embossing the Import licence as "Project Import". The requirements of Proviso to Rule (k) referred to supra were, therefore, fulfilled. The learned Advocate has further argued that auxiliary equipments required for the initial setting up of a unit of a specified power project is assessable under Heading 84.66(1) of the First Schedule to the Customs Tariff Act, 1985 (hereinafter referred "to as C.T.A., 1975) as Project Import subject to registration of the contract as provided in the proviso to this Tariff Heading as well as in the Project Imports (Registration of Contract) Regulations, 1965. The goods covered by the contract of the appellants were 2 vehicles required for transport of transformers which were required for initial setting up of various power transmission sub-stations. These vehicles are auxiliary equipment of power projects and are covered by sub-heading (D) of Heading 84.66(1) of C.T.A., 1975. As the application for registration of contract was filed after fulfilment of all requirements, the contract should have been registered for classification of the goods under Heading 84.66(i) C.T.A., 1975 as Project Imports. Regarding the observation of the Appellate Collector that "The equipment is not meant for any single project", the learned advocate has argued that the Project Imports (Registration of Contract) Regulations, 1965 do not provide that the vehicle cannot be transferred to another project. In reply to a question put from the Bench, it has been clarified on behalf of the appellants that after the setting up of seven sub-stations for which the Vehicle had been imported, it was diverted to some other projects.
5. The learned S.D.R. has stated that the auxiliary equipment for power project falls under Heading 84.66(i)(D)(3) of the C.T.A., 1975. Power Project means power production project and not the power distribution project. The vehicle did not play any part in the power production. It is a transport material. The project of the appellants in the present case is "Power Transmission! Project" and it is not covered by this Tariff Heading. Secondly, the learned S.D.R. has stated, auxiliary equipments would mean only those equipments which are exclusively required for a particular project. In this case, the vehicle was not meant for any particular project exclusively. It was diverted to other projects. The Custom House was, therefore, justified in refusing the benefit of "Project Imports" to this vehicle.
6. As rejoinder to the above arguments of the learned S.D.R., the learned Advocate has stated that a too restricted view should not be taken. A "Power Project" would include both power production and power transmission. Transmission is an essential aspect of a power project. It is a very essence of a power project. This vehicle clearly falls within the meaning of initial setting up of a power project. The benefit of "project Imports" is admissible to the vehicle.
7. We have carefully considered the records of the case and the arguments of the learned Advocate and the learned S.D.R. The issues arising our of their arguments are :
(i) Whether these power transmission projects fall within the purview of "Power Project" appearing in Heading No. 8466(i)(D)(3) of the Import Tariff:
(ii) Whether the imported vehicle is an auxiliary equipment of the power transmission project, and
(iii) Whether the vehicle imported for the initial setting up of a number of transmission projects is eligible for assessment at concessional rate of duty as "Project Import" under the above Tariff Heading.
8. The learned S.D.R. has not disputed the fact that all procedural formalities for registration of a contract have been observed by the appellants. It is also an admitted fact that the vehicle in question was imported for transport of the heavy weight power transformers required for initial setting up of various sub-stations of several power transmission projects. It is also an admitted fact that after completion of the initial setting up of seven transmission sub-stations, the vehicle was diverted to other projects. These transmission sub-stations did not play any role in the generation of power, and consequently, the imported vehicle had nothing to do in connection with the generation of power. A project cannot be called a "Power Project" unless it generates power. In the present case, the sub-stations were to be set up for power transmission and not for producing power. Without production of power, there cannot be a "Power Project". Para 2 of the photo copy of Project Report submitted by the appellants with the paper book shows that this "Project Report for the transmission system exclusively meant for Punjab (220 KV and above) during the Fifth Five Year Plan has been prepared to evacuate the additional, generation that will be available from the new projects and also from the Projects under execution with CEA and the Central Projects already working." Para 3 of the Project Report says that "Total generation for the Project has also been assumed 5S& MW. The same generation was earlier assumed in the main Transmission Project (132 KV & 66 KV) for the Fifth Five Year Plan which stand submitted to CEA...". It is also stated that the present Project Report is meant for transmission and dispersal of 584 MW additional power, extensions and argumentations of the transmission net work already provided in previous transmission Project. Thus the Project Report itself shows that generation of power is not a part of the present project. This being the position, we are unable to accept the contention that these transmission sub-stations are "Power Projects" falling under Heading 8466(i) of the Tariff.
9. The next question to be decided is whether the imported vehicle is an auxiliary equipment. The term auxiliary equipment has not been defined in the Customs Act or in the Customs Tariff or in the Project Imports (Registration of Contract) Regulations, 1965. The term is, therefore, to be construed strictly. The dictionary meaning of the word "auxiliary" as per the Concise Oxford Dictionary, Seventh Edition is "subsidiary". Auxiliary equipment would, therefore, mean subsidiary equipment. By the word auxiliary equipment we understand that equipment which is directly used in the setting up of the Project. In the present case, the vehicle was to be used for transport of the transformers to the Project site. The vehicle was nothing but a transport material. If it is treated as an auxiliary equipment, then other types of transport materials, such as trucks, lorries, motor vehicles etc. which are utilised in connection with the setting up of the Project in some way or other, will also have to be considered to be auxiliary equipments. We are afraid, this will result in stretching the scope of this term too far. We are not agreeable to do so and would like to restrict the term auxiliary equipments to those equipments which have direct use in the setting up of the project. Viewed from this angle, the imported vehicle does not qualify to be treated as an auxiliary equipment.
10. Having held as above, further discussions on the point whether the imported vehicle meant for use in more than one Project will otherwise qualify for assessment as "Project Import" is not called for. However, for academic interest we are to observe that sub-heading (D) of Tariff Heading 84.66(i) refers to auxiliary equipment required for initial setting up of "a unit" or the substantial expansion of "an existing unit", of "a specified" power project. It is very clear from the provision of this subheading that the auxiliary equipment should be relatable to a particular and a specified power project, in the present case, the vehicle was imported for setting up of seven transmission sub-stations falling under several projects and it was not relatable to a particular project. Therefore, even if the vehicle is considered to be auxiliary equipment (which, of course, is not the case), then also this specific provision is not fulfilled and it is not eligible for assessment as "Project Import".
11. Having regard to the above discussions, we hold that the vehicle imported for the initial setting up of power transmission sub-stations did not qualify for assessment under Tariff Heading 84.66(i) and accordingly, the Custom House was justified in refusing to register the contract for this vehicle under Project Imports (Registration of Contract) Regulations, 1965. We, therefore, find no reason to interfere with the impugned order. In the result, we uphold the same and dismiss this appeal.