1996 (11) TMI 377 - AT - Customs

Summary

Issues Involved:
1. Validity of the inclusion of Diesel Generating (DG) Sets under Project Imports.
2. Requirement of contract registration for concessional duty rates.
3. Rejection of the refund claim for differential duty.
4. Post-facto amendments to the registered contract.
5. Interpretation of Heading 84.66 of the Customs Tariff Act.

Detailed Analysis:

1. Validity of the Inclusion of DG Sets under Project Imports:
The appellants argued that the DGTD certified the DG Sets merited concessional rates of duty as Project Imports, and thus, the Customs authorities were bound to accept this certification. They cited the Bombay High Court's decision in *Bombay Chemicals Pvt. Ltd. v. Union of India* and the CEGAT's decision in *Hindustan Aeronautics Ltd. v. Collector of Customs, Madras*. However, the Tribunal noted that the DG Sets were cleared without contest and that the refund claim was not tenable. The Tribunal emphasized that the registration of the contract was a mandatory condition precedent to the importation and could not be done post-facto. The Tribunal found no merit in the appellants' claim that the requirement of registration was a mere formality.

2. Requirement of Contract Registration for Concessional Duty Rates:
The Tribunal referenced the rationale behind Heading 84.66, as explained by the Madras High Court in *Appraiser, Madras Customs v. Tamil Nadu Newsprint Papers Ltd.*, which aimed to avoid hardship to importers by streamlining the clearance process for project imports. The Tribunal cited several judgments, including *Saurashtra Cement & Chemical Industries Ltd. v. Collector of Customs, Ahmedabad*, *Satelite Communication Project v. Collector of Customs*, and *Toyo Engineering (I) Ltd. v. Collector of Customs, Bombay*, which consistently held that the contract must be registered with Customs before the clearance of goods to avail the concessional rates under Heading 84.66. The Tribunal concluded that the appellants' failure to register the contract before clearance disqualified them from the concessional duty rates.

3. Rejection of the Refund Claim for Differential Duty:
The appellants contended that the duty collected at a higher rate amounted to a tax collected without authority of law, citing the Supreme Court's decision in *Commissioner of Sales Tax, U.P. v. Auriaya Chamber of Commerce, Allahabad*. However, the Tribunal noted that the DG Sets were cleared without indicating an intention to avail of the project import benefits, and the recommendation from the DGTD came after the clearance. The Tribunal referenced *Collector of Customs, Bombay v. Mihir Textiles Ltd., Bombay*, where it was held that the intention to avail concessional rates must be disclosed at the time of clearance. Consequently, the Tribunal upheld the rejection of the refund claim.

4. Post-Facto Amendments to the Registered Contract:
The appellants argued that obtaining the DGTD certificate was not a mandatory condition precedent and that the Assistant Commissioner should have granted post-facto amendments to the registration. They cited the Calcutta High Court's decision in *Asiatic Oxygen Ltd.*, which advocated for a liberal interpretation of the Project Imports facility to promote industrialization. However, the Tribunal distinguished this case, noting that the facts were not analogous. The Tribunal emphasized that the law required strict compliance with the registration requirement and that post-facto amendments were not permissible.

5. Interpretation of Heading 84.66 of the Customs Tariff Act:
The Tribunal discussed the purpose of Heading 84.66, which was to facilitate the clearance of materials for setting up projects by avoiding delays and hardships caused by classifying items under different tariff heads. The Tribunal cited several judgments, including *Punjab State Electricity Board, Patiala v. Collector of Customs, Bombay*, which held that auxiliary equipment must meet specific conditions to qualify for project import benefits. The Tribunal concluded that the DG Sets did not qualify as auxiliary equipment under the Project Imports heading and that the Customs authorities were not bound to accept the DGTD's recommendation in this case.

Conclusion:
The Tribunal found no infirmity in the impugned order and rejected the appeal, upholding the requirement for pre-importation contract registration and denying the concessional duty rates and refund claim for the DG Sets. The Tribunal emphasized strict compliance with the statutory conditions for availing benefits under Heading 84.66 of the Customs Tariff Act.