Custom, Excise & Service Tax Tribunal
M/S.Sree Rayalaseema Hi-Strength vs Commissioner Of Customs (Export), ... on 12 June, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/57/2011
(Arising out of Order-in-Appeal C. Cus. No. 44/2011 dated 27.1.2011 passed by the Commissioner of Customs (Appeals), Chennai)
M/s.Sree Rayalaseema Hi-Strength
Hypo Ltd. Appellant
Vs.
Commissioner of Customs (Export), Chennai Respondent
C/41483/2013 (Arising out of Order-in-Appeal C. Cus. No.561/2013 dated 28.3.2013 passed by the Commissioner of Customs (Appeals), Chennai) Commissioner of Customs (Export), Chennai Appellant Vs. M/s.Sree Rayalaseema Hi-Strength Hypo Ltd. Respondent Appearance Shri Hari Radhakrishnan, Advocate for the Assessee Shri M. Rammohan Rao, DC (AR) for the Department CORAM Honble Shri R. Periasami, Technical Member Honble Shri P. K. Choudhary, Judicial Member Date of Hearing / Decision: 12.06.2015 Final Order No. 40672-40673 / 2015 Per R. Periasami The assessee filed appeal against Order-in-Appeal No. 27/2011 and Revenue filed appeal against Order-in-Appeal No. 561/2013 dated 28.3.2013. Since both the appeals involve a common issue both are taken up together for disposal.
2. In the assessees appeal No. C/57/2011, the facts are that the appellants imported titanium sheets for clearance under Status Holder Incentive Scheme (SHIS) claiming benefit of Notification No. 104/2009 dated 14.9.2009. The adjudicating authority denied the benefit of notification on the ground that titanium sheets are not capital goods. On appeal, Commissioner (Appeals) upheld the order.
3. In appeal No. C/41438/2013, filed by Revenue, the issue are identical but relating to subsequent imports of same item, where the adjudicating authority denied the exemption Notification No. 104/2009 and also confirmed Rs.5,73,026/- under section 28(2) of Customs Act, 1962. On appeal, learned lower appellate authority set aside the order of the adjudicating authority and allowed the appeal of the respondent and held that titanium sheets are capital goods. Hence, Revenue has filed this appeal.
4. Heard both sides and perused the records.
5. Learned counsel representing the assessee submits that titanium sheets imported are used only as a lining material in their chemical reactor. Therefore, it is part of capital goods. The definition given under the Notification No. 104/2009 is an inclusive definition which covers capital goods, parts, accessories required for manufacture or production either directly or indirectly and it is inclusive definition covering refractories for lining and also for packing industry etc. He relied para 7 of the Order-in-Original where they have made submission before the adjudicating authority that titanium sheets are used exclusively as a lining material. He further submits that capital goods definition given in the notification and the capital goods definition in FTP are one and the same. He further submits that it is directly used in the chemical reactor as a lining material. It is used for fabricating the body for calcium hydro chloride reactor and these titanium sheets are used as a resistance to corrosive of the reactor. He further submits that the licensing authority also issued a EPCG licence for import of titanium sheets under EPCG scheme. He produced copy of the licence where among the list of items titanium sheets are specifically included under the capital goods. Once the goods are allowed in one scheme as capital goods the same cannot be denied for SHIS scheme. Once the licensing authority has allowed the goods under capital goods customs authorities cannot question the licensing authority and deny the benefit. He also submits that the Commissioner (Appeals) in their own case for subsequent period has allowed and held that the impugned goods are capital goods only. He relied on the following decisions:-
(a) Reliance Communications Infrastructure Ltd. Vs. CC, Bangalore 2009 (240) ELT 461
(b) Heinz India Ltd. Vs. State of Kerala 2009 (245) ELT 71 (Ker.) For the Revenue appeal, the learned counsel reiterated the findings of the Commissioner (Appeals) where the Commissioner (Appeals) has allowed the benefit under SHIS scheme.
6. On the other hand, learned AR for Revenue submits that the scope of SHIS scheme is intended for import of capital goods only for upgradation. The titanium sheets is not capital goods and it cannot be used as parts of the capital goods. It has to be processed further and it can only be parts or parts of capital goods. Further, he submits that the in the Customs Tariff, the titanium sheets does not fall under any of the headings as capital goods in Chapter 84 or 85. The exemption is particularly related to SHIS with reference to import of capital goods to a specific sector. He relied on para 7.14 of the impugned order dated 27.1.2011. He relied on the decision of the Tribunal in the case of Sarvalakshmi Paper & Board Vs. Collector of Customs, Madras 2000 (126) ELT 935.
7. After hearing both sides, we find that the limited issue in the present appeals is whether titanium sheets imported by the appellants under SHIS scrip by availing benefit under Notification No.104/2009 is correct or not. We find that in the assessees appeal the lower appellate authority has denied the benefit whereas for the subsequent period the lower appellate authority had allowed the benefit and held that they are capital goods. We find that the definitions of capital goods given in Explanation to the Notification No. 104/2009 is reproduced as under:-
Capital goods means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernization, technological upgradation or expansion. It also includes packaging machinery and equipment, refractories for initial lining, refrigeration equipment, power generating sets, machine tools, catalysts for initial charge, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in services sector.
We also find that the definition of capital goods mentioned in para 9.12 of FTP is identical to the above definition.
8. We also find that the licensing authority had issued EPCG licenses to the appellant for import of said product. On perusal of the copy of the EPCG license No. 0930004208 dated 21.7.2008 it is evident that the list of items given in the list include titanium sheets, titanium rod, titanium tube/pipe etc. under EPCG licence.
9. The assessees main contention is that once the licensing authority allows these goods under capital goods the Customs should not deny the benefit. Revenues main contention is that these goods are not capital goods per se.
10. As regards usage of titanium sheets, the appellant submitted that they are used in the fabrication of chemical reactor since calcium hydrochloride is highly corrosive in nature and in order to protect the reactor titanium sheets are lined in the reactor. Therefore, we find that the imported goods are directly used as parts of lining material in the reactor. The definition of capital goods widely includes plant, machinery, equipment, accessories.
11. In the present case it is evident that titanium sheets are specifically used as lining material for fabricating the reactors. There is no dispute on the fact that the appellant is the actual user and the imported goods are used in the chemical industry. These goods are also allowed to the importers under EPCG license. Further, we find that in respect of import of capital goods they are governed by the FTP and once the licensing authorities include any item as capital goods, the same is to be allowed by customs. Therefore, we hold that the lower authority in his impugned order dated 28.3.2013 has rightly held titanium sheets are capital goods covered under the capital goods definition and the same is eligible under SHIS scrip under Notification No. 104/2009.
12. In the regard, The Tribunal in the case of Reliance Communications Infrastructure Ltd. Vs. CC, Bangalore (supra) held that the definition of capital goods as per FTP is wide and once the policy allows such items it is not open for customs to object that it only forms part of the capital goods. In the present case we find that the licensing authority themselves have allowed titanium sheets as capital goods in the EPCG license. Once it is held that it is capital goods under EPCG license, a different stand cannot be taken for clearance through SHIS scrip. The SHIS refers to the definition of capital goods as per para 9.12 of FTP and the definition under customs notification, are identical to para 9.12 of FTP. Therefore, we hold that the goods are covered under capital goods.
13. Accordingly, we hold that the impugned titanium sheets imported under SHIS are eligible for exemption under Notification No. 104/2009 and the order dated 7.1.2011 passed by Commissioner (Appeals) in assessees appeal is liable to be set aside and the appeal of the assessee is allowed. On the Revenue appeal, the impugned order dated 28.3.2013 passed by Commissioner (Appeals) is upheld and the Revenues appeal is rejected.
(Dictated and pronounced in open court)
(P.K. CHOUDHARY) (R. PERIASAMI)
Judicial Member Tehnical Member
Rex
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