1997 (7) TMI 360 - AT - Customs

Summary

Issues:
1. Interpretation of the term 'Capital goods' under Notification No. 111/95-Cus for concessional assessment.
2. Determination of whether Ion Exchange Resins qualify as catalysts for initial charge under the definition of 'Capital goods.'
3. Consideration of EPCG license issuance and its relevance to the exemption under Notification No. 111/95-Cus.

Analysis:
1. The case involved a dispute regarding the classification of goods imported under the EPCG scheme at a NIL rate of duty under Notification No. 111/95-Cus. The Asstt. Commissioner rejected the claim for concessional assessment, stating that the goods did not meet the definition of 'Capital goods' as per the notification.

2. The importer contended that the imported Ion Exchange Resins should be considered catalysts for initial charge, falling under the definition of 'Capital goods.' The Commissioner of Customs (Appeals) set aside the Asstt. Commissioner's order, emphasizing the validity of the EPCG license and its alignment with the EXIM Policy, supporting the importer's claim for concessional assessment.

3. The Tribunal analyzed the definition of 'Capital goods' under Notification No. 111/95, emphasizing the requirement for goods to be covered by an EPCG license for duty-free import. However, it noted that the Ion Exchange Resins did not qualify as catalysts based on their usage in the manufacturing process, as they did not undergo chemical changes or accelerate reactions, aligning with supplier statements.

4. The Tribunal highlighted the importance of the EPCG license production as a condition for exemption but noted that the license's broader definition of capital goods did not directly align with the narrower definition in the exemption notification. Citing legal precedents, including the Delhi High Court and Supreme Court judgments, it emphasized the Customs authorities' right to verify goods' eligibility for exemption based on the defined criteria.

5. Ultimately, the Tribunal ruled in favor of the department, concluding that the Ion Exchange Resins did not meet the criteria for being considered catalysts for initial charge as defined in the notification. The decision emphasized the need for goods to align precisely with the exemption criteria, beyond just the production of a valid EPCG license, to qualify for concessional assessment under Notification No. 111/95-Cus.