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Issues:
- Entitlement to claim exemption from Customs duty under Notification No. 11/97 for imported Demag Crane under Project Import Regulations, 1986. Analysis: The appellant, a fertilizer plant operator, imported a Demag Crane for an expansion project under Chapter 98, Heading 98.01 of the Customs Tariff Act, 1975, covered by Project Import Regulations, 1986. The appellant contended that the crane qualified for zero duty benefit under Heading 98.01 for initial unit setup or substantial expansion of an existing unit. However, Customs authorities demanded provisional duty and issued a show cause notice for recovery of a significant amount. The appellant cited a letter from the Ministry of Chemicals & Fertilizers exempting goods for the project, including the crane. The original authority rejected the appellant's contentions, leading to appeals and remands. The Commissioner (Appeals) remanded the matter citing a circular exempting material handling equipment under Project Import Regulations and referenced a Tribunal decision. The Tribunal's Larger Bench decision in Toyo Engineering Ltd. clarified that equipment directly aiding in the manufacturing process of a fertilizer plant falls under the term 'industrial plant' in Heading 98.01, allowing duty exemption for auxiliary equipment. The Tribunal differentiated this case from a Supreme Court ruling regarding vehicles used for transformer transport in a power project, emphasizing the direct use in project setup for auxiliary equipment qualification. The authorities below erroneously applied the Supreme Court ruling to the present case, overlooking the direct use criterion for auxiliary equipment. The Tribunal deemed the crane as machinery under Heading 98.01, not part of an industrial project, thus qualifying for duty exemption. The decision highlighted the misapplication of legal precedents and the incorrect reasoning for denying duty exemption to the appellant. Consequently, the impugned order was set aside, and the appeal was allowed, granting the appellant entitlement to all consequential relief, including duty refund.
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