2016 (12) TMI 1209 - AT - Customs

Project import - denial of benefit on the ground that appellant have not submitted the re-conciliation statement in respect of setting up the project as required under clause 7 of the Regulations - Held that - as regard the Rule 7 requirement of filing of re-conciliation statements, the same was inserted w.e.f. 7/1/1992 in the Project Import Regulations, 1986 therefore the requirement of Rule 7 per say cannot be made applicable - even though Rule 7 is not applicable but otherwise also the appellant is require to submit the documents which establish that the goods imported under Project Import Regulations has been used for setting up project as declared by the appellant at the time of import of the goods - appellant is granted one more opportunity to submit their documents as required by the department, therefore matter needs to be remanded - appeal allowed by way of remand.

Summary

Issues:
1. Denial of benefit under Project Import Regulations, 1986 due to non-submission of reconciliation statement.
2. Applicability of Rule 7 of Project Import Regulations, 1986.
3. Requirement of submission of documents to establish fulfillment of project import obligations.

Analysis:

1. The appellant imported capital goods under Project Import Regulations, 1986 but faced a demand for Customs Duty as the adjudicating authority denied the benefit of the regulations citing non-submission of a reconciliation statement as required under clause 7 of the Regulations. The Commissioner(Appeals) upheld the decision based on the same ground.

2. The appellant's counsel argued that the requirement of filing a reconciliation statement under Rule 7 of Project Import Regulations, 1986 did not exist at the time of import in 1990. It was pointed out that Rule 7 was inserted on 7/1/1992, making it inapplicable to imports made in 1990. The argument was that the demand confirmation and benefit denial were unjustified due to the retrospective application of Rule 7.

3. The Revenue representative reiterated the requirement for executing a bond and bank guarantee under Project Import Regulations to ensure project setup, emphasizing the obligation to comply with procedural requirements like Rule 7. It was contended that the submission of documents, including a reconciliation statement, was essential to prove that the imported capital goods were used for the project's establishment, as declared during import.

4. The Tribunal observed that Rule 7, mandating reconciliation statements, was introduced in 1992, after the appellant's import in 1990, rendering it inapplicable. However, considering the bond's conditions obligating the appellant to provide necessary documents to demonstrate project fulfillment, the Tribunal concluded that although Rule 7 did not directly apply, the appellant still needed to submit documents proving the goods' utilization for the project. Consequently, the appellant was granted an opportunity to furnish the required documents, and the matter was remanded to the adjudicating authority for a fresh decision within three months.

In conclusion, the Tribunal allowed the appeal by remanding the case for further adjudication, emphasizing the appellant's obligation to provide documents establishing compliance with Project Import Regulations, despite the inapplicability of Rule 7 to the import in question.