2008 (6) TMI 23 - AT - Customs

Project import - Regulation 7 is not a condition determining the eligibility of the impugned goods for the benefit of concessional rate under Project Import Regulation. It is only a procedural requirement - revenue not proved that the equipment has not been installed - Moreover, when the concession is sought to be denied, an opportunity to Show Cause and also a personal hearing should have been given - appellants are entitled for the concessional rate of assessment as per notification 90/94

Summary

Issues:
Appeal against Order-in-Appeal No. 14 to 17/2006 (H-II) Cus. dated 28-2-2006 passed by the Commissioner of Customs & Central Excise (Appeals - II) Hyderabad.

Analysis:
The appellants had registered four Project Contracts for importing Photo Composing System and Agfa Type Setting Equipment under Project Import Regulations, 1986. After facing labor problems and temporary closure, the finalization of Project Contracts as per Regulation 7 was not completed. The Revenue proceeded against the appellants after ten years, denying concessional assessment due to the absence of an installation certificate as per Regulation 7.

The learned Advocate argued that Regulation 7 does not mandate an installation certificate for eligibility under Project Import Regulations. Citing the Polyplex Corporation Ltd. case, it was contended that any violation of Regulation 7 should not lead to denial of concessional duty. Reference was made to the Mangalore Chemicals & Fertilizers Ltd. case emphasizing the distinction between substantive conditions and procedural requirements.

It was noted that the appellants had submitted a sworn affidavit of the Director and a Chartered Engineer Certificate confirming the equipment installation. The Original Authority's failure to issue a show cause notice and grant a personal hearing was highlighted as a violation of natural justice principles. The Departmental Representative supported the impugned order.

Upon careful consideration, it was established that Regulation 7 is procedural, not determinative of eligibility for concessional assessment. Lack of evidence regarding equipment installation was noted, suggesting Revenue could have verified the facts. Emphasizing the importance of natural justice, the absence of a show cause opportunity and personal hearing was deemed a violation. Considering the Chartered Engineer's Certificate and Director's affidavit, the appellants were deemed entitled to the concessional rate, leading to the setting aside of the impugned order and allowing the appeals with consequential relief.