2007 (3) TMI 523 - AT - Customs

Summary

Issues Involved:
1. Eligibility for Nil Rate of Duty under Customs Notification No. 23/98.
2. Interpretation of "Setting up a New Refinery" vs. "Substantial Expansion of Existing Project".
3. Applicability of Case Laws and Precedents.
4. Verification of Factual Position.

Summary:

1. Eligibility for Nil Rate of Duty under Customs Notification No. 23/98:
The Commissioner of Customs (Appeals) upheld the Assistant Commissioner's order rejecting the appellant's claim for a nil rate of duty u/s Customs Notification No. 23/98 dated 2-6-98. The Notification provided a nil rate of duty for goods required for setting up a crude petroleum refinery. The appellants had registered their project under the Project Import Regulations, 1986 (PIR) for substantial expansion of their existing refinery.

2. Interpretation of "Setting up a New Refinery" vs. "Substantial Expansion of Existing Project":
The lower appellate authority concluded that the exemption was available only for setting up a new refinery in a location where none existed earlier. The Assistant Commissioner found that the appellants were importing ancillary items and not essential processing units necessary for setting up a new refinery. The appellants argued that their project included essential units like crude distillation and catalytic cracking, constituting a new refinery. They submitted certificates and lists of items required for setting up a new refinery, asserting that the Notification did not restrict the benefit to initial setups only.

3. Applicability of Case Laws and Precedents:
The learned SDR cited case laws, including Tamil Nadu Newsprint and Papers Ltd. and Mahavir Aluminium Ltd., arguing that benefits under different headings were not claimable when items were imported under Project Import. The appellants cited the case of Mangalore Refinery and Petrochemicals Ltd. v. CCE, Mangalore, where a similar dispute was decided in favor of the appellants. The Tribunal noted that the cited case laws involved different factual settings and were not directly applicable.

4. Verification of Factual Position:
The Tribunal observed that the Notification did not require the new refinery to be set up in a location where none existed earlier. The appellants failed to satisfy the authorities that they had set up a new refinery with the imported and indigenously procured goods. The Tribunal emphasized the need to verify the factual position regarding the appellant's claim of setting up a new refinery. Certificates from Engineers India Ltd. and the Ministry of Petroleum and Natural Gas were submitted, indicating the setup of new units. The Tribunal remanded the matter to the original authority for a fresh decision after verifying the factual position, allowing the appellants to present their case and produce relevant documents.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the original authority for a fresh decision after verifying the factual position regarding the appellant's claim of setting up a new refinery. The appellants were given the opportunity to present their case and produce relevant documents, including industrial licenses and specific clarifications from the Ministry of Petroleum and Natural Gas.