2018 (9) TMI 1078 - AT - Customs

Concessional rate of BCD - N/N. 12/2012 Cus. Dt. 17.03.2013 - import of New 150 MT/day as NaOH 100% Evaporation Plant for concentration of Caustic Soda - denial of benefit on the ground that the same was not meant for modernizing an existing Caustic Soda unit or a caustic potash unit by using Membrane Cell Technology as envisaged in the Customs Notification No. 12/2012. Held that - The scope of Notification 12/2012 is not only for modernization by using Membrane Cell Technology of an existing Caustic Soda unit, it could also be for capacity expansion of an existing Caustic Soda unit. From the documentary evidences placed on record wherein the production process has been explained along with the procedural techniques involved which are placed in the paper book of the assessee, it is found that the evaporation and flaking are integral processes involved in the production of Caustic Soda which requires evaporation to increase its concentration by adopting Membrane Cell Technology. The adjudicating authority has only concentrated on the first limb of the Notification, namely, modernization by using Membrane Cell Technology and he has ignored the second limb, namely, capacity expansion while he accepts that there was only capacity expansion which is not sufficient to satisfy Notification 12/2012. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Eligibility for concessional rate of BCD under Notification No. 12/2012.
2. Interpretation of Notification No. 12/2012 regarding modernization and capacity expansion.
3. Application of Membrane Cell Technology in Caustic Soda manufacturing process.

Analysis:

Issue 1: Eligibility for concessional rate of BCD under Notification No. 12/2012
The case involved the respondent assessee importing machinery for Caustic Soda production and claiming a concessional rate of BCD. The Revenue contended that the imported goods did not qualify for the concessional rate as they were not for modernizing an existing unit using Membrane Cell Technology as required by Notification No. 12/2012. The appellant argued that the goods were essential for modernization and capacity expansion, thus eligible for the benefit. The Ld. Commissioner (Appeals) allowed the benefit, which the Revenue challenged in the appeal.

Issue 2: Interpretation of Notification No. 12/2012 regarding modernization and capacity expansion
The Tribunal analyzed the Notification's provisions, which allowed for modernization, capacity expansion, and setting up of a new unit using Membrane Cell Technology. The adjudicating authority focused solely on modernization, overlooking capacity expansion. The Tribunal disagreed with this interpretation, supporting the Ld. Commissioner (Appeals) in considering both modernization and capacity expansion aspects. The Tribunal upheld the Commissioner's findings, emphasizing the integral role of evaporation and flaking processes in Caustic Soda production using Membrane Cell Technology.

Issue 3: Application of Membrane Cell Technology in Caustic Soda manufacturing process
Both parties presented arguments regarding the application of Membrane Cell Technology in the Caustic Soda manufacturing process. The Revenue contended that the imported goods did not involve Membrane Cell Technology, thus not qualifying for the concessional rate. In contrast, the respondent highlighted the replacement of outdated equipment with more efficient technology, emphasizing the importance of evaporation and concentration processes in Caustic Soda production. The Tribunal agreed with the respondent's position, considering the gradual liberalization of benefits for equipment using Membrane Cell Technology.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the Ld. Commissioner (Appeals)'s decision to grant the concessional rate of BCD to the assessee. The judgment clarified the eligibility criteria under Notification No. 12/2012, emphasizing both modernization and capacity expansion aspects in utilizing Membrane Cell Technology for Caustic Soda production.