1989 (9) TMI 270 - AT - Customs

Summary

Issues Involved:
1. Denial of Project Import Registration extension.
2. Classification of appellants' activities as manufacturing.
3. Validity of proforma invoice as a contract.
4. Eligibility of the appellants' unit as an industrial plant.
5. Relevance of other supporting evidence.

Issue-wise Detailed Analysis:

1. Denial of Project Import Registration extension:
The appeal contested the order of the Collector (Appeals) which denied the extension of Project Import Registration. The appellants argued that their import of a Mobile Heat Treatment machine was for substantial expansion of their industry. However, the Assistant Collector and the Collector (Appeals) rejected their application, stating that the appellants' activities amounted to specialized support services rather than manufacturing activities, thus not falling within the scope of an Industrial Plant under Tariff Heading 84.66.

2. Classification of appellants' activities as manufacturing:
The appellants claimed that their heat treatment activities constituted manufacturing, citing various references, including the "Heat Treater's Guide" and the Indian Boilers Act of 1923. They argued that their process involved significant transformation of materials, qualifying as manufacturing. However, the Collector (Appeals) and the Tribunal referenced the Supreme Court's decision in U.O.I. v. Delhi Cloth & Silk Mills Co. Ltd., which stated that manufacturing requires a new and distinct article to emerge. The Tribunal concluded that the heat treatment process did not result in a new product with a distinct name, character, or use, thus not qualifying as manufacturing.

3. Validity of proforma invoice as a contract:
The appellants presented a proforma invoice as a contract for the import. The Tribunal, referencing the decision in Sujatha International v. Collector of Customs, emphasized that a formal contract is required for Project Import Registration. A proforma invoice does not meet this criterion, and thus, the appellants' argument was refuted.

4. Eligibility of the appellants' unit as an industrial plant:
The appellants argued that their registration under the Factories Act and possession of a Central Excise license qualified them as an industrial plant under Heading 84.66. The Tribunal, referencing the decision in Photovisual, Calcutta v. Collector of Customs, Calcutta, determined that the appellants' activities did not constitute an industrial plant as they did not involve manufacturing or production of goods. The Tribunal concluded that the appellants' heat treatment activities did not fit within the scope of an industrial plant as envisaged under the relevant tariff heading.

5. Relevance of other supporting evidence:
The appellants cited the Order of the Commissioner of Income-tax (Appeals) and a letter from the Joint Director of Industries recommending project import endorsement. The Tribunal held that the authority to grant project import concessions lies with the Customs Authorities as per the Project Import (Registration of Contract) Regulations, 1965. References to other agencies were deemed irrelevant to the customs proceedings. The Tribunal also cited the decision in Uma Art Studio v. Collector of Customs, Cochin, reinforcing that endorsements from other agencies do not influence the customs decision on project import status.

Conclusion:
The Tribunal dismissed the appeal, concluding that the appellants' activities did not qualify as manufacturing, the proforma invoice did not constitute a valid contract, and the unit did not meet the criteria of an industrial plant under Heading 84.66. Consequently, the appellants were not entitled to the Project Import Concession.