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TMI Blog2023 (2) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... en from the Agreement that though initially the cost of Agro-Processing Component under clause 3 of the Annexure-A (Technical and Administrative Provisions) was to be transferred to the Project by the Government of India as a loan of 4.108 million euro, but subsequently an amendment was incorporated on 08.03.2002. The amended clause 3 provides that the Agro-Processing Component was increased from 4.108 million euro to 7.196 million euro and out of this amount, the capital investment cost (85%) was to be provided as a grant and the working capital (15%) was to be provided as a loan to be repaid in a revolving fund. Thus, the plant and machinery, which would be included in the capital investment cost, was provided as a grant which means as a gift. Clause 8 of the exemption notification would, therefore, be satisfied. This factual portion is also reflected from the Certificate dated 09.11.1999 given by the European Union. The Certificate clearly mentions that the plant and machinery was gifted free of cost to the Programme under the bilateral Agreement between the Government of India and the European Union - the Commissioner (Appeals) failed to notice the amendment made in cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Description of goods Conditions (1) (2) (3) (1) xxxxx xxxxx (2) xxxxx xxxxx (3) xxxxx xxxxx (4) xxxxx xxxxx (5) xxxxx xxxxx (6) xxxxx xxxxx (7) xxxxx xxxxx (8) Goods, gifted free of cost under a bilateral agreement between the Government of India and a Foreign Government 3. It needs to be noted that a Financing Agreement dated 17.01.1992 was entered into between the European Economic Community (now European Union) and the Republic of India in regard to a project called Kerala Horticulture Development Programme. The European Economic Community was to contribute, by way of grant, towards the Financing of the said project. It is pursuant to the said Agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.11.1999. The certificate categorically states the plant and machinery under import is meant for the pilot project being set up by the appellant at Muvattupuzha, Ernakulam, Kerala and further that the equipments were supplied free of cost in terms of the bilateral agreement between the Government of India and European Union. After perusal of the said certificate, we are of the view that the goods under import by the appellant satisfied the condition specified in the Notification No. 148/1994. Consequently the goods are entitled to duty free clearance under the Notification and we order accordingly. 6. In the result, the impugned order is set aside and appeal allowed. 7. Feeling aggrieved, the Department filed Customs Appeal No. 25 of 2018 [ The Commissioner of Customs vs. M/s. Kerala Horticultural Development Programme decided on 29.08.2022 ] before the Kerala High Court. The High Court, by judgment and order dated 29.08.2022, allowed the appeal and remanded the matter to the Tribunal. The relevant portion of the judgment is reproduced below: 8.1 The Primary Authority and the Commissioner of Customs, from the record available, noted that the plant imported was under an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per law within four months from the date of receipt of copy of the judgment. (emphasis supplied) 8. This is how the matter has been placed before the Tribunal. The aforesaid judgment of the High Court was received by the Tribunal on 17.10.2022. 9. Shri Kurian Thomas, learned counsel appearing for the appellant submitted that the finding recorded by the Commissioner (Appeals) that the plant and machinery that was imported in terms of the Agreement was not supplied free of cost is factually incorrect for the following reasons: (i) The Appellate Commissioner had relied upon the preamended clauses 3(b), 3(c) and 3(d) whereas the said clauses had been amended on 08.03.2002 by Amendment No. 3 and from the amended clauses it would be clear that the plant and machinery was provided to the appellant free of cost; (ii) The Certificate dated 19.11.1999 issued by the European Union also supports the fact that the plant and machinery was supplied free of cost to the programme under the Agreement; and (iii) The appellant was, therefore, clearly entitled to the benefit of the exemption notification as clause 8 was satisfied. 10. Shri K. A. Jathin, learned authorised repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 747 125 4 980 10. xxxxxxxxx Channeling of funds of the Projects. The EC funds provided to the Government of India as a grant will channoled in total as such to the project. Special arrangements have been established as follows:- a) xxxxxxxxxxx b) the Agro-Processing competent will be transferred to the project by the Government of India as a loan of 4.108 million ECU for the establishment of the KFAPC (15 years -10% -5 years grace), it will consist of 1.6 million ECU, contribution to equity share of farmers societies in paid up capital and company loan of 2.508 million ECU, contribution for equipment, building, miscellaneous; c) out of the Marketing Support and Development component, the Government of India will transfer to the project 0.970 million ECU as a loan (15 years -10% -5 years grace) for the privatization of the KHPDC. It will consist of 0.382 million Ecu as contribution to equity share for farmers societies in KHPDC paid -up capital and 0.588 million ECU as contribution to investments and costs of KHPDC; d) the prog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be transferred to the Project by the Government of India as a loan of 4.108 million euro, but subsequently an amendment was incorporated on 08.03.2002. The amended clause 3 provides that the Agro-Processing Component was increased from 4.108 million euro to 7.196 million euro and out of this amount, the capital investment cost (85%) was to be provided as a grant and the working capital (15%) was to be provided as a loan to be repaid in a revolving fund. Thus, the plant and machinery, which would be included in the capital investment cost, was provided as a grant which means as a gift. Clause 8 of the exemption notification would, therefore, be satisfied. 17. This factual portion is also reflected from the Certificate dated 09.11.1999 given by the European Union. The Certificate clearly mentions that the plant and machinery was gifted free of cost to the Programme under the bilateral Agreement between the Government of India and the European Union. 18. The Commissioner (Appeals) failed to notice the amendment made in clause 3(b) of Agreement while recording a finding that the plant and machinery was provided on a loan which was to be repaid. 19. On a plain reading ..... X X X X Extracts X X X X X X X X Extracts X X X X
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