2001 (3) TMI 348 - AT - Central Excise

Summary

Issues:
1. Denial of 'Project Import Regulation 1986' benefit and consequential short levy recovery of duty.
2. Assessment under Tariff head 9801 for diversification or substantial expansion.
3. Review of registered contract by Assistant Collector.
4. Finalization of assessments under Regulation 7 and execution of bond under Section 18.

Analysis:

1. The Assistant Collector denied the 'Project Import Regulation 1986' benefit, ordering assessment for duty recovery from the appellants due to their unit not falling under initial setting up, substantial expansion, or diversification eligible for benefits. The Commissioner (Appeals) found the unit did not qualify under any category, even if considered a new activity, emphasizing the import of a single 'CNC Wire Cutting Electrical Discharge Machine' for electronic components. The Commissioner remanded the matter for redetermination of duty classification and rate on machinery and spare parts.

2. The Commissioner (Appeals) analyzed the claim for assessment under Tariff head 9801, noting compliance with procedural aspects except for determining if the import was for diversification or substantial expansion. He concluded that the unit's activities did not fit these criteria and were more akin to starting a new unit rather than a project. The Commissioner rejected the plea of scarce foreign exchange and the relevance of using indigenous machines alongside imports. He remanded the matter for reassessment of duty classification and rate on machinery and spare parts.

3. The Appellate Tribunal considered the issue of reviewing a registered contract by the Assistant Collector, finding that the Project Imports Regulation 1986 governed import classification under Heading 9801. The Tribunal agreed with the Commissioner that the import of a single machine did not align with the regulation's definition of an 'industrial plant.' However, the Tribunal found no fault in the Assistant Collector registering the contract for three machines as per the project report.

4. Regarding finalization of assessments under Regulation 7 and execution of bonds under Section 18, the Tribunal clarified that assessments are provisional until finalized three months after the last clearance. The absence of bond execution under Section 18 did not preclude provisional assessments. The Tribunal emphasized the importance of correct classification under Project Imports, stating that non-disturbance of value did not impede the proper officer's right to finalize assessments based on classification. Ultimately, the Tribunal dismissed the appeal based on these findings.