2012 (3) TMI 125 - AT - Customs

Contract of Construction of Roads in India- Notification 21/2002-Cus dated 01.03.2002- availing the exemption the importer should have a contract awarded or as a sub contractor for the construction of roads in India either by the Central Government or the State Government or other agencies mentioned in the notification - Appellant had such a contract at the time of importation- the usage of the equipment in the performance of the contract is mandatory - held that - Exemption cannot be granted as the Appellant has utilized the equipment for construction of roads elsewhere not as a contractor but as a sub-contractor. But even in those cases, they were not named as a sub-contractor - appellant to make a pre-deposit of 50% of the customs duty within eight weeks

Summary

Issues:
Appeal against Order-in-Original regarding duty exemption on imported equipment for road construction.

Analysis:
1. Facts and Background:
The case involved an appeal against an Order-in-Original passed by the Commissioner of Customs, Mumbai, concerning the duty exemption claimed by M/s Apco Construction (P) Ltd. for importing an Asphalt Hot Mix Plant. The appellant claimed duty exemption under a specific notification for road construction in the State of UP but was found to have diverted the equipment for use as a sub-contractor in Rajasthan and Tamilnadu.

2. Exemption Conditions and Violation:
The appellant argued that they fulfilled the conditions of the exemption notification by having a road construction contract in UP and using the equipment for road construction, albeit in different states. However, the tribunal noted that the exemption required the importer to use the equipment exclusively for the specified road construction project. The appellant's diversion of the equipment for use elsewhere as a sub-contractor violated the terms of the exemption.

3. Strict Interpretation of Exemption Conditions:
The tribunal emphasized that the condition of having a contract for road construction was not merely an eligibility criterion but a mandatory requirement to prevent misuse of the exemption. The appellant's failure to be named as a sub-contractor in the contracts for road construction in Rajasthan and Tamilnadu meant they did not meet the conditions for claiming the duty exemption.

4. Decision and Pre-Deposit Requirement:
Based on the analysis, the tribunal directed the appellant to make a pre-deposit of 50% of the confirmed customs duty within eight weeks. Compliance was to be reported by a specified date, with the waiver of the balance amount contingent on this pre-deposit. Recovery of the remaining dues was stayed pending the outcome of the appeals.

In conclusion, the tribunal found that the appellant had not adhered to the terms and conditions of the duty exemption notification, leading to the directive for a pre-deposit and stay on recovery pending appeal proceedings.