2005 (9) TMI 183 - AT - Customs

Summary

Issues:
1. Whether replacement items should be treated as independent imports or part of the original contract for concessional project import rate.
2. Whether duty demand on the addition of value for optional SAC combustors is sustainable.

Analysis:
1. The case involved a dispute regarding the treatment of replacement items as independent imports or part of the original contract for concessional project import rate. The appellants had registered their contract with the Custom House under Project Imports Regulations. The replacements were essential for power generation but were considered by the Revenue as part of another independent contract. The lower authorities denied concessional assessment for replacements, stating they were not part of the original contract. However, the Tribunal found that the replacements were registered as an amendment to the original contract and the appellants had substantially complied with Project Import Regulations. The Tribunal held that the appellants were entitled to the benefit as they fulfilled the eligibility conditions, and the denial by lower authorities was baseless.

2. The second issue pertained to the demand of duty on the addition of value for optional SAC combustors. The appellants argued that they did not import the SAC combustors but purchased only the rotor assembly with inbuilt combustors. The commercial invoice reflected this, with separate pricing for the inbuilt SAC combustors. The Tribunal accepted the appellants' contention that they should not be required to pay duty on items not imported. The demand of duty by adding the value of SAC combustors to the contract was deemed unsustainable. The Tribunal allowed the appeal, providing consequential relief to the appellants.

In conclusion, the Tribunal ruled in favor of the appellants, holding that the replacements were part of the original contract and they were entitled to the concessional assessment. Additionally, the demand for duty on the value of SAC combustors not imported was found to be unsustainable in law. The Tribunal emphasized that the appellants had complied with Project Import Regulations and that the denial of benefits by lower authorities lacked legal basis. The appeal was allowed with consequential relief pronounced in open court on 30-9-2005.