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2025 (3) TMI 855 - AT - CustomsClassification of imported goods - whether the Works Rolls imported by the appellant can be treated as Capital Goods as is being claimed by the appellant or the same is to be treated as spare parts of the Capital goods as is being claimed by the Revenue? - eligibility to utilize on 10% of the scrip amount to discharge the Customs Duty and the balance 90% is required to be paid by way of cash TR 6 / GAR7 Challan - Time Limitation - HELD THAT - From the picture produced it can be seen that the Works Rolls are attached to the machinery and are being used in the factory of the appellant without the Works Rolls. There is no possibility for the Rolling Machine to become functional. It can be seen the under the main heading Metal-Rolling Mills and Rolls therefor the Rolls for rolling mills are specifically classified under CTH 8455 30 00. The Other parts are classifiable under CTH 8455 90 00 which goes on to show that the Other parts whether in respect of Metal-Rolling Mills or in respect of Rolls for the Metal Rolls would get classified therein. Thus it is clear that Rolls for rolling mills are independent goods are in the nature of Capital Goods and are not in the nature of Spare Parts . In the present litigation it is not the case of the Revenue that the imported goods are classifiable under CTH 8455 90 00. The appellant has adopted CTH 8455 30 00 in their Bills of Entry sample verified by the Bench and the Revenue has cleared the same. Even in the present proceedings the classification is not disputed by the Revenue. An identical issue was before this Bench in the case of Comm. of Customs (Port) Kolkata vs. M/s. Cosmic Ferro Alloys Limited 2024 (8) TMI 674 - CESTAT KOLKATA . In that case the goods in question were Roller Sets Blades for Slitting Machines Spacers Spares for Cold Rolling Mills and the issue was whether the import of such goods would be be covered by the definition of Capital Goods under Notification No. 104/2009-Customs dated 14.09.2009. This Bench has held that the goods imported are squarely fitting within the definition of Capital Goods as defined in the FTP (2009-14) and Notification104/2009-Customs dated 14-09-2009 as amended. We observe that the definition of Capital Goods is wide enough to cover the imported spares/parts of capital goods . In the present case after going the factual matrix it is found that the above decision of this Bench is squarely applicable. As a matter of fact the present appellants are in a better footing. While in that case the issue was as to whether the spare parts can be considered as Capital Goods for the eligibility to use the SHIS scrip in the present case it is already held the goods in question are Capital Goods and are not mere spare parts . Hence there are no hesitation in applying the decision of this Bench to hold that the impugned order is not legally sustainable. Accordingly the same set aside and allow the appeal allowed on merits. Time Limitation - HELD THAT - The Tribunals have held that the importer would be eligible to use the SHIS scrip. Thus the bonafide belief of the appellant gets fortified by the Tribunal s decisions. Hence the issue being that of interpretation the Revenue is not justified in fastening the suppression clause on the appellant. Accordingly the confirmed demand in respect of the extended period set aside even on account of limitation. Conclusion - i) The Works Rolls are by themselves Capital Goods and not Spare Parts. Hence they are eligible to be imported against full utilization of SHIS Scrip. Therefore on this count the Appeal succeeds on merits. ii) The Dept. is precluded from taken different stand in respect of EPCG License and SHIS Scrip when the FTP has a common definition of Capital Goods. Hence when the goods have been treated as Capital Goods under EPCG License the same cannot be treated as spare parts to deny the SHIS scrip benefit. Hence even on this count the appeal succeeds on merits. iii) The issue is that of interpretation and has consistently been settled by the Tribunals in favour of the importer. Hence the confirmed demand for the extended period is hit by time bar. Therefore such demand is being set aside on account of time bar also. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues in this case revolve around the classification of "Work Rolls" imported by the appellant and whether they qualify as "Capital Goods" or "Parts or Spares of Capital Goods" under Notification No. 104/2009-Customs dated 14.09.2009. The determination of this classification affects the extent to which the appellant can utilize duty credit scrips under the Status Holder Incentive Scheme (SHIS) for the payment of customs duty. Additionally, the issue of whether the demand for duty is time-barred due to the alleged delay in issuing the Show Cause Notice was also considered. ISSUE-WISE DETAILED ANALYSIS Classification of Work Rolls as Capital Goods - Relevant legal framework and precedents: The legal framework is primarily based on Notification No. 104/2009-Customs, which defines "Capital Goods" and sets the conditions for utilizing duty credit scrips. The appellant relied on precedents such as Shushila Steel vs. Comm. of C. Ex., Meerut, and Jamshedpur Engg. & Machine Mfg. Co. vs. Commr. Of C. Ex., Jamshedpur, which held that rolls are capital goods. - Court's interpretation and reasoning: The Tribunal examined the classification under the Customs Tariff Heading (CTH) 8455 30 00, which specifically includes "Rolls for rolling mills," distinguishing them from "Other parts" under CTH 8455 90 00. The Tribunal noted that the rolls are integral to the functioning of rolling mills and thus qualify as capital goods. - Key evidence and findings: The Tribunal considered the appellant's use of Work Rolls in their manufacturing process and the classification under CTH 8455 30 00. The Tribunal also considered the appellant's treatment of Work Rolls as capital goods for accounting purposes and the acceptance of this classification by the Income Tax Department. - Application of law to facts: The Tribunal applied the broad definition of capital goods in the notification, which includes machinery and equipment required for manufacturing. The Tribunal found that Work Rolls fit this definition and are not merely spare parts. - Treatment of competing arguments: The Revenue argued that Work Rolls should be classified as parts or spares, limiting the use of duty credit scrips to 10%. The Tribunal rejected this argument, emphasizing the specific classification of Work Rolls under CTH 8455 30 00 as capital goods. - Conclusions: The Tribunal concluded that Work Rolls are capital goods, allowing the appellant to utilize the full value of the SHIS scrips for duty payment. Time Bar on Duty Demand - Relevant legal framework and precedents: The Tribunal considered the timing of the Show Cause Notice and the appellant's argument that the demand was time-barred. - Court's interpretation and reasoning: The Tribunal found that the issue was one of interpretation and that the appellant had a bona fide belief based on previous Tribunal decisions that Work Rolls were capital goods. Therefore, the extended period for issuing the demand was not justified. - Key evidence and findings: The Tribunal noted the consistent treatment of Work Rolls as capital goods in the appellant's records and the absence of suppression of facts by the appellant. - Application of law to facts: The Tribunal applied the principle that issues of interpretation do not warrant the extended period for demand unless there is evidence of suppression or misrepresentation. - Treatment of competing arguments: The Revenue's argument for the extended period was based on the alleged misclassification by the appellant. The Tribunal disagreed, citing the consistent classification and treatment by the appellant and previous favorable tribunal decisions. - Conclusions: The Tribunal set aside the demand for the extended period as time-barred. SIGNIFICANT HOLDINGS - The Tribunal held that "Work Rolls" are capital goods under Notification No. 104/2009-Customs and are not merely spare parts. This allows the appellant to utilize the full value of SHIS scrips for duty payment. - The Tribunal emphasized that the Revenue cannot adopt different standards for the same goods under different schemes (EPCG and SHIS) when the Foreign Trade Policy provides a common definition of capital goods. - The Tribunal set aside the demand for the extended period as time-barred, noting that the issue was one of interpretation and the appellant had a bona fide belief in their classification of Work Rolls as capital goods. - The Tribunal's decision reflects the principle that consistent treatment and classification by the appellant, supported by previous favorable tribunal decisions, preclude the application of the extended period for demand due to alleged misclassification.
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