2015 (5) TMI 909 - AT - Customs

Benefit of project import assessment under Heading 98.01 of CTA,1975 - consignments were imported prior to the registration of the contract - Non fulfillment of mandatory conditions of Regulations (4) &(5) of Project Import Regulations, 1986 - once the classification of the goods imported had been declared at the time of warehousing, by filing into-bond bills of entry, later, at the time of filing the ex-bond bills of entry for home clearance, the classification cannot be altered - Held that - Registration of contract should have been obtained, before the Order granting permission for clearance of the goods was passed. We notice that after laying down the conditions, their Lordships analyzing the facts, have categorically held that in the said cases, the contracts were not registered at all before the Order of clearance was passed. In other words, the aspect of clearance of goods was put on the forefront so as to ascertain the fulfillment of the condition of Registration of Contract. We agree with the contention of the ld. Advocate that even though the judgment laid down in Mihir Textiles case (1997 (4) TMI 75 - SUPREME COURT OF INDIA) passed under the old regulations, however the Hon ble Supreme Court has categorically held that the contract need to be registered prior to the Order of Clearance was passed. - in terms of Regulation No.(4) of the PIR, 1986, the contract should be registered prior to clearance of the goods and not at the time of warehousing of the goods. In the present case the project contract has been registered prior to clearance of the goods for home consumption, hence eligible to the benefit of project import benefit. - Decided in favour of appellant.

Issues Involved:

1. Eligibility for Project Import assessment under Chapter Heading 98.01 of the Customs Tariff Act, 1975.
2. Compliance with Project Import Regulations, 1986, specifically Regulations (4) and (5).
3. Interpretation of "import" and the timing of contract registration.
4. Classification of goods at the time of warehousing versus clearance for home consumption.
5. Reliance on judicial precedents and their applicability to the present case.

Issue-Wise Detailed Analysis:

1. Eligibility for Project Import assessment under Chapter Heading 98.01:

The appellant filed eleven Bills of Entry for goods imported between September 2011 and February 2012. Initially, these goods were classified under different sub-headings of the Customs Tariff Act, 1975. Subsequently, the appellant sought to avail the benefit under Project Import Regulations, 1986, by registering the project contract with the Customs Department on 29.03.2012. A Show Cause Cum Demand Notice was issued, proposing the denial of benefits under the Project Import Regulations, 1986, and recovery of differential duty amounting to Rs. 39,59,43,836/-. The Commissioner of Customs finalized the assessment, denying classification under Chapter Heading 98.01 and confirming the demand for differential duty, along with confiscation and penalties.

2. Compliance with Project Import Regulations, 1986, specifically Regulations (4) and (5):

The appellant argued that the interpretation of Regulations (4) and (5) by the adjudicating authority was erroneous. Regulation (4) specifies that the assessment under sub-heading 98.01 is available for goods imported against contracts registered with the Customs House before clearance for home consumption. The appellant contended that the contract was registered before the clearance of goods for home consumption, thus complying with the regulations. The adjudicating authority, however, denied the benefit, stating that the goods were imported and warehoused before the contract registration, thereby not meeting the mandatory provisions of the regulations.

3. Interpretation of "import" and the timing of contract registration:

The appellant challenged the adjudicating authority's interpretation of "import" and the timing of contract registration. The appellant argued that the term "import" should be understood as the completion of the import process when the goods mix with the mass of goods in the country, not merely when they cross the territorial waters. The appellant cited the Supreme Court's judgment in Garden Silk Mills Ltd. vs. UOI, which clarified that import is complete when goods are cleared from customs control and mix with the mass of goods in the country. The adjudicating authority's interpretation that import is complete when goods enter territorial waters was thus contested.

4. Classification of goods at the time of warehousing versus clearance for home consumption:

The appellant contended that the classification declared at the time of filing into-bond bills of entry for warehousing could be altered at the time of filing ex-bond bills of entry for home consumption. The adjudicating authority's stance that classification cannot be changed once declared at the time of warehousing was challenged. The appellant cited judicial precedents, including the decision in Dinesh Mills Ltd. vs. CC, which held that re-assessment at the time of clearance for home consumption is permissible and can involve a change in tariff heading.

5. Reliance on judicial precedents and their applicability to the present case:

The appellant argued that the adjudicating authority misapplied the Supreme Court's judgment in Mihir Textiles Ltd. vs. Collector of Customs, Bombay. The appellant contended that the conditions laid down in Mihir Textiles were not applicable to the present case, as the contract was registered before clearance for home consumption. The appellant also cited the Tribunal's decision in Bharat Earth Movers Ltd. vs. CC, which supported the interpretation that registration of the contract before clearance for home consumption suffices for eligibility under Project Import Regulations, 1986.

Conclusion:

The Tribunal concluded that the appellant complied with the Project Import Regulations, 1986, by registering the contract before the clearance of goods for home consumption. The adjudicating authority's interpretation of "import" and the timing of contract registration was found to be erroneous. The Tribunal set aside the impugned order, allowing the appeal with consequential relief, thereby granting the benefit of Project Import assessment under Chapter Heading 98.01 of the Customs Tariff Act, 1975, for the goods covered under the registered project contract.

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