Custom, Excise & Service Tax Tribunal
Nocil vs Commissioner Of Customs (I), Mumbai on 21 October, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. C/239/05-Mum (Arising out of Order-in-Appeal No. 62/2005/MCH dated 17.1.2005 passed by Commissioner of Customs (Appeals), Mumbai) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) and 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 :
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?
====================================================== NOCIL Appellant Vs. Commissioner of Customs (I), Mumbai Respondent Appearance:
Shri D.B. Shroff, Sr. Advocate, with Shri Prasad Paranjape, Advocate, for appellant Shri M.K. Sarangi, Joint Commissioner (AR), for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of Hearing: 3.10.2016 Date of Decision: 21.10.2016 ORDER NO Per: Raju The appellant, NOCIL, imported a second-hand thermoforming plant and production line under chapter heading 98.01 as project imports. The appellant had the project registered with the customs. The goods were imported vide bill of entry No.1235 dated 4.1.1994. The bill of entry was assessed provisionally and effective rate of duty prescribed under Notification 132/85 was levied. The appellant thereafter submitted necessary documents for finalization of provisional assessment and provisional registration of contract. In terms of CBEC instructions contained in letter No.512/8/89-Cus-VI dated 14.6.1991, a request was made to Deputy Commissioner of Customs and Central Excise, Nagpur, to conduct plant site verification for the imported goods on 16.10.2003. The central excise formation at Nagpur submitted a report to the customs that the said goods were not found installed in the factory and therefore verification could not be completed. The Deputy Commissioner also informed the customs that the importer had sold the said plant to Pololight Industries Ltd., Silwasa, vide invoice No.83/84/87/88 dated 11.9.1998. The importer had submitted before the jurisdictional excise authorities documents evidencing receipt/installation and disposal of subject plant vide their letter dated 28.11.2003. A notice was issued to the appellant alleging that the appellant could not have diverted the goods to local market violating the provisions of Project Import Regulations, 1986. It was held that since the appellant had violated the conditions of the Project Import Regulations, they are not entitled to finalization of assessment under heading 98.01 and at effective rate of duty prescribed under Notification 132/85. The goods were classified under heading 8479.89 and a demand was issued for basic customs duty @ 80%, auxiliary duty at the rate of 50% and CVD of 10% and special excise duty of 15%. The demand was confirmed by the Deputy Commissioner of Customs and the Commissioner (Appeals). Aggrieved by the said order, the appellant is before the Tribunal.
2. Learned counsel for the appellant argued that the appellant had installed and commissioned the said plant in their factory and regular manufacture/production of footwear and parts commenced from October 1995. The same continued upto and including August 1997. The appellant submitted copies of form RT-12 returns and monthly extract of PLA and RG-23A registers duly certified by the central excise authorities in respect of their claim. The appellant argued that in the year 1997-98 due to economic unviability, the production at their factory was closed and later, almost 18 months after the stoppage of production, the said machines and other associated equipment were disposed of. The learned counsel argued that it is not disputed that the appellant had actually received and installed the plant and produced goods for period exceeding two years. It is not disputed that the plant thereafter was idle for considerable period of time. It was argued that there is no provision under Notification 132/85 or under chapter heading 98.01 or under the Project Import Regulations that prohibits sale of the machinery imported under the Project Import Regulations after the same has been installed and used. The learned counsel argued that the said plant was sold in September 1998 and till such time it was used/installed in their factory premises.
3. Learned AR relies on the impugned order. He relied on the decision of the Tribunal in the case of Bharat Bijlee Ltd. vs. CC, Mumbai 2014 (314) ELT 74, to assert that the goods imported under Project Import Regulations cannot be diverted. The learned AR also relied upon the decision of the Honble Apex Court in the case of CC, Mumbai vs. Toyo Engineering India Ltd. 2006 (201) ELT 513 (SC).
4. We have gone through the rival submissions. We find that the Revenue has failed to establish any provision under Notification 132/85 or the Project Import Regulations or under Chapter heading 98.01 that prohibited sale of goods imported under chapter heading 98.01. The chapter heading 98.01 is a facility extended and not a concession granted. When a complete plant is imported, it may consist of thousands of different items, parts and components. To classify each and every component separately and to determine the value of each and every component would be a herculean task wasting time of importer as well as Revenue. In these circumstances, chapter heading 98.01 has been introduced where the entire plant is classified under a single heading and charged to a single rate of duty. In the instant case, the appellant has clearly imported the goods for bona fide use and manufacture of the intended final product. They have installed machinery in their plant and put the equipment to use for more than two years. It is only when the plant became unviable and was lying idle for more than 18 months that the appellant disposed of the plant. We find that in the absence of any restriction of such sale, the benefit of assessment under chapter heading 98.01 cannot be denied. The learned AR has relied on the decision of the Tribunal in the case of Bharat Bijlee Ltd. vs. CC, Mumbai 2014 (314) ELT 74. In the said case, the imported goods were not used at all for the purpose for which the same were imported. In the instant case, it is not disputed that the imported goods were used for the intended purpose for a period of over two years and thus the decision of the Tribunal in the case of Bharat Bijlee Ltd. (supra) is not applicable to the instant case. The learned AR also referred to the decision of the Honble Supreme Court in the case of CC, Mumbai vs. Toyo Engineering India Ltd. 2006 (201) ELT 513 (SC). In the said case, the apex court has observed as follows:-
12.?It is not disputed that construction equipments imported by the respondent were used in the initial setting up of the plant. The Assistant Collector and the appellate authority denied the facility of the project import as the ownership of the imported goods would not pass to the project authority and that the machinery imported could be utilized elsewhere in the setting up of any other plant. What is required under Heading 98.01 Tariff Act is that the machinery imported should be required for the initial setting up of a unit, or the substantial expansion of an existing unit. This heading specifically mentions and includes auxiliary equipment. The auxiliary equipment has not been defined under the Tariff Act. As per Dictionary meaning, extracted above, it is an equipment which aids or helps. Any equipment which aids or helps in the setting up of an industrial plant would fall and be covered under Heading 98.01 of the Tariff Act. The mere possibility of its being used subsequently for other project would not debar the respondent from availing the facility of project import. If the contention of the Revenue is accepted, then resultant effect as put by the Tribunal would be :
...no equipment can be imported for projects like Konkan Railway Project, Road Development Projects of the National Highway Authority of India, etc. specified under Heading 98.01 of CTA. We agree with this observation of the Tribunal.
14.?We do not find any substance in this submission. In that case this Court did not consider the vehicles imported to be an item of auxiliary equipment required for setting up of an initial unit on the ground that it was used only in shifting of the transformers which would not constitute an integral part of the power project. The vehicles imported were required for transportation of the transformers from railway yards to the erection sites and had no relation to power generation or power project. After transporting the specified number of transformers to the site of sub-station the utility of the vehicles would be over at the end of such transport and thereafter the vehicles could certainly be used for other purposes of the assessee. That the vehicles, which are used in the shifting of the transformers, would not constitute integral activity of the project. In the present case goods imported by the respondent are hydle truck cranes, excavator, shovel loader, truck, forklift truck, power generators, diesel welder, welding rectifier, containers tools and tackles instruments, level Nako with tripod, theodtite nako with accessories and tripod besides window air-conditioners, electric typewriter and camera with flash (the total cost of last three items is only Rs. 70,000/-, which is negligible). In fact, it was not disputed before the Tribunal or before us as well that the construction equipments imported by the respondent were used in the initial setting up of the plant. The goods imported by the respondent such as hydle truck cranes, excavator, shovel loader, truck, forklift truck, power generators, diesel welder, welding rectifier, containers tools and tackles instruments, level Nako with tripod and theodlite nako with accessories and tripod would certainly be auxiliary equipments which would help in the initial setting up of the industrial plant. The facility of the project import was denied to the respondent because the ownership of the imported goods did not pass to the project authority. Since it is not disputed that the construction equipments imported by the respondent were used in the initial setting up of the plant, then, as per the provisions of Heading 98.01 of the Tariff Act the respondent could not be denied the benefit of the project import. We find that in the said case also, it was held that the equipment which was required for initial setting up of the plant, but later any operations need not be transferred to the project authorities. Thus, to that extent, the said decision supports the case of the appellant.
5. In view of the above, the impugned order is set aside and the appeal is allowed. (Pronounced in Court on 21.10.2016) (M.V. Ravindran) Member (Judicial) (Raju) Member (Technical) tvu 1 7 C/239/05