2019 (3) TMI 621 - AT - Customs

Import of Construction equipment - violation of post-importation conditions - Benefit of N/N. 21/2002-Cus dated 1st March 2002 denied - import of rotary piling rig R-625 serial no. 2553 and its accessories - Held that - It is apparent that the sheer scale of investment involved in undertaking road connectivity projects through participation of the private sector did warrant, and prompted, public contribution through exemption from duties of customs on import of equipment that is intended to be deployed. The only construction of intent that can be inferred from the structure of the exemption notification is that pre-importation condition entitles the importer to availment of the exemption while the post-importation condition mandates performance; these are mutually exclusive conditions. It is seen from the record that the appellant was prevented from executing the project at Panipat for want of the project site being made available to them. In these circumstances, the pre-importation condition, which is neither included in the undertaking for continuing obligation under the notification nor mandated to be so in the notification, cannot be held to have been deniable after the eligibility was determined at the threshold. Consequently, there is no breach leading to invokability of section 28 of the Customs Act, 1962 and/or section 111 of the Customs Act, 1962. Utilization of the imported equipment - Held that - It is not in dispute that the equipment was deployed on contracts for construction of rail over bridges. The post-importation deployment does not necessarily have to relate to contracts that confer eligibility at the threshold. Hence, execution of project contracted by Indian Railways, or any agency of the Government of Bihar, is not violative of the continuing obligation undertaken by appellants or mandated by the notification except where the project did not involve construction of roads. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of exemption under notification no. 21/2002-Cus dated 1st March 2002.
2. Confiscation of goods under section 111(o) of Customs Act, 1962.
3. Redemption of confiscated goods on payment of fine.
4. Recovery of foregone amount at the time of import.
5. Imposition of penalties under various sections of Customs Act, 1962.
6. Compliance with pre-importation and post-importation conditions for exemption.
7. Interpretation of the exemption notification for utilization in road development projects.
8. Deployment of imported equipment on projects other than the one for which the goods were imported.
9. Applicability of strict construction principle to exemption notifications.

Analysis:
1. The judgment dealt with the denial of exemption under a specific customs notification to the appellants for the import of a 'rotary piling rig' and its accessories. The Commissioner of Customs had confiscated the goods but allowed redemption on payment of a fine and imposed penalties on the importer and other individuals. The Tribunal disposed of all appeals by M/s Ircon International Ltd, M/s Batliboi Impex Ltd, and an individual named Shri RP Singh through a common order.

2. The background revealed that the appellants had imported the goods for a road construction project but were accused of transferring the equipment to a different project location, breaching the conditions of utilization specified in the exemption notification. The Revenue contended that the importer had to deploy the equipment on the specific project for which it was imported, and failure to do so led to the confiscation and penalties.

3. The Tribunal analyzed the post-importation conditions stipulated in the exemption notification and concluded that the importer had fulfilled the pre-importation condition by being awarded an eligible contract. The deployment of the equipment on other road construction projects was deemed compliant with the post-importation condition, even if not directly related to the initial project for which the goods were imported.

4. The judgment emphasized the importance of strict interpretation of exemption notifications and highlighted that the deployment of the imported equipment on projects like a 'rail over bridge' was not a violation of the exemption conditions as long as it contributed to road connectivity. The Tribunal overturned the impugned order, ruling in favor of the appellants based on the compliance with the exemption conditions.

5. The Tribunal's decision was based on a thorough analysis of the exemption notification's intent, the purpose of the conditions, and the specific projects' relevance to road development. It clarified that the deployment of the equipment on various road-related projects, even if not identical to the initial project, did not constitute a breach of the exemption conditions, ultimately leading to the setting aside of the impugned order and allowing the appeal.