2007 (4) TMI 485 - AT - Customs

Summary

Issues:
1. Eligibility for exemption under Sr. No. 401 of Notification No. 21/2002-Cus.
2. Classification of DG Sets as integral parts of a Nuclear Power Plant.

Analysis:

Issue 1: Eligibility for exemption under Sr. No. 401 of Notification No. 21/2002-Cus.
The case involved the appellant, a Central Government Undertaking, importing diesel engines set along with lifting tools under a high sea sales agreement for a Nuclear Power Project. The appellant claimed assessment under Chapter Heading 98.01 and exemption under Sr. No. 401 of Notification No. 21/2002-Cus. The imports were certified by officials as required under the conditions. However, the benefit of exemption was denied on the grounds that DG Sets were not integral parts of the Nuclear Power Plant but were for a captive power plant. The Commissioner (Appeals) held that the recommendation of the concerned Ministry/Department is not final and the lower authority must verify the eligibility for Project Import benefit.

Issue 2: Classification of DG Sets as integral parts of a Nuclear Power Plant
The appellant argued that DG Sets were essential for the initial setting of the Nuclear Power Plant as per requirements of the Atomic Energy Regulatory Board. They referenced safety guidelines mandating uninterrupted power supply for essential functions of the plant. The Tribunal noted that in cases where uninterrupted power supply is crucial to prevent environmental hazards, the captive power plant should be considered part of the project. It distinguished previous cases where captive power plants were not deemed integral to the project due to different circumstances.

In conclusion, the Tribunal held that the DG Sets were indeed integral to the project's initial setup, as confirmed by the Deputy General Manager of the appellant. The delay in clearance of DG Sets had hindered plant operations, emphasizing their importance. Therefore, the appeal was allowed, setting aside the Commissioner (Appeals) order and granting the benefit of exemption under Sr. No. 401 of Notification No. 21/2002-Cus.