2024 (4) TMI 1020 - AT - Customs

Import of road construction machines - Benefit of exemption - Actual user conditions - requirements of a valid contract for road construction. - Goods declared as New Python 5000 Pothole Patchers Machine - duty exemption under Notification No. 12/2012 (Sl. No. 368, list 16) - adjudicating authority denied the benefit of notification to the importer on the ground that the imported machines being used to patch-up or repair minor cracks / potholes which develop on the existing road surface were not found specified under List 16 - Validity of contract with NHAI etc. for the construction of roads in India - HELD THAT - We find that Boards Circular F No 345/17/2008-TRU, dated 23/02/2009 has not been issued in connection with Customs Notification No. 12/2012 but is pertaining to Service Tax levy. Interpreting a notification benefit with a Circular issued for another enactment is always fraught with danger of misinterpretation. There is nothing in the exemption notification to show that only machines used for construction activities should be given its benefit and not extended to machines for maintenance and repair activities. The machines listed in list 16 cover a whole gamut of road construction activity like, paver finisher, surface dressing eqp., kerb laying, bridge inspection unit, stone crushing plant, tunnel excavators etc and not to road laying equipment/ machines alone. The matter has been discussed elaborately at para 7 of the impugned order. Further machines at Sl. Nos.4 and 5 can also be used for repair and maintenance activities of roads. We hence do not find the impugned order to be erroneous on this ground. It is not Revenue s case that the said contract was not entered into with this authorized agency. The Respondent has explained that one of the conditions for bidding for the contract was that they should be in possession of a machine for carrying out the contracted work. Hence the contract could only have been applied for while possessing a machine, necessitating its prior import. We feel that it is impossible for every notification to perceive exhaustively situations and circumstances that may emerge after its issue and where its application may be called for. Hence the process of interpretation combines both a literal and a purposive approach. The purpose of the concession is to ensure that the machine is used for the purpose specified in the notification. In exceptional cases the exemption could have been extended provisionally with a bond and finalised after a reasonable opportunity was given to the importer to produce the contract. Thus, we find that the learned Commissioner (Appeals) has used his discretion fairly and judicially in interpreting the notification and his order does not merit interference. The appeal is hence rejected and the matter disposed of accordingly.

Summary

Issues Involved:
The issues involved in the judgment are the eligibility of the importer to claim the benefit of Customs Notification No. 12/2012, Sl. No. 368, List 16 for the import of 'New Python 5000 Pothole Patchers Machine' and the interpretation of conditions regarding road construction agreements/contracts for claiming the notification benefit.

Eligibility of Importer for Notification Benefit:
The appeal was filed by the Revenue against the Order in Appeal passed by the Commissioner of Customs (Appeals), Chennai. The dispute arose when the adjudicating authority denied the benefit of notification to the importer, stating that the imported machines for patching potholes were not specified under List 16 of the notification and the importer lacked a valid contract for road construction. However, the Commissioner (Appeals) set aside the adjudication order, allowing the appeal and extending the benefit of the exemption notification to the importer. The Revenue contended that the machines imported did not match the specifications required for the exemption and highlighted a similar case from the Mumbai Tribunal. On the other hand, the respondent argued that the impugned goods could also function as surface dressing equipment and crack filling equipment as per the list appended to the notification. The Tribunal found that the impugned order did not err in granting the benefit based on the interpretation of the notification and upheld the Commissioner's decision.

Interpretation of Conditions for Notification Benefit:
One of the conditions for claiming the notification benefit was the possession of a road construction contract at the time of import, which the importers did not have when filing the Bill of Entry. The Revenue argued that the contract submitted was only for pothole filling, categorized as a repair/maintenance activity, and not for road construction. However, the Tribunal noted that the purpose of the concession was to ensure the machine's use for the specified purpose, and in exceptional cases, provisional extension of the exemption could be allowed. The Tribunal also distinguished a previous Mumbai Tribunal case where specific conditions were violated, unlike in the present case. Ultimately, the Tribunal concluded that the Commissioner (Appeals) had used discretion fairly in interpreting the notification, leading to the rejection of the appeal.