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TMI Blog2007 (3) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Project Import Regulations, 1986 (for short "the PIR"). In respect of the said expansion, the goods imported were entitled to the benefit of Project Import Assessment under Heading 98.01 of the Schedule to the Customs Tariff Act, 1975 and correspondingly the company was entitled to the benefit of Customs exemption Notification No. 11/97 dated 1-3-1997. The said notification specified nil rate of duty in respect of "goods required for fertilizer plant". Ministry of Chemicals and Fertilisers was the duly constituted Sponsoring Authority under the said PIR. The said Ministry had issued a certificate dated 22-10-1997 (Essentiality Certificate) to the effect that the import of capital goods for expansion of the fertilizer project stood examined and the list of goods annexed to the certificate had been attested from the essentiality angle by the Deputy Secretary to the Government of India. At this stage, it may be noted that in their application for issuance of essentiality certificate, the assessee had stated that on account of load shedding in the concerned area, a Captive Power Plant was essential for the substantial expansion of the fertilizer project. By the said essen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil Nil (ii) coal mining projects; 20% Nil (iii) captive power plants of 5 MW or more; 20% 13% (iv) power generation projects including gas turbine power projects (excluding captive power plants set up by projects engaged in activities other than in power generation); 20% Nil (v) power transmission projects of 66 KV and above; 20% 10% (vi) Other industrial plants or projects." 20% 13% We also quote hereinbelow the Essentiality Certificate dated 22-10-1997 along with the attested copy of list of capital goods to be imported for the expansion of the fertilizer project. "No. 15027/1/97-FP-III Government of India Ministry of Chemicals Fertilisers Department of Fertilisers. Dated 22nd October, 1997 To The Assistant Commissioner of Customs, Mormugao, GOA-803 Subject : Customs duty exemption for import of capital goods for substantial expansion of existing NPK Plant by M/s. Zuari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... motor, flexible coupling mounted on common frame. M/s. A.R. Wilfley and Sons, Inc Post Box No. 2330, Denver, Coloradi 80201, U.S.A. 136425.00 5.a) Phosphoric acid (H 3 PO 4 ) supply pump. - do - 2 nos. 5.b) Scrubber Effluent Pump - do - 2 nos. 5.c) Fummes Scrubber Liquor pump - do - 2 nos. 5.d) Dryer Scrubber Liquor pump - do - 2 nos. 5.e) Molten Urea pump - do - 2 nos. 5.f) Spares for above. - do - 1 Lot 13642.50 6.a) Ammonia Sparger M/s. Maguin S.A. 2, Rue Pierre Semard, 02800 Charmes, France 1 no. 2313320.00 6.b) Dryer Knocker - do - 5 nos. 6.c) Oversize Crusher with Motor, Base frame and Remote Control - do - 2 nos. 6.d) Scrubber Liquor Sprayer - do - 1 no. 6.e) Spares for above. - do - 1 Lot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artsila Vasa 18V32LN, Diesel Generating set with auxiliary equipment. M/s. Wartsila Diesel, Wartsila Diesel Oy., P.O. Box 252, Fin- 65100, Vaasa, Finland 1 Lot 11382000.00 14.b) Spares for above. - do - 1 Lot 1382000.00 Total without the spares 494873.00 4294677.00 11382000.00 Total Spares 49486.60 465365.80 1382000.00 Total with Spares 544359.60 4760042.80 12764000.00 This is to certify that the above goods are most essential for the substantial expansion of the NPK plant of Zuari Agro Chemicals Ltd., at Zuarinagar, Goa and are hence eligible for nil rate of Customs Duty under Customs Notification No. 11/97 dated 1-3-1997. For ZUARI AGRO CHEMICALS LTD. For ZUARI AGRO CHEMICALS LTD. Sd/- (Resident Director) Sd/- (S.K. Chatterjee) Vice President-Technical" 6.There is no dispute regarding other items mentioned in the list. Regarding those items, the Department has accepted that they have been attested by the Sponsoring Ministry. According to the Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee, it was not open to the Revenue to say that the Captive Power Plant was not an essential requirement for the expansion of the fertilizer project, once an essentiality certificate stands issued by the Sponsoring Ministry. In this connection, reliance is placed by the assessee on the judgment of this court in the case of Commissioner of Customs (Imports), Mumbai v. Tullow India Operations Ltd. reported in (2005) 13 SCC 789. Reliance is also placed by the assessee on the judgment of the Calcutta High Court in the case of Asiatic Oxygen Ltd. v. Assistant Collector of Customs reported in 1992 (57) E.L.T. 563. 8.We find merit in this civil appeal filed by the assessee for the following reasons. 9.Firstly, on the facts we find that the assessee had given to the Sponsoring Ministry its entire Project Report. In that report they had indicated that for the expansion of the fertilizer project they needed an extra item of capital goods, namely, 6MW Captive Power Plant. In their application, the assessee had made it clear that the fertilizer project was dependant on continuous flow of electricity, which could be provided by such Captive Power Plant. Therefore, it was not op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for the Project. As stated above, Heading 98.01 is the specific entry applicable in the case of the Project Imports. An item like a power plant could be in a given case an independent Plant. Generally, it is a stand-alone equipment. However, when it becomes a part of the entire Project/System, the same power plant can also become one of the items of capital goods. The essentiality certificate given by the Sponsoring Ministry has treated Captive Power Plant, in this case, as "capital goods" along with 13 other items. The assessee has also treated the Captive Power Plant as one of the capital goods required for the expansion of the fertilizer project. In the above circumstances, all the items in the list annexed to the certificate have been certified and recommended by the Sponsoring Ministry as the entire capital goods required for the substantial expansion of the fertilizer project. Therefore, in our view, the assessee is right in its contention that, in this case, 6MW Captive Power Plant is one of the items out of 14 items constituting capital goods required for the substantial expansion of the fertilizer project, and, therefore, it fell under Serial No. 226(i) as goods require ..... 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