Custom, Excise & Service Tax Tribunal
M/S. Essar Projects India Ltd vs Commissioner Of Customs (Port), ... on 21 April, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
EAST ZONAL BENCH: KOLKATA
CUSTOMS APPEAL NO.C/A/76050/2014
(ARISING OUT OF ORDER-IN-ORIGINAL NO.KOL/CUS/PORT/42/2014 DATED 10.06.2014 PASSED BY COMMISSIONER OF CUSTOMS (PORT), KOLKATA)
FOR APPROVAL AND SIGNATURES OF
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER
DR. I.P.LAL, HONBLE TECHNICAL MEMBER
1. Whether Press Reporters may be allowed to see :
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 wishes to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
M/S. ESSAR PROJECTS INDIA LTD.
APPELLANT
VERSUS
COMMISSIONER OF CUSTOMS (PORT), KOLKATA
...RESPONDENT
APPEARANCE:
SHRI C.S.LODHA, SR. ADVOCATE ASSISTED BY SHRI VIPIN KR. JAIN, ADVOCATE FOR THE APPELLANT;
SHRI A.K.DAS, SPECIAL COUNSEL FOR THE REVENUE.
CORAM:
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER DR. I.P.LAL, HONBLE TECHNICAL MEMBER Date of Hearing: 21.01.2015 Date of Decision: 11.05.2015 ORDER NO.FO/A/75227/2015 Per Dr. D. M. Misra:
This Appeal is directed against the Order-in-Original No.KOL/CUS/PORT/42/2014 dated 10.06.2014 passed by Commissioner of Customs (Port), Kolkata.
2. Briefly stated factsof the case are that the Appellant had filed eleven Bills of Entry during January and February, 2012 in relation to eleven consignments of goods arrived/brought into India during the period, September, 2011 to February, 2012. While filing the said into-bond Bills of Entry for the respective consignments, at the time of warehouse of the goods, the Appellant had declared its classification under the respective sub-heading of Customs Tariff Act,1975.The Appellant had later on 23.03.2012applied for registration of theProject Contract, under which the said goods were claimed to have been imported, with the Customs department, in order to avail the benefit under Project Import Regulations,1986. The said Contract had been registered by the Customs Department on 29.03.2012 provisionally, bearing No. F.No.S-37C(P)-Proj-09/2012A(6) subject to verification of the essentiality certificate. The said essentiality certificate was later issued by the Ministry of Fertilizers on 30.03.2012 which confirmed that the items certified through various letters in favour of M/s Matrix stands goods for customs clearance by M/s EPIL. Subsequently, the Appellant had filed Ex-Bond Bills of Entry, claiming classification under Chapter Sub-Heading 98.01 & benefit of concessional rate of duty, as applicable to such project imports under the Project import regulations, 1986.
2.1 A Show Cause Cum Demand Notice was issued to the Appellant proposing denial of benefit under theProject Import Regulations,1986 and classification of the imported goods under Chapter Sub-Heading 98.01, recovery of differential duty of Rs.39,59,43,836/- and also denial of the said benefit to future consignments proposed to be imported under the said Project Contract. Also, it is proposed for confiscation of the goods imported and imposition of penalty under the provisions of Customs Act,1962. On adjudication, the ld. Commissioner of Customs (Port), Kolkata, had finalized the assessment, denying classification under Sub-Heading 98.01 and the benefit under the Project Import Regulations, 1986; also confirmed the demand of differential duty of Rs.39,62,46,154/-; directed confiscation of the goods; and imposed redemption fine of Rs.89.00 crore; imposed penalty of Rs.20.00 crore under Section 112(a) of the Customs Act, 1962. Also, he has directed that besides the said eleven Bills of Entry under assessment, all the import consignments covered under Contract No.EPIL-GSZ:02/2010 dated 23.08.2010 covered under Project Import Registration No.S-37C(P)Proj-09/2012A(6), shall be assessed on merit, without extending the benefit of the project import.
3. Ld. Sr. Advocate, Shri C.S.Lodha for the Appellant, narrating the background facts, submitted that the Appellantare an EPC Contractor, have been entrusted with the job of setting up of Green-Field Fertilizers Plant at Panagarh Industrial Area, Durgapur by oneM/s Matrix Fertilizers and Chemicals Ltd. The Appellant had also entered into a separate Contract with M/s. Matrix for supply of certain equipments required for the said Fertilizers Project. For off-shore items, initially it was agreed that the equipments required for the said Fertilizers Project would be imported by the Appellant, and M/s. Matrix would then buy these equipments on High Sea Sale basis, in their own name as an importer of such goods.
3.1. The ld. Sr. Advocate has further submitted that the Fertilizer Project is eligible to the benefit of the Project Import assessment under Customs Tariff Heading 98.01, for which it was necessary to register the Contract with the Customs Authorities in terms of the Project Import Regulations, 1986. M/s. Matrix had applied on 10.06.11 for registration of the Off-Shore Supply Contract for its Integrated Fertilizers Project valued at Rs.1818.00 crore, after obtaining the Essentiality Certificate on 01.04.11, issued by the Ministry of Chemicals and Fertilizers Department. The Deputy Commissioner of Customs, Kolkata Customs House, registered the said Contract by allotting the Registration F.No.S-37C(P)Project-21/2011A(6).
3.2. It is contended by the ld. Sr. advocate that subsequently it had been agreed between the Appellant and M/s. Matrix that the off shore supply meant for the said Fertilizers Project, would be cleared in the name of the Appellant as an importer instead of high sea sale to M/s Matrix. Thus, it became necessary/appropriate for the Appellant to get the Project registered in their name with the Kolkata Customs House so as to avail the benefit of project import assessment. Accordingly, a request was made by M/s. Matrix to the Customs authorities on 07.03.2012 To substitute their name with that of the Appellant inthe project Contract registered; the Appellant had also requested for transfer of said contract in their favour registered in the name of M/s. Matrix. However, it was informed by the department that there is no provision for transfer of Registration under the Project Import Regulations, 1986, and hence their request was rejected. Consequently, a request was madefor cancellation of the Registration standing in the name M/s Matrix and issue ofa fresh application inthe name of the Appellant on 23.03.12. The Customs Authorities issued a new registration in the Appellants name provisionally, bearing F.No.S-37C(P)/Proj-2009/12(6).
3.3. It is further submitted that between 10.01.2012 to 22.02.2012, eleven consignments had arrived at Kolkata Port, for which eleven into-bond bills of entry were filed and the said goods were warehoused. Subsequently, the Appellant after registration of the Contract in the name of the Appellant, filed eleven ex-bond bills of entry classifying the goods under Chapter Heading 98.01 and claimed the benefit of Project Import assessment. The Customs Authorities had objected to such change in classification under Customs Tariff Heading98.01, and after lot of correspondences with the Department on the direction of the Commissioner of Customs (Port), the goods were provisionally assessed and cleared on furnishing security in the form of two bank guarantees for Rs.33,00,23,605/- and Rs.1,10,00,000/- (totaling Rs.34,10,23,605/-)and cash security of Rs.5,52,22,549/-to cover the differential duty involved.
3.4. The ld. Sr. Advocate has submitted that while finalizing the assessment, the ld. Commissioner had denied the benefit of Project Import assessment mainly on the ground that the Appellant had failed to comply with provisions of Project Import Regulations, 1986, inasmuch as the project contract was registered on 29.03.2012, whereas the goods have been imported prior to the said date of registration and warehoused by filing into-bond bills of entry. Thus the mandatory provisions of regulations(4)&(5) of PIR,1986 are not complied with.He has also observed that once the goods are classified under a particular heading at the time of filing into-bond bill of entry, the classification cannot be altered to 98.01 of CTA,1975 at the time of clearance of the goods by filing ex-bond bills of entry.
3.5. Ld. Sr. Advocate argued that interpretation of clauses (4) & (5) of the Project Import Regulations, 1986 recorded by the Ld. Commissioner, is erroneous. Under Clause (4) of the said Regulations, it is made clear that assessment under sub-heading 98.01, shall be available to those goods which are imported against one or more contracts, which have been registered with the appropriate Customs House by the proper officer of Customs permitting clearance of the goods for home-consumption. In the present case, even though the goods were brought into India, warehoused by filing into-bond bills of entry, the clearance for home-consumption of the said goods were effected only after filing the ex-bond bills of entry.
3.6. It is his submission that there is a marked difference between the Project Import (Registration of Contract) Regulations, 1965 and the present provisions of Project Import Regulations, 1986. Under the earlier provisions read with Customs Tariff Heading 84.66 of CTA, 1975 it is necessarythat such contract or contracts has or have been registered before any order is made by the proper Officer of Customs permitting the clearance for home-consumption or depositing any warehoused items. He has submitted that the legislature has consciously removed the expression, to deposit items in a warehouse. In other words, under the present Project import regulations, 1986 the Contract has to be registered before clearance of the goods for home-consumption; there is no necessity for the contract to be registered before the items are warehoused.
3.7. The ld. Sr. Advocate submitted that the adjudicating authority in denying the benefit of Project import assessment has mainly relied upon the judgement of the Honble Supreme Court in the case ofMihir Textiles Ltd. Vs Collector of customs, Bombay 1997 (92) ELT 9(SC). It is his contention that the conclusion arrived at by the ld. Commissioner is the result of an erroneous and improper application of the ratio of the said judgment to the facts of the present case. The Ld. advocate Referring to para 7 of the said judgment, submitted that after analysing the provisions of tariff entry 84.66, their Lordships had observed that the conditions need to be satisfied in order to claim concessional rate of duty under the said tariff entry are: (1) goods should have been imported against a specific contract registered with the Customs house(2) such registration should have been made in the manner prescribed by the regulations (3) registration of the contract should have been obtained before the order granting permission for clearance of the goods was passed.Then, the Honble Supreme Court proceeded to observe that in all these cases before the court, the Contracts were not registered at all before the order of the clearance was passed. They Ld. Advocate has submitted thatin contrast to the facts of this aid case, in the present case, the Contracts were registered on 29.03.2012 and request for clearance for home consumption had been made thereafter.
3.8. The ld. Sr. Advocate in support of his contention has placed reliance on the decision of this Tribunal in the case of Bharat Earth Movers Ltd. Vs. CC, 2006(201)ELT 602(Bang.). He has submitted that at para 4 of the said decision, the Tribunal analyzing the ratio laid down in Mihir Textiles case (supra) had observed that Clause (4) of the Project Import Regulations,1986 under Chapter Heading 98.01of CTA specifically omits reference to the condition regarding registration being done before depositing in a warehouse and it has been prescribed before clearance for home-consumption. Therefore, the observation of the ld. Commissioner that the Contracts were required to be registered before filing into bond bills of entry and the goods were warehoused for availing the benefit of assessment under Project Import Regulations, is contrary to the said judgment and accordingly, bad in law.
3.9. The ld. Sr. Advocate further submits that the reasoning of the ld. Commissioner that once the classification has been declared in the into-bond bills of entry, the same cannot be changed in the ex-bond bills of entry, as the assessment is almost final in relation to the classification of the goods, is not supported by any provisions of law. The ld. Sr. Advocate has also submitted that in respect of the warehoused goods, it has been categorically held that at the time of clearance of the goods for home-consumption under Section 68 of the Customs Act, 1962, the goods have to be re-assessed. Such re-assessment is also an assessment under Section 2(2) of the Customs Act, 1962. In support, he has referred to the decision of this Tribunal in the case of Dinesh Mills Ltd. vs. CC, 2007(220)ELT 246 (Tri.-Ahmd.). It is his contention that when the goods have to be assessed or re-assessed to duty, it cannot be said that the re-assessment be limited to the same Tariff Heading, under which the goods were earlier assessed, and it is only for the purpose of checking the rate of duty on account of any change made therein and nothing beyond it. Thus, the Tariff Heading could certainly be revised in case the necessity arises in this regard, at the time of clearance of ex-bond goods from a warehouse.
3.10. Further, it is his submission that at the time of filing eleven into-bond bills of entry, the same were assessed on self-assessment basis under different Tariff Headings, only for the purpose of determining the bond amount and the security deposit.Pursuant to registration of the contract under PIR,1986, the goods have been claimed to be classifiable underthe compositeHeading 98.01 as it covers all goods falling under any of the Chapters of the Customs Tariff Act, when imported/cleared underProject import Regulations.
3.11 The Ld. Sr. Advocate has further submitted that this Tribunal in the case of Pratibha Industries Ltd. Vs. CC, NhahaSheva, 2005 (188) ELT 438 (Tri.-Mum.), had not interpreted correctly the principle laid down in Mihir Textile Ltd. Vs. CC,Bombay 1997 (92) ELT 9(SC), Ajanta Offset and PackagingLtd.Vs. CC 1997 (94) ELT 443(SC), and Dunlop India Ltd. Vs. CC 1997(95) ELT 162(SC). The plea of the assesseethat since out of charge Order has not been effected, the application under regulation 4 cannot rejected, has not been acceptedobserving that Regulation (4) cannot override the mandatory provision of Regulation (5) to the effect that registration application has to be made on or before importation. It is the contention of the Ld. Sr. Advocate that this reasoning is contrary to the principle that the Registration should be effected before the clearance of the goods for home consumption and also it is bad law as it was passed without referring to the meaning of import referred to in the said Regulation 5 and interpreted by the Honble Supreme Court in Gardens Silk Mills &KiranSpg.Mills case(supra). Hence, the said judgment cannot be considered as a binding precedent.
3.12. The ld. Sr. Advocate further submitted that the meaning of import, as recorded by the ld. Adjudicating Authority, is erroneous and contrary to the principle of law laid down by the Honble Apex Court in GardenSilk Mills Ltd. vs. UOI, 1999(113) ELT 358. The ld. Commissioner has observed that import of goods into India would commence, when the same cross into the territorial waters of India that is to say the day on which the entry inward for a vessel has been granted. The ld. Sr. Advocate vehemently argued that the said meaning of import arrived at by the ld. Adjudicating Authority is contrary to the principle of law settled by the Honble Apex Court. The Honble Supreme Court in KiranSpinning Mills Vs. CC 1999 (113) ELT 753(SC). After analyzing the definitions of import & India , as prescribed at Section 2(23) and 2(27) of Customs Act,1962 their Lordships had observed that the import of goods into India would commence when the same cross into territorial waters, but it is completed, when the goods become part of the mass of the goods within the country.. In the case of goods which are in the warehouse the Customs barrier would be crossed when they are sought to be taken out of the Customs control and brought to mix with the mass of goods in the country.
3.13. The ld. Sr. Advocate further submitted that the Adjudicating Authority has erred in denying the benefit of project assessment to the goods to be imported under the said registered contract without any valid reasons.The said observation of the ld. Commissioner is erroneous inasmuch as while denying the benefit of project assessment to the 11 consignments, it is reasoned that the imports were made prior to registration of the contract under PIR, 1986 i.e before 29th March 2012. Therefore, the future imports that would be effected under the said contract registered on 29th of March 2012, cannot be denied to the benefit of project import assessment.
3.14. The ld. Sr. Advocate further submitted that through Right to Information Act( RTI), they had collected information from various other customs house revealed that the classifications declared at the time of filing into-bond bills of entry against the respective sub-headings, were later allowed to be changed to sub-heading 98.01 of CTA, 1965, and assessed allowing the benefit of Project Import Regulations, 1986.
4. Per contra, the ld. Special Counsel, Shri A.K.Das for the Revenue, on the other hand, submits that the rationale of the Order-in-Original is that the registration of contract ought to be done on or before importation of the goods as per Regulation (5) of Project Import Regulations which is a mandatory provision and non-fulfillment of the said condition would not make the Appellant eligible to Project Import assessment benefit, as has been held in the case of PratibhaIndustiress case (supra). It is his submission that registration not having been done on or before importation, the benefit of Project Import, cannot be extended to the Appellant.
4.1 Further, Analyzing the judgment of the Honble Supreme Court in Garden Silk Mills case (supra), he submits that the observation of the Honble Supreme Court at para 16 of the said judgment consists of two parts. In the first part it describes the meaning of importation and the later part it has been emphasized what is the taxable event. The portion relating to filing of bill of entry occur in the latter part, does not have any bearing on the definition of import mentioned in the first part. Thus, once the goods which had come into India from outside the country, form part of the land mass within the country, then the import or importation is complete, and it would not depend on or wait for the time, when the bill of entry for home-consumption, is filed, if at all, at a later date.
4.2 It is his submission that the eleven consignments in question were imported prior to registration of the contract and the mandatory requirement, as prescribed under Regulation (5) of PIR,1986 , has not been complied with. It is his submission that once the mandatory provision of Project Import Regulations, is not complied with, then in accordance with Note:2 of Chapter 98 of CTA,1975, they should not be eligible to the benefit of Heading No.98.01. In view of this, the question whether any assessment made on into-bond bill of entry, can be changed at the time of clearance of the goods for home-consumption in respect of assessment of the goods on ex-bond bill of entry, becomes irrelevant. It is his contention that once the conditions of registration under the Project Import Regulations, have not been complied with, the entire chain of imports under the Project Import gets out of the purview of Customs Tariff Heading 98.01 and no such consignment would be entitled to avail the benefit, as has been held by the Honble Supreme Court in the case of Dunlop India Ltds case(supra).
4.3 In his rejoinder, the ld. Sr. Advocate has submitted that mixing of the imported goods with the land-mass cannot be construed as completion of the process of import of the goods into India, after crossing the territorial waters and entering into India; on the contrary when the goods are cleared from the Customs barrier, mixes with the mass of the goods for consumption, then only the act of import is said to be complete and the taxable event under the Customs Act occurs.
5.Heard both sides at length and perused the records. The nerve chord of the dispute centers around the eligibility of the eleven consignment of goods, imported under a project contract between the Appellant & M/s Matrix, provisionally registered with customs House, Kolkata on 29.03.2012, and future imports under the said contract, to the benefit of project import assessment under Heading 98.01 of CTA,1975 read with Project Import Regulations, 1986.
5.1 While denying the said benefit, the ld. Adjudicating Authority anchored his observation on a two-fold reasoning. He has held that since the said consignments were imported prior to the registration of the contract, therefore, mandatory conditionsof Regulations (4) &(5) of Project Import Regulations, 1986, have not been satisfied; secondly, once the classification of the goods imported had been declared at the time of warehousing, by filing into-bond bills of entry, later, at the time of filing the ex-bond bills of entry for home clearance, the classification cannot be altered.
5.2. Assailing the impugned order, the appellant on the other hand, argued that the meaning and interpretation of import' recorded by the adjudicating authority is contrary to the principle of law laid down by the Apex Court in Garden silk Mills and Kiran Spinnings case. It is their argument that in the said Regulations, the requirement of Registration of the contract is on or before clearance of the imported goods rather than on or before its importation(bringing into India)/warehouse of the goods. Also, it is argued that the principle of law laid down by the Honble Supreme Court in Mihir Textile Ltd.s case(supra) has been mis-quoted and not understood in its proper perspective, hence misapplied to the facts and circumstances of the present case. To substantiate their argument, the appellant have referred to the erstwhile provisions of Project import regulations, 1965, the PIR, 1986 and Boards instruction prescribed in the CBEC manual.
5.3. To appreciate the rival contentions, and to address the question of law raised, it is necessary to examine the provisions of present Project Import Regulations, 1986 as well as the erstwhile Project Imports(Registration of Contract) Regulations, 1965.The provisions relevant to the present issue reads as:
PROJECT IMPORTS (REGISTRATION OF CONTRACT) REGULATIONS, 1965 [Notification No. 183-Cus., dated 18-11-1965 as amended by Notifications No.71-Cus., dated 30-4-1966; No. 117-Cus., dated 18-6-1966; No. 101-Cus., dated5-7-1966; No. 56-Cus., dated 27-6-1970 and No. 282-Cus., dated 2-8-1976.] In exercise of the powers conferred by Section 157 of the Customs Act, 1962 (52 of 1962), read with the proviso to the entry in Column 2 against Item 72A(i) of the First Schedule to the Indian Tariff Act, 1934 (32 of 1934), the Central Board of Excise and Customs, hereby makes the following regulations, namely:
1. Short title and commencement(1) These regulations may be called the Project Imports (Registration of Contract) Regulations, 1965.
(2) They shall be deemed to have come into force with effect from the 11th September, 1965.
2. Application. These regulations shall apply to every contract referred to in sub-heading No. (i) of. Heading No. 84.66 of the First Schedule to the Customs Tariff Act. 1975 (51 of 1975).
3. Registration of contract. (1) Every importer claiming assess-, ment of the articles falling under sub-heading No. (i) or sub-heading No. (ii) of the said HeadingNo.84.66 on the importation shall apply in writing to the proper officer of Customs at the port where the goods are to be imported for registration of the contract or contracts, as the case may be:
. 84.66 (i).
(ii) Provided these are imported (whether in one or in more than one consignment) against one or more specific contracts, which have been registered with the appropriate Custom House in the manner prescribed by Regulations which the Central Board of Excise and Customs may make under section 157 of the 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 or raw materials; PROJECT IMPORTS REGULATIONS, 1986 M.F. (D.R.) Notification No. 230/86-Cus., dated 3-4-1986 as amended.
In exercise of the powers conferred by section 157 of the Customs Act, 1962 (52 of 1962), and in supersession of the Project Imports (Registration of Contract) Regulations, 1965, except as respect things done or omitted to be done before such supersession, the Central Board of Excise and Customs hereby makes the following regulations, namely : REGULATION 1.?Short title and commencement. (1) These regulations may be called the Project Imports Regulations, 1986.
(2)?They shall come into force on the 3rd day of April, 1986.
REGULATION 2.?Application. These regulations shall apply for assessment and clearance of the goods falling under heading No. 98.01 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).
REGULATION[3.?Definitions. - For the purposes of these regulations, -
..
REGULATION 4.?Eligibility. The assessment under the said heading No. 98.01 shall be available only to those goods which are imported (whether in one or more than one consignment) against one or more specific contracts, which have been registered with the appropriate Custom House in the manner specified in regulation 5 and such contract or contracts has or have been so registered,
(i) before any order is made by the proper officer of customs permitting the clearance of the goods for home consumption;
(ii) in the case of goods cleared for home consumption without payment of duty subject to re-export in respect of fairs, exhibitions, demonstrations, seminars, congresses and conferences, duly sponsored or approved by the Government of India or Trade Fair Authority of India, as the case may be, before the date of payment of duty.
REGULATION 5.?Registration of Contracts. (1) Every importer claiming assessment of the goods falling under the said heading No. 98.01, on or before their importation shall apply in writing to the proper officer at the port where the goods are to be imported or where the duty is to be paid for registration of the contract or contracts, as the case may be :
..
5.4. On a simple reading of the aforesaid provisions under both the Regulations in juxtaposition, it is clear that under the old regulations, read with erstwhile Tariff entry 84.66,the contract should be registered before permitting clearance of the goods for home consumption by the Customs officer or before depositing the items in a warehouse; however under the new Regulation, the condition of deposit in warehouse is conspicuously absent. It is the argument of the appellant that the legislator had consciously deleted the said condition, hence the only condition now remains is that the contract should be registered before permitting the clearance of imported goods for home consumption.
5.5. Needless to emphasize in the PIR,1986, the eligibility to the benefit is clearly laid down under Regulation (4) and the procedure for claiming such benefit under Regulation (5) of the said Regulations. In clause (i) of Regulation (4) it is made clear that such contract or contracts has or have been registered before any order is made by the proper officer of Customs permitting the clearance of the goods for home consumption. The procedure/guideline for project import assessment has been enumerated by the CBEC in Chapter 5 of Customs Manual at para 3.1 as:
3. Registration of contracts:
3.1 In terms of Regulation 4 of the Project Import Regulations, 1986 (PIR) the basic requirement for availing the benefit of assessment under Tariff Heading No. 98.01 is that the importer should have entered into one or more contracts with the suppliers of the goods for setting up a project. Such contracts should be registered prior to clearance in the Custom House through which the goods are expected to be imported. The importer shall apply for such registration in writing to the proper officer of Customs. 5.6. A plain reading of Regulation 4 and the instruction of CBEC mentioned above leaves no room for doubt that the timing stipulated for registration of the contract is on or before clearance of the goods for home consumption i.e when it leaves the customs barrier. Needless to mention, clearance of goods for home consumption as mentioned in Regulation (4) of PIR,1986 cannot be construed as crossing of the Indian territorial waters and depositing it in the warehouse. Unhesitatingly, it could be said that the clearance of the goods is for home consumption i.e. when the goods move out of the customs control so as to mix with the mass of goods for consumption.
5.7 These regulations had been considered by this Tribunal in Bharat Earth Movers Ltd. case (supra). In that case, the goods had arrived and warehoused in terms of the Appellants letter dated 28.01.2002 on the ground that the assessee would be making an application for registrationof their contract under the Project Import and for extending the benefit of concessional rate of duty for the goods imported and warehoused. The Ministry of Coal and Mines through their letter dt. 29.01.2002 had informed the Deputy Commissioner of Customs, Mysore that Coal India Ltd. had placed purchase order on the assessee-importer for supply of BH-85 and BH-35 Dumpers and for the manufacture of the said dumpers they were required to import substantial quantity of components to be used in certain identical projects and that the import of the quantity of components would qualify for concessional rate of Duty of Customs under Customs Tariff Sub-Heading9801.00 and they are eligible to Project Import Assessment. After analyzing the Regulations and referring to the judgment of the Honourable Supreme Court in Mihir Textiles Case and in Garden Silk Mills case(supra) observed at para 4 as:
4.?On a careful consideration and perusal of the provisions of Chapter 98 of Customs Tariff Act read with Regulation 4 & 5 of the Project Import Regulations, it is cleared that the project can be registered before the goods are cleared for the home consumption. In the case of Mihir Textile Ltd., the Apex Court had examined the provisions as under chapter heading 84.66 which clearly laid down that the registration of contract has to be done before clearance of goods for home consumption or before the deposit in the warehouse. This restriction is absent in Regulation 4 & 5 of the present Regulations and in Chapter Heading 98.01. The Regulation 4 specifically omits a reference to the condition regarding registration being done before depositing in a warehouse and only states that it has to be done before clearance for home consumption. Therefore, both the authorities have not carefully gone through the provisions and had denied the benefit on incorrect reading of the provisions. The appellants had registered the contract before the clearance of the warehoused goods and hence they are eligible for the benefit of the Project Import in terms of the Tribunal ruling rendered in the case of McNally Bharat Engineering Company Limited videfinal order No. 1607/05, dated 8-9-2005. The refund is not hit by provisions of unjust enrichment. The appellants succeed in this appeal and the same is allowed by consequential relief, if any.
5.8We find that the ld. Adjudicating Authority has placed strong reliance on the decision of the Honble Supreme Court in Mihir Textiles Ltd.s case (supra) while denying the benefit of Project Import benefit to the Appellant. The ld. Commissioner has observed that the Honble Supreme Court has laid down three conditions that are necessary to be satisfied for extending the benefit. At para 4 of the impugned Order-in-Original it is recorded as:
.It is also clear from the case law of M/s. Mihir Textiles Ltd. vs. Collector of Customs, Bombay {1997(92)ELT 9(SC)}, wherein Honble Supreme Court has held that three conditions are to be satisfied for the entitlement of Project import benefit that (1) goods should have been imported against a specified contract registered with the appropriate Customs House; (2) such registration should have been made in the manner prescribed by the regulations; and (3) Registration of the contract should have been obtained before the order for warehousing has been passed. The Honble Supreme Court further held that unless all these three conditions are satisfied, no importer can claim, as a matter of right, the concessional relief provided in the entry in the present case, where the goods imported and the Bills of Entry were filed, the contract was not registered. 5.9 The ld. Sr. Advocate has vehemently argued that the Condition No.(3) as stated in the said Order is not laid down in the judgment of the Supreme Court in Mihir Textiles case and the same has been wrongly quoted in the impugned Order, hence the conclusion is erroneous.
5.10 In Mihir Textiles case, the appellant therein had imported 12 AirZet Looms along with accessoriesand the goods had arrived at Bombay Port on 18.03.1983. The appellant cleared the same from the Port on 31.03.1983 on payment of full duty which was a little over Rs.52 lakhs. On 13.04.1983, the appellant had applied to the Collector of Customs for granting registration of the contract as envisaged in Entry84.66 of Customs Tariff and got the registration on 22.4.1983. Consequently, the appellant had filed a refund application on the ground that they were liable to pay Customs Duty only at the concessional rate shown in the aforesaid Entry. The claim for refund was rejected by the Authorities and confirmed by the Tribunal. After discussing the provisions, as was in existence during the relevant point of time, and the conditions prescribed under Entry No.84.66, Their Lordships at para 7 observed as follows:-
7.?The proviso prescribes, principally, three conditions to be satisfied for entitlement of the concessional rate shown in the aforesaid entry. They are - (1) Goods should have been imported against a specified contract registered with the appropriate Customs House; (2) Such registration should have been made in the manner prescribed by the regulations; (3) Registration of the contract should have been obtained before the order (granting permission for clearance of the goods) was passed. Unless all the three conditions are satisfied, no importer can claim, as a matter of right, the concessional relief provided in the entry. In these cases the contracts were not registered at all before the order of clearance was passed. That fact is not disputed before us and as the appellants were aware of position they chose to pay full customs duty for making the clearance. 5.11 We find that in the aforesaid judgement ascondition No.(3), it is mentioned that registration of contract should have been obtained, before the Order granting permission for clearance of the goods was passed. We notice that after laying down the conditions, their Lordships analyzing the facts, have categorically held that in the said cases, the contracts were not registered at all before the Order of clearance was passed. In other words, the aspect of clearance of goods was put on the forefront so as to ascertain the fulfillment of the condition of Registration of Contract. We agree with the contention of the ld. Advocate that even though the judgment laid down in Mihir Textiles case (supra) passed under the old regulations, however the Honble Supreme Court has categorically held that the contract need to be registered prior to the Order of Clearance was passed.
5.12 Therefore, reading the aforesaid judgment, we do not harbor any hesitation to say that in terms of Regulation No.(4) of the PIR, 1986, the contract should be registered prior to clearance of the goods and not at the time of warehousing of the goods. In the present case the project contract has been registered prior to clearance of the goods for home consumption, hence eligible to the benefit of project import benefit.
5.13 In view of our above finding, the Appellant are eligible to the benefit of project import under Chapter 98.01 of CTA,1975 for goods covered under the project contract registered on 29.03.2012 with the Customs department,kolkata, hence the other issues raised become academic, accordingly not delved into.
5.14 In the result the impugned Order is set aside and the Appeal is allowed with consequential relief, if any, as per law.
(Pronounced on 11.05.2015.) SD/ SD/ (I.P.LAL) (D.M.MISRA) TECHNICAL MEMBER JUDICIAL MEMBER 20 C/A/76050/2014 20