Custom, Excise & Service Tax Tribunal
Ims Petrogas Ltd vs Commissioner Of Customs on 24 October, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. I Appln.No.C/(Ors)/93290 & 93354/16 APPEAL No.C/1404 & 1405/05 (Arising out of Order-in-Appeal No.362 & 363/2005 /MCH/DC/CC/05 dated 06/09/2005 passed by Commissioner of Customs (Appeals), Mumbai) For approval and signature: Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the :No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
IMS Petrogas Ltd., SHV Energy North West India Ltd., Appellants Vs. Commissioner of Customs (Imports), Mumbai Respondent Appearance:
Shri.Prakash Shah, Advocate for appellant Shri.MK Sarangi, Jt. Comm. (AR) for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of Hearing : 24/10/2016 Date of Decision : 08/11/2016 ORDER NO Per: M.V. Ravindran
1. These two appeals are directed against Order-in-Appeal No.362 & 363/2005 /MCH/DC/CC/05 dated 06/09/2005 passed by Commissioner of Customs (Appeals), Mumbai. The appellants also filed miscellaneous applications which are listed today for disposal.
2. The miscellaneous applications and appeals are arising out of the same impugned order, hence we dispose of appeals and miscellaneous application by a common order.
3. The relevant facts are that M/s.IMS Petrogas Ltd. (now SHV Energy LPG Infrastructure Pvt. Ltd.) hereinafter referred to as Appellant No.1), registered their contract under Project Import Heading 98.01 for initial set up of LPG Storage Terminal (Tanks) at Porbunder, Gujarat. Appellant claimed benefits of Notification No.42/96-Cus dated 23/07/1996, Sl.No.16 for Port Development Project. As per the lower authority appellant was setting up LPG Storage Tanks for their LPG imports at Porbunder under the Parallel Marketing Scheme of Ministry of Petroleum of Natural Gas, Govt. of India, the recommendation letter did not state that setting up of LPG Tanks falls in the category of Port Development Project, the goods were allowed provisionally pending further clarification. Subsequently, M/s.SHV Energy Northwest India Ltd. (now SHV Energy Pvt. Ltd.) (hereinafter referred to as Appellant No.2) approached the lower authority for import of balance material for the said project. The subsequent clarifications received from the Project authorities did not clarify whether the said project is a Port Development Project. As per lower authority the setting up of LPG Storage Tanks is for their own infrastructure facility for import, storage and distribution of LPG and the facility is not available to any other Port user. The letter dated 31/07/2004, the project authority has written to the lower authority to consider the same as Port Development Project and extend the custom duty concession to the appellants is incorrect. As per the lower authority the appellants are not eligible to benefit of Project Import and the contract has been de-registered. Appellant has been directed to pay Rs.74,59,572/- and Appellant No.2 has been directed to pay Rs.49,36,245/- on account of finalisation of assessment on merit. Appellant No.1 & 2 have filed two different appeals against the same order of the lower authority.
4. The first appellate authority also agreed with the findings recorded by the adjudicating authority and upheld the order-in-original.
5. Learned Counsel appearing for the appellants submit that appellants had submitted various documents such as, plant layout, project report, etc. under letter dated 02/08/1996 from the Secretary, Ports & Fisheries Department, Government of Gujarat, which they claimed as recommendation letter; the findings of the first appellate authority that the appellant did not produce detailed project import report is erroneous and contrary to the records; the denial of benefit of project import is also incorrect as they have submitted the entire report to the adjudicating authority also; once the sponsoring authority has recommended that the project undertaken by the appellants has been considered as Port Development Project, it was not open for the Customs authorities to sit in appeal against the said recommendation; the project authority, viz., the Ports & Fisheries, Department of Government of Gujarat, in the present case clarified that the project has been considered by them as port development project and the customs authorities are bound by it; the Ports & Fisheries, Department of Government of Gujarat is a statutory authority and having certified that the project undertaken by the appellant is Port Development Project, cannot be disputed today by the Customs department; the findings of the lower authorities that the construction of LPG storage tank is for only use of the appellants and was not available to all port users is also incorrect as subsequently, the adjudicating authority i.e., Commissioner of Customs (Preventive), Jamnagar, by order-in-original No.05-06/Commr/2012 dated 31/07/2012 in appellants own case held that the appellant is extending usage of storage tanks of LPG to others also; in fact it is on record that the appellant had permitted other oil companies to use the LPG Tanks; the findings of the learned adjudicating authority that storage facilities are not covered by Project Import Regulation is erroneous and has effect of rendering number of projects notified under sub-item (6) of Heading 98.01 of the notification No.42/96-Cus dated 23/07/96, nugatory and meaning less; sub-item (6) of Heading 98.01 includes various projects like Bombay Water Supply and Sewage Project, Salaya-Koyali Mathura Crude Oil Pipe Line Project and Mathura-Delhi-Ambala-Jullundur Product Pipeline Project, which would indicate that the project need not be only for production, mine or exploration and these projects are also recognized under Project Import Regulation as these are of service oriented projected; the findings of the lower authorities that a clarification of Ports & Fisheries Department, Government of Gujarat does not put the Customs department under an obligation to grant concessional rate of duty is not correct and contrary to the judgement of the Honble Apex Court in the case of Zuari Industries Ltd. Vs. CCE & C 2007 (210) ELT 648 wherein the Apex Court held that Revenue cannot go behind the certificate of the Project Authority and deny the benefit of the exemption under project import, this ratio is in para 9 of the said judgement.
6. Learned Departmental Representative on the other hand would submit that the Project Import Regulation will not cover the LPG storage facilities which has been erected by the appellants for his personal use and reiterated the findings of the lower authorities.
7. We have considered the submissions made at length by both sides and perused the records.
8. The issue involved in this case is whether the appellant is eligible for the benefit of Project Import Regulation or otherwise for construction of LPG storage terminal tanks at Porbunder, Gujarat claiming the benefit of notification No.42/96-Cus dated 23/07/96, Sl.No.16 in Port Development Project.
9. We find from the records that Notification No.42/96-Cus is issued in exercise of powers conferred by sub-item (6) of Heading 98.01, the first schedule to the Customs Tariff Act, 1985, the Central Government has notified 19 projects input eligible under Project Import assessment under Chapter heading 98.01 and at Sl.No16, Port Development Projects are indicated. We find by letter dated 02/08/1996, the office of the Secretary of Ports & Fisheries Department, Government of Gujarat has specifically stated that they have accepted the proposal of the appellant for erecting of storage of LPG (import) facility at Porbunder Port of the Gujarat Maritime Board and by letter dated 01/02/97 clearly indicated to the Asst. Commissioner of Customs, Central Cell, GR-6) New Customs House, Mumbai that in view of the clarifications mentioned above, the duty concession to import the items under Customs Tariff Act, 1975 and Project Import Regulations, 1986 as well Public Notice 154 Imp.133 dated 30/11/89 may be permitted as per rules to M/s.IMS Petrogas Ltd. and SHV Energy North West India Ltd. subject to the condition that total material should not exceed as attested and forwarded as Annexure-B (copy enclosed as per para 3 above) with this department even letter dated 22/10/96. The above said paragraph reproduced from the letter of Secretary to the Ports and Fisheries Department, Government of Gujarat clearly indicates that these facilities for LPG import and storage at Porbunder Port is covered under Project Import Regulations and the said Secretary is authorized for issuing such certificates. On face of such a certificate from the concerned ministry, the Revenue authorities are in error to hold that the import of the goods under Project Import Regulations by appellants is improper as also the de-registration of project from Project Import Regulations. In our view, the ratio of the judgement of the Apex Court in the case of Zurai Industries Ltd. (supra) will apply to the case in hand, in its full force and there is no dispute that the said project is covered under Notification No.42/96-Cus issued by the Government of India under Heading 98.01. We also find strong force on the contentions raised by the learned Counsel that the only reason of denying the benefit of Project Import Regulations was that these storage tank was for their own use, is also erroneous, as we find that in the order-in-original dated 03/07/2002, the appellants own case, the Commissioner of Customs (Prev.) has held that the applicant has been extending the benefit of these very same storage facilities to other oil marketing companies and amounts collected from such oil marketing companies are to be considered for valuation of the goods imported.
10. In view of the foregoing factual matrix, we have no hesitation to hold that the appellants are eligible to the benefit of Project Import Regulations in respect of the project registered by them. The impugned orders de-registering the project imports and demanding differential duty are unsustainable and liable to be set aside and we do so.
11. The impugned orders are set aside and the appeals are allowed with consequential relief. MA also disposed of.
(Pronounced in Court on ..) (Raju) Member (Technical) (M.V. Ravindran) Member (Judicial) pj 1 2 Appeal No.C/1404 & 1405/05