2013 (4) TMI 598 - AT - Customs

Exemption under notification No. 21/2002-Customs import of Electronic Sensor Paver Vogetel model super 1800-2 with AB 600-2 TC screed for laying bituminous pavement upto 9 M width along with accessories - held that - As the maximum pave width of the equipment is only 6 meters, it does not satisfy the criterion of 7 meters size and above. If the intention was to cover the width of the bolt-on extensions also, the same would have been so specified in the notification. Thus from the product catalogue, it is amply clear that the equipment under import does not satisfy the product specification stipulated in List 18 of the notification and consequently, the equipment under importation does not qualify for the benefit of exemption and we hold accordingly. - Against assessee. Sub-Contractor - whether the appellant is eligible to claim the duty exemption in terms of sub-clause (iii) of clause (a) of condition 40. - held that - In law, Subcontractor is a person who is awarded a portion of an existing contract by a principle or general contractor. Subcontractor performs work under a contract with a general contractor, rather than the employer who hired the general contractor. - the appellant cannot be considered as a sub-contractor since he has not been named as such in the contract awarded to the consortium. - Against assessee.

Issues Involved:
1. Eligibility of the imported equipment for duty exemption under notification No. 21/2002-Cus dated 1-3-2002.
2. Eligibility of the appellant for the concession as a sub-contractor to the road construction contract awarded by M/s NHAI to M/s GICL.

Issue-wise Detailed Analysis:

1. Eligibility of the Imported Equipment for Duty Exemption:

The appellant imported an "Electronic Sensor Paver Vogetel model super 1800-2" and claimed duty exemption under notification No. 21/2002-Cus dated 1-3-2002, which grants duty exemption to "Electronic paver finisher (with sensor device) for laying bituminous pavement 7 m size and above" subject to condition No. 40. The assessing officer denied the benefit of exemption on the grounds that the equipment imported had a base width of 3 meters, extendable to 6 meters with hydraulic extension, and up to 9 meters with mechanical expansion. The notification specified that the device should have a width of 7 meters and above.

The Tribunal held that the size referred to in the notification pertains to the base width of the equipment itself, not including any extensions. The product catalogue indicated that the equipment's base width is 3 meters, extendable to 6 meters, and only with bolt-on extensions could it reach 9.5 meters. Therefore, the equipment did not meet the 7 meters size criterion specified in the notification. The Tribunal emphasized the principle of strict interpretation of exemption notifications, stating that the equipment under import does not qualify for the exemption as it does not meet the specified product criteria.

2. Eligibility of the Appellant for the Concession as a Sub-contractor:

The appellant argued that they should be considered a sub-contractor as they were part of a consortium awarded the contract by NHAI to M/s GICL. The appellant was the lead member of the consortium. However, the contract did not explicitly name the appellant as a sub-contractor. The Tribunal examined the concession agreement and the MOU among the consortium members, which defined the appellant's role in carrying out construction work but did not designate them as a sub-contractor in the agreement with NHAI.

The Tribunal referred to the legal definition of a sub-contractor and the requirement that a sub-contractor must be specifically named in the main contract. The appellant's MOU was reached before the main contract with NHAI and was intended to outline the consortium members' rights and obligations, not to establish a sub-contract. The Tribunal concluded that the appellant did not satisfy condition No. 40(a)(iii) of the notification, which requires the sub-contractor to be explicitly named in the main contract.

Reference to Previous Case:

The Tribunal also referred to a previous decision by the Hon'ble Supreme Court in a similar case involving the appellant, where the court held that the exemption notification should be strictly construed. In that case, the Supreme Court denied the exemption because the appellant was not considered the person awarded the contract. The Tribunal applied the same reasoning, concluding that the appellant did not meet the criteria for duty exemption as a sub-contractor.

Conclusion:

The Tribunal dismissed the appeal, holding that the imported equipment did not meet the specified criteria for duty exemption and that the appellant was not eligible for the concession as a sub-contractor under the terms of the notification. The decision emphasized the need for strict interpretation of exemption notifications and the requirement for explicit designation of sub-contractors in the main contract.

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