2016 (12) TMI 428 - AT - Customs

Project import - eligibility of benefits of Notification No.42/96-Cus dated 23/07/1996, Sl.No.16 for Port Development Project - As per lower authority the setting up of LPG Storage Tanks is for their own infrastructure facility for import, storage and distribution of LPG and the facility is not available to any other Port user - whether the appellant is eligible for the benefit of Project Import Regulation or otherwise for construction of LPG storage terminal tanks at Porbunder, Gujarat claiming the benefit of notification No.42/96-Cus dated 23/07/96, Sl.No.16 in Port Development Project Held that - Notification No.42/96-Cus is issued in exercise of powers conferred by sub-item (6) of Heading 98.01, the first schedule to the Customs Tariff Act, 1985, the Central Government has notified 19 projects input eligible under Project Import assessment under Chapter heading 98.01 and at Sl.No16, Port Development Projects are indicated. We find by letter dated 02/08/1996, the office of the Secretary of Ports & Fisheries Department, Government of Gujarat has specifically stated that they have accepted the proposal of the appellant for erecting of storage of LPG (import) facility at Porbunder Port of the Gujarat Maritime Board and by letter dated 01/02/97 clearly indicated to the Asst. Commissioner of Customs, Central Cell, GR-6) New Customs House, Mumbai that in view of the clarifications mentioned above, the duty concession to import the items under Customs Tariff Act, 1975 and Project Import Regulations, 1986 as well Public Notice 154 Imp.133 dated 30/11/89 may be permitted as per rules to M/s.IMS Petrogas Ltd. and SHV Energy North West India Ltd. subject to the condition that total material should not exceed as attested and forwarded as Annexure-B (copy enclosed as per para 3 above) with this department even letter dated 22/10/96 . The above said paragraph reproduced from the letter of Secretary to the Ports and Fisheries Department, Government of Gujarat clearly indicates that these facilities for LPG import and storage at Porbunder Port is covered under Project Import Regulations and the said Secretary is authorized for issuing such certificates. On face of such a certificate from the concerned ministry, the Revenue authorities are in error to hold that the import of the goods under Project Import Regulations by appellants is improper as also the de-registration of project from Project Import Regulations. In our view, the ratio of the judgement of the Apex Court in the case of Zuari Industries Ltd. Vs. CCE & C 2007 (3) TMI 12 - SUPREME COURT OF INDIA will apply to the case in hand, in its full force and there is no dispute that the said project is covered under Notification No.42/96-Cus issued by the Government of India under Heading 98.01. The appellants are eligible to the benefit of Project Import Regulations in respect of the project registered by them. The impugned orders de-registering the project imports and demanding differential duty are unsustainable and liable to be set aside - appeal allowed - decided in favor of appellant-importer.

Summary

Issues:
Eligibility for benefit of Project Import Regulation for construction of LPG storage terminal tanks at Porbunder, Gujarat under Notification No.42/96-Cus dated 23/07/96, Sl.No.16 in "Port Development Project".

Analysis:
The case involved appeals against an Order-in-Appeal passed by the Commissioner of Customs (Appeals), Mumbai regarding the eligibility of two appellants, M/s. IMS Petrogas Ltd. (now SHV Energy LPG Infrastructure Pvt. Ltd.) and M/s. SHV Energy Northwest India Ltd. (now SHV Energy Pvt. Ltd.), for the benefit of Project Import Regulation under Notification No.42/96-Cus. The lower authority had questioned the classification of the project as a "Port Development Project" and directed the appellants to pay substantial amounts. The first appellate authority upheld the lower authority's decision.

The appellants argued that they had submitted various documents supporting their claim, including a recommendation letter from the Secretary, Ports & Fisheries Department, Government of Gujarat. They contended that the project was certified as a Port Development Project by the relevant authority and Customs authorities should not question this certification. They also highlighted that the storage facilities were used by other oil companies, indicating a broader usage beyond personal use.

The Departmental Representative maintained that the LPG storage facilities were for personal use and not covered under Project Import Regulation. However, the appellate tribunal analyzed the records and the relevant notification. They noted that the Secretary of Ports & Fisheries Department, Government of Gujarat had explicitly certified the project as eligible for duty concessions under Project Import Regulations. The tribunal emphasized that the certification from the ministry should be respected, citing a precedent from the Hon'ble Apex Court.

Ultimately, the tribunal found in favor of the appellants, ruling that they were indeed eligible for the benefits of Project Import Regulation for their project. They set aside the impugned orders de-registering the project imports and demanding differential duty, allowing the appeals with consequential relief. The judgment was pronounced on 08/11/2016.