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TMI Blog2012 (8) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... security deposit of Rs 50,00,000/- submitted by the importers the time of registration of the contract is appropriated in full towards the above duty liability. The balance of Rs. 4,89,99,069/- to be paid by the importers. (iv) No interest is payable on the above amount under section 28AA or 28 AB of the Customs Act, 1962. (v) The 170 computer items having revised valued of Rs. 85,14,297/- + 10% = Rs. 93,65,726.7, are hereby confiscated under section 111 (o) of the Customs Act, 1962. Since these goods have already been released against P.D. Bond, I impose a fine of Rs. 25,00,000/- (Rupees Twenty Five Lakhs only) in lieu of confiscation. (vi) I also impose a penalty of Rs. 50,00,000/- (Rupees Fifty Lakhs only) on the importers under Section 112 (a) of the Customs Act, 1962. 2. The brief facts of the case are that the appellant is engaged in the business of manufacturing of cement. The installed capacity of the plant was 8.63 lac Tons per annum. As the appellant was under the process of expansion of their Project therefore, on 18.9.1992 the appellant filed Memorandum with Secretariat for Industrial Approvals, Department of Industrial Development, New Delhi for undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the imported goods but contested the demand in respect of computers by submitting that the computers were used for controlling the manufacturing process and further the computers in the offices were interlinked to the computers in the factory. Thereafter on 21.06.2002 a fresh Show Cause Notice was issued in supersession of the earlier notice raising two new grounds: (a) the value of technical services liable to be added to the value of the goods; and (b) since the reconciliation statement dated 10.3.1997 was filed beyond a period of three months from the last date of clearance of the consignment stipulated in Regulation 7 of the Project Import Regulations, 1986, the appellant was not entitled for the benefit of assessment under the Project Import Regulations, 1986. Therefore the impugned demands were proposed. 4. The appellant contested the Show Cause Notice and replied that the second Show Cause Notice on the same issue on a different ground was not permissible in law and on merits, the appellant submitted that Regulation 7 regarding filing of reconciliation statement was only procedural and further Regulation 7 itself provided for extension of time and substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above was passed. 6. Against the said order, the appellant is before us. 7. Shri J.C. Patel, the learned counsel for the appellant submitted that the impugned order has traversed beyond the allegations in the Show Cause Notice. Therefore, the same is not sustainable. He further submitted that the Customs authorities cannot go beyond the certificate of the sponsoring authority and deny the benefit of the Project Import. To support this contention, he relies upon the decision of the Hon ble Calcutta High Court in Asiatic Oxygen Ltd vs Assistant Collector reported in 1992 (57) ELT 563 and the decision of the Hon ble Supreme Court in the case of Zuari Industries Ltd vs CCE 2007 (210) ELT 648 (SC). It was further argued that the adjudicating authority has erred in not considering the substantial expansion achieved by the project as a whole and in only examining the expansion achieved in the second phase when the imported goods were required. To support this contention, he relied on the decision of the Tribunal in Orissa Air Products Ltd vs CCE reported in 1998 (103) ELT 583. 8. The learned counsel fairly conceded that the demand of duty on 170 computers which was installed in the off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the installed capacity from 8.63 lacs tons per annum to 11.29 lacs tons per annum which works out around 31% increase. As per the Project Import Regulations, 1986, the substantial expansion means the expansion which will increase in the installed capacity by not less than 25% and assessment of the said is eligible under Heading 98.01 only to those goods which are imported whether in one or more than one consignment than one consignment against one or more specific contracts which have been registered with the appropriate Custom House in the manner specified in Regulation 5 of such contract/contracts has or have been so registered. Regulation 5 is reproduced below: 5. Registration of Contracts. - (1) Every importer claiming assessment of the goods falling under the said heading No. 98.01, on or before their importation shall apply in writing to the proper officer at the port where the goods are to be imported or where the duty is to be paid for registration of the contract or contracts, as the case may be : Provided that in the case of consignments sought to be cleared through a Custom House other than the Custom House at which the contract is registered, the importer shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed form to the Secretariate of Industrial Approval in the Ministry of Industry. As the same has been complied with therefore the Project Import Regulations, 1986 are applicable to the facts of this case and the same has been dealt by Chapter 8 of the Customs Tariff Act, 1975 and Chapter Heading 98.01 sub heading 98.01.00 deals with the situation the same is applicable to the appellant s case. The main contention of the Revenue is that when the appellant registered the contract with the Customs the installed capacity of the Project was 9.97 lacs tons per annum instead of 8.63 lacs tons per annum. Therefore, the substantial expansion of the installed capacity of the Project is only 16.75% which is less then 25%. Therefore, the appellants are not entitled for the benefit of Project Import Regulations, 1986 under the substantial expansion of the installed capacity. Therefore, the issue before us is that whether the installed capacity for substantial expansion in the facts of this case be treated as 8.63 lacs tons per annum or 9.97 lacs tons per annum. From the memorandum filed by the appellant before the Secretary for Industrial Approvals of Ministry of Industry, the installed capac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t disputed that the cylinders to be imported were necessary for the said units to attain their full licensed capacity. It is also not disputed that the petitioners had been unable to import all the cylinders necessary for achieving its full licensed capacity at the beginning by reason of various constraints, financial and otherwise. If the petitioner had been in a position to import all the cylinders in 1966, the Customs Authorities by their own reasoning would have permitted their importation under Heading 84.66 . It is illogical therefore to deny the petitioner the benefit of Heading 84.66 because the very same number of cylinders is being brought in stages. 13. Following the principle of construction elaborated by the Supreme Court in M/s. Goodyear s case (supra) I hold that the language used in Heading 84.66 even strictly construed includes the setting up of a unit in stages for the first time. 14. Secondly the Customs Authorities cannot dismiss the recommendations and endorsement of the DGTD and the CCI & E as being certificate of busy bodies . The certification was made pursuant to the import and export procedure prescribed by the Government of India and the relevant rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er for obtaining the benefit of the exemption notification. We may add that, the essentiality certificate is also a proof that an item like Captive Power Plant in a given case could be treated as a capital goods for the fertilizer project. It would depend upon the facts of each case. If a project is to be installed in an area where there is shortage of electricity supply and if the project needs continuous flow of electricity and if that project is approved by the Sponsoring Ministry saying that such supply is needed then the Revenue cannot go behind such certificate and deny the benefit of exemption from payment of duty or deny nil rate of duty. To the said effect is the judgment of the Calcutta High Court in the case of Asiatic Oxygen Ltd. (supra) in which it was held that the object behind the specific Heading 98.01 in Customs Tariff Act, 1975 was to promote industrialization and, therefore, the heading was required to be interpreted liberally. It was further held that, once an essentiality certificate was issued by the Sponsoring authority, it was mandatory for the Revenue to register the contract. 16. Thereafter is was observed that : 11. Before concluding, we may poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Commissioner (AR) for the Revenue in the appellant s application for registration of contract under Heading 98.01 of the Customs Tariff wherein the installed capacity as shown 8.63 lacs tons per annum instead of 9.97 lacs tons per annum has been misplaced because column 6 has to be read as a whole and as per the said column it prescribed that the installed capacity at the time of substantial expansion was 8.63 lacs tons per annum and the sponsoring authority has also confirmed the said fact. We do agree with the argument of the learned counsel that when they filed the memorandum for substantial expansion of the installed capacity of the project before the Secretariat of Industrial Approval, in the Ministry of Industry on 18.9.1992 if the appellant filed the contract for import of the imported components at the first stage expansion then the appellants are entitled for the benefit of the Project Import Regulations, 1986 under the Customs Tariff Heading 98.01, but if they filed the contract in second phase they are not entitled this is not acceptable. Therefore, the appellants are entitled for the benefit of the Project Import in the second phase also. In view of these observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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