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TMI Blog2024 (8) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... nents in the form of Roller Sets , Spacers , Spares for Cold rolling Mills Blades for slitting Machines falling under Customs Tariff Item Nos. 84559000 82089090 respectively come under the ambit of definition of Capital Goods , which are to be used in the setting up Cold Roll Forming Mill Lines for manufacture of 'Engineering goods'. It is observed that in respect of all the 10 BEs, the respondent has imported capital goods or their accessories along with their spares/parts and therefore the benefit of the exemption is clearly available to the goods imported. The Chartered Engineer's certificate submitted by the Respondent clearly establish that the goods imported are integral parts/components of the capital goods which are essential to make the plant operational. It is observed that the Respondent has placed their reliance on the decision in the case of COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. JSW STEEL LTD. [ 2015 (10) TMI 2392 - CESTAT CHENNAI ], wherein it was held that Capital goods definition given under the notification is identical to the definition given in the FTP and covers 'plant, machinery, equipment or accessories required for manufacture, producti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Slitting Machines , Spacers Spares for Cold Rolling Mills etc falling under Customs Tariff Item Nos. 84559000 82089090, being parts/spares and components of capital goods namely Stainless Steel Slitting Machines Cold Roll Forming Mills . The import duty was debited from 3 (Three) Status Holder Incentive Scrips (SHIS) by availing benefit of the Notification No. 104/2009-Cus dated 14-09-2009, as amended. 2. Scrutiny of the records of import made by the Respondent revealed that they had used 3 (three) Nos. of SHIS licenses, for import of Capital Goods namely Stainless Steel Slitting Machines Cold Roll Forming Mills falling under Customs Tariff Item No. 84552000 and also Spares/ Parts and Components against a total number of 10 (Ten) Bills of Entry. All 3(three) SHIS licenses were either fully or partly used for import of Spares/Parts/Components of capital goods as mentioned above. 3. It was observed that while debiting duty from the aforesaid three licenses, about 100% and 15% respectively of the license values were used for such imports of Spares/Parts/Components, in violation of Para 3.16.3 of the Foreign Trade Policy (2009-14) and condition nos. 4(i) 4(iii) of the Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has dropped the demand of Customs duty and other proposals made in the Notice. Aggrieved against the dropping of the demands, Revenue has filed this appeal. 8. In their Grounds of Appeal, the Revenue has raised the following grounds: I. The definition of the Capital Goods' as per Para 3.16.3 of the Foreign Trade Policy (2009-14) restricts the ambit of such Capital Goods', within Plants, machinery, equipment or accessories only. Despite being an inclusive definition, it does not incorporate Parts, Spares Components within the extended definition of the Capital goods. The legislative intent becomes further clear from the fact that the same Policy had framed separate definitions of 'Spares', 'Parts' 'Components' in Para 9.57, 9.44 9.14 of the Foreign Trade Policy respectively. The definitions are as follows:- (i) Part means an element of a sub-assembly or assembly not normally useful by itself, and not amenable to further disassembly for maintenance purposes. A part may be a component, spare or an accessory. (ii) Component means one of the parts of a sub-assembly or assembly of which a manufactured product is made up and into which it may be resolved. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy, and it never mentions that such Capital Goods can be imported in CKD and SKD condition. On the contrary, when Chapter 5 of the Policy, that deals with import of Capital Goods under EPCG scheme and the relevant Customs Notifications 102/2009 103/2009 both dated 11-09-2009 are compared, there is a specific mention that such Capital Goods can be imported in CKD/SKD conditions too. Therefore, different wordings and different treatment in respect of two different Export Promotional Schemes under the same Policy, clearly indicate the legislative intent of not allowing import of Capital Goods in either CKD or SKD condition using SHIS licenses. In the absence of explicit provision, it cannot be presumed that import of Capital Goods in CKD/SKD conditions is admissible by debiting Customs duty from multiple licenses either. VI. There is no denial of the fact, that the Roller Sets, Spares, Blades and Parts of Rolling Mill falling under CTH 8455 9000 and 82089090 respectively, are nothing but Parts of Capital Goods. Such Work Rolls don't have any independent function. They become functional only when they are attached to the Capital Goods of which they are integral parts. Customs Tarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject goods do not qualify for the benefits availed by the importer. IX. The impugned goods failed to qualify as Capital Goods as such, and are not therefore covered by clause 1(b) of the notification. Despite being Components and Parts, they had no nexus with the Capital Goods imported earlier and for that reason, such goods do not get covered within the ambit of clause 1(b) of the subject notification; X. The ld. adjudicating authority grossly erred in interpreting the Policy as well as the conditions laid down in the Customs notification in proper perspective. The condition (4) (iii) of the notification specifically mentioned that imports of Spares, Parts Components are allowed upto ten percent of the duty credit amount in the said scrip originally issued . Para 3.16.3 of the Foreign Trade Policy (2009-14), as amended similarly stipulates that .....Only in respect of Capital Goods imported earlier, upto 10% value of the Duty Credit Scrip can be used for import of components, spares/parts of such Capital Goods . A combined reading of the notification and the Policy makes it clear that in both the cases, the emphasis has been given on the phrase the duty credit scrip . The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods imported were Capital Goods along with their parts some spares imported under BE No.7911209 dated 06.01.2015. The Chartered Engineer's Certificate dated 18.04.2015 categorically certified that entire Capital Goods imported under SHIS Scheme had been installed and the department had also accepted the same as a fulfilment of the obligations contained in the licence. (ii) They have furnished the undertakings as per Condition 5A of the said notification, as amended, which were subsequently cancelled on the basis of the certificate issued by the independent Chartered Engineer. (iii) The decision in the case of Commissioner of Customs, Chennai vs. JSW steel Ltd. [2016(340) ELT 262 (Tri Chennai)), cited by them is squarely applicable in the instant case as there was a Contract between supplier and Respondent under single quoted price for the import of entire equipment of plant and machinery for setting up of their Stainless Steel Slitting Line and Cold Rolled Forming Mill Lines for production of Railway Wagon and other related parts in their factory. (iv) In view of the above, the ld. adjudicating authority has rightly held that the allegations in the Show Cause Notice were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in services. 11.3. We observe that the goods imported by the Respondent are not merely spares/parts as alleged in the Notice. They are 'Capital Goods' as defined in the policy which is reproduced above. Further, we observe that the restriction of 10% is only with respect to import of components, spares/parts of capital goods imported earlier. Thus, import of capital goods (including accessories thereof) which have not been imported earlier, can be imported by utilizing SHIS without any restriction. The import of Parts/Spares/Components in the form of Roller Sets , Spacers , Spares for Cold rolling Mills Blades for slitting Machines falling under Customs Tariff Item Nos. 84559000 82089090 respectively come under the ambit of definition of Capital Goods , which are to be used in the setting up Cold Roll Forming Mill Lines for manufacture of 'Engineering goods'. In this regard, we observe that the Respondent has submitted Chartered Engineer's Certificate explaining the use of the imported spares/parts in the plant. 11.4. We observe that in respect of all the 10 BEs, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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