2018 (9) TMI 47 - AT - Customs

Project Import - benefit of concessional rate of duty - non-compliance with sub-clause (i) of Regulation 5 of the PIR as the contracts have been registered by the proper officer at the port after importation of the goods and warehouse - Project Import Regulation, 1986. Held that - As per Rule 5(2) of the PIR, any importer desiring to claim the benefit of Project Imports, shall get a clearance from the Sponsoring Authority - In the present case the sponsoring authority i.e. the Ministry of Commerce and Industries, Department of Industrial Policy and Promotion (light engineering section), had cleared/approved the project imports of the appellant for import of capital goods for essential setting up of project at Uttaranchal in terms of Customs N/N. 230/86-Cus dated 03.04.1986. This has been addressed to the Assistant Commissioner of Customs, Customs House, Kolkata - However, the regulation 5 is not a condition determining eligibility of the imported goods for the benefit of concessional rate of assessment under Project Regulation. It is only a procedural requirement. The importer shall apply as soon as he has obtained the clearance from the sponsoring authority under Regulation 5(2) of the PIR - Also, no prescribed time limit for obtaining clearance from the sponsoring authority. Both the lower authorities have not gone through the provisions carefully and had denied the benefits on incorrect interpretation of the statutory provisions - In the present case the appellants had registered the contract before clearance of the warehoused goods and hence they are eligible for the benefit of the project import. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of customs duty under Project Import Regulation, 1986 (PIR) for irregularly taken duty concession.

Analysis:
The case involved the appellant, a company engaged in the business of dry cell batteries, who imported machinery for a project at Haridwar, Uttaranchal. The dispute arose when the Customs authorities alleged that the appellant irregularly availed duty concession under Project Import Regulation, 1986 (PIR) as they did not comply with sub-clause (i) of Regulation 5 of the PIR by registering the contracts after importation of the goods and warehousing. The Customs authorities demanded a differential duty amounting to ?31,30,740 due to the irregular registration of the contract. The lower authorities upheld the demand, leading to the appellant filing an appeal challenging the order.

The appellant argued that Regulation 4 of PIR, which determines eligibility for benefits, does not specify a time limit for filing the application for registration of the contract. They contended that the sponsoring authority had certified the eligibility of the imported goods under Project Import, and once certified, the benefit could not be denied. The appellant relied on a previous decision in support of their submission.

Upon review, the Tribunal found that the sponsoring authority had approved the project imports for the appellant in accordance with Customs Notification No.230/86-Cus dated 03.04.1986. It was observed that Regulation 5 was a procedural requirement, not a condition determining eligibility for concessional rates. The Tribunal noted that there was no prescribed time limit for obtaining clearance from the sponsoring authority, as clarified in CBEC's Customs Manual. The Tribunal also highlighted that the registration of the contract could be done before the goods were cleared for home consumption, as per the provisions of Chapter-98 of the Customs Tariff Act and Regulations 4 and 5 of the Project Import Regulation.

Citing a previous case, the Tribunal emphasized that the registration of the contract had to be done before clearance for home consumption, not before depositing in a warehouse. The Tribunal concluded that the appellant had registered the contract before the clearance of the warehoused goods, making them eligible for the benefit of project import. Consequently, the Tribunal set aside the impugned orders and allowed the appeal filed by the appellant, providing consequential relief.