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TMI Blog2001 (8) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... gineer s Certificate; (c) The importer s affidavit (d) Technical opinion of the professor of IIT Madras (Dr. N.N Nair, HOD); and (e) Recommendatory letter of Director of Industries, Andhra Pradesh. The CEGAT had observed that these documents opine that the items imported are not complete toys but merely patterns from which toys could be made after R D leading to emergence of moulds and the Commissioner had not given any grounds for rejecting the evidence. Therefore, the case required remand for recording a detailed finding and issue of speaking order. 2. The Commissioner gave an opportunity of hearing to the importer and considered the importer appellant s following pleas :- (a) They are engaged in the manufacture of children s play equipments and systems and is a small scale unit registered with the Directorate of Industries, Andhra Pradesh. (b) They had imported patterns, moulds and components for setting up a new industrial unit from M/s. Automatic Toys, Italy and M/s. Barbieri, Italy. (c) They had been issued specific licence for the import of these goods except mould which is covered under OGL. (d) They had sought registration for import under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are still available at their factory in a dismantled condition. Hence, they pressed for accepting their assessment and grant of benefit of concession under Heading 98.01. 3. The Commissioner after due consideration rejected their plea by giving a detailed findings as follows :- I have carefully gone through the records of the case and the submissions made in the appeal. The issue to be decided here is whether the goods imported by the appellant are eligible for classification under Heading 98.01 of the Customs Tariff and the benefit of assessment as Project Imports. The goods imported against the two bills of entry covered by the order of the lower authority are the following items : 1. Mould for Baby Bumper Car - 1 No. 2. Components for Bumper Car : (a) Oval Bumping Rubber tyres and tubes - 13 nos. (b) Steering Wheel - 13 nos. (c) Plastic Head Light cover - 13 pairs (d) Bumper Car hand rest fitting - 13 nos. (e) Fibre glass seats for bumper car - 13 nos. 3. Finished Toys (declared as patterns for obtaining finished products by importer) (a) Baby Bumper car - 1 No. (without power supply) (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the order of the Commissioner (Appeals) dated 17-1-91 is that the goods under import are in the nature of auxiliary equipment. Auxiliary equipment has not been defined either in the Tariff or the Project Import Regulations, 1986 and is therefore to be construed strictly by its meaning in common parlance/dictionary meaning. The word auxiliary as per most dictionaries refers to something that provides aid or assistance or is subsidiary or additional i.e. an equipment which serves as a supplementary or as reserve for e.g. an auxiliary power system. The appellant s contention that the patterns /toys imported would conform to the definition of auxiliary equipment is evidently far-fetched. Before drawing any final conclusions on this matter the six documents listed by the Hon ble CEGAT are also to be examined. Out of these, as per the appellant s own submission the case having traversed more than a decade, two of the documents viz. the Chartered Engineer s certificate and the technical opinion of the Prof., IIT, Madras, are no longer available, on record or with the appellant, for scrutiny. The appellant has however referred to a letter dated 28-8-90 issued by them to the Assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m House prior to the clearance of goods. However, I find no grounds to accede to the plea that the finished toys are patterns and conform to the description in the heading as they qualify as capital Apparatus/equipment for development purpose and are essential auxiliary items for getting moulds to make the finished toys. The imported goods viz. finished toys are not for obvious reasons either machinery, instruments, appliance or apparatus nor are they auxiliary equipment as the toys do not serve as subsidiary, additional or supplementary equipment. Their classification under Heading 98.01 is therefore clearly ruled out and they merit classification only under CTH 95.03. For the above reasons, I uphold the order of the lower authority denying the benefit of classification under CTH 98.01 for Project Import assessment. The appeal is, accordingly, rejected. 4. Shri Anil Kamineni, appellant s representative submitted that they had their contract for import project registered on the direction of the High Court and the goods were cleared on provisional assessment. It is his submission that they had produced the necessary evidence to prove that the items are of project imports and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the moulds. He, therefore, points out that Commissioner (Appeals) order discarding these evidences and also their use as Capital Goods for Project Imports was not justified. They cannot be classified under Heading 95.03 which cover Other toys; reduced size (scale) models and similar recreational models, working or nor, puzzles of all kinds . He contended that the imported goods are not complete play equipment in themselves and cannot be used as play items nor could they be sold as play things. They are essential to set up the new unit for manufacturing play equipment and hence they are squarely covered by the project Imports Regulations and accordingly classifiable under Heading 98.01. He further contended that they have obtained special import licence for the goods imported. The licencing authority classified the goods as capital goods . He contended that capital goods are defined in the Export Import Policy as Capital Goods means any plant, machinery equipment or accessories required for manufacture or production either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological upgradation or expansio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Bench as to how they would distinguish the Larger Bench judgment rendered by the Tribunal in the case of Toyo Engineering India Ltd. [2000 (122) E.L.T. 315]. Ld. DR points out that in the Larger Bench case, the appellants had taken out the goods for setting up a project abroad, same was brought back and wanted it to use the same for setting up a project. The nature of goods was considered by the larger bench as accessories in the light of Word Book Dictionary, auxiliary means, a person or thing that helps; aid; syn; accessory . The items were bumpers and transport equipments which are necessary for constructing the factory. It was pointed out by the ld. DR that in that case the Bench did not permit the DR to raise the pleas pertaining to registration of contract prior to importation in terms of Heading 98.01 as similar pleas had not been raised before the adjudicating authority. He, on being pointed out by the Bench that in the present case, there was no dispute of registration of contract, or licence issued or the documents were not disputed by the Commissioner by rebuttal evidence, ld. DR submitted that although the ld. Commissioner has not dealt with the documents w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncing authorities classifying the goods as capital goods . 9. In terms of the above findings, and also the directions given by the Tribunal, it was incumbent on the ld. Commissioner to have recorded the reasons as to why these documents and opinions were not acceptable. On a perusal of the Commissioner s order which is extracted, we notice that the Commissioner has not given any findings on the documents. The proper method would have been to refer back the department s opinion pertaining to the item not being capital goods for consideration for classification as project import under Chapter 98 to the concerned Chartered Engineer, Professor of IIT Madras, importing authorities and recommendory authority i.e. the Director of Industries, Govt.of Andhra Pradesh and put to them the department s plea and reasonings as to why the item cannot be considered as Project Import and should have sought their presence for cross examination. In a remand proceedings, it was incumbent on a Commissioner to have applied her mind on the documents which were before her and then given thought to it by placing it with rebuttal evidence. In the absence of such an examination and getting the rebuttal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classified. The ld. Commissioner has blown hot and cold in holding at one place that for the purpose of classification end-use is not the criteria and in the next line, she records a finding that end-use is one of the criteria for the purpose of use for the project. We notice that the findings of the ld. Commissioner is not sequential and logical. The question of application of Interpretative Rules and Section notes and Chapter notes would not come to play, once we consider the item to be a project import for the purpose of classification under Heading 98.08 as capital goods . The criteria of considering the item to be semi-finished or specially designed for use in the manufacture of the final products and the same is required to be classified in terms of the Interpretative Rules and chapter notes would be applicable only for chapters other than Chapter 98.01. Once the item falls within the ambit of Chapter Heading 98.01, then the interpretation has to be liberal as has been held by the Calcutta High Court in the case of Asiatic Oxygen Ltd. (supra). 11. We notice that there is no dispute in the matter that the supplier in the invoice had clearly described the items to be Childr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion of the order. We agree with the appellants contention that there is no contra opinion obtained by the department either in the form of clarification from the Director of Industries for treating the items as not project imports or from any Chartered Engineer or any expert or any market survey report to say that the items imported are complete goods and are in marketable condition and were sold as toys. In the absence of any evidence and further in the absence of any reasonable ground to reject the evidence brought on record including the affidavit of the manufacturer, therefore, the ld. Commissioner s finding rejecting the claim of appellants is required to be set aside. 12. We also notice that the Larger Bench of Five Members of the Tribunal has gone in great detail to consider as to what is an auxiliary equipment in the case of Toyo Engineering India Ltd. (supra). The Tribunal in Para 5 has noted the definition of the term auxiliary . It noted that Auxiliary means giving additional help; supplemental or subsidiary; an item not directly a part of a specific component or system but required for its functional operation (Words and Phrases of Excise and Customs by S.B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icted the term to those equipments which have direct use in the setting up of the project. The Larger Bench of the Tribunal in National Aluminium Co s case have interpreted the Supreme Court s decision in P.S.E.B. case and explained as to why the vehicles were not held to be integral part of the power project. We also observe that it is not the case of the department that the construction equipments imported by the appellants were not used in the initial setting up of the plant. The Assistant Collector denied the facility of project import as the ownership of the imported goods would not pass to the project authority and the Collector (Appeals) confirmed the adjudication order holding that the impugned goods would be acting as an aid in the setting up and the importer may utilise the machinery elsewhere in the setting up of another plant. What is required for the purpose of project import is that the equipments should be used in the initial setting up of the specified plant. The mere fact that the equipment would be acting as an aid would not debar them from being covered by Heading 98.01 as it specifically mentions auxiliary equipment which according to Dictionary means a thing th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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