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TMI Blog2004 (2) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ring risks, liabilities, payable and receivable monies in proportion as mutually agreed towards performance of these contracts and their successful completion . As the Joint Venture was a legal entity i.e. a juridical person as ruled by the Apex Court in the case of New Horizons [ 1994 (11) TMI 203 - SUPREME COURT] , it was also a person for the purpose of Condition No. 38 which stipulated that the goods should be imported by a person who had been awarded a contract for construction of roads in India by NHAI. Therefore, we are of the view that the importation and clearance of goods by IVRCL should be considered as having been done by the Joint Venture fulfilling Condition No. 38 of the Notification. In view of the Supreme Court's ruling that a Joint Venture is a legal entity in the nature of partnership, we are unable to follow Gammon India (supra) which, we respectfully observe, was decided per incuriam. Whether the goods imported and cleared under the Bill of Entry filed by IVRCL were eligible for the benefit of exemption in terms of Sr. No. 217 of the Table (read with Item No. (1) in List-11) annexed to the notification - It is clear from the facts that some of the component ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner on IVRCL u/s 125 of the Customs Act appears to be on the higher side. Thus, we reduce the fine to Rs. 1 lakh. A penalty of Rs. 1 lakh was imposed on IVRCL u/s 112 of the Act by the Commissioner. We find that this penalty is not supported by requisite finding against the importer. Such a penalty can be imposed only if it is found on the basis of adequate evidence that the appellant-company had rendered the goods liable to confiscation u/s 111 of the Act. Such a finding is not forthcoming in this case. We, therefore, set aside the penalty. The impugned order shall stand modified to the aforesaid extent and the appeal stands disposed of. - S/Shri V.K. Agrawal, Member (T) and P.G. Chacko, Member (J) [Order per : P.G. Chacko, Member (J)]. - The appellants filed Bill of Entry (for home consumption) No. 369413, dated 28-12-2001 through CHA for clearance of imported goods from Germany declared as Hot mix plant batch type with electronic controls and bag tyre filter arrangement 160 tons per hour capacity valued at DM 550,000/-. Clearance was sought under Customs Tariff Heading 8474.80 at 'nil' rate under Notification No. 17/2001-Cus., dated 1-3-2001. The notification vide Serial No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as Hot Mix Plant and that the appellant-company had not been duly authorized by the National Highways Authority of India (NHAI) to import such plant. The appellants waived show cause notice and made written and oral submissions pleading for the benefit of the Notification. The Commissioner of Customs who finalized the assessment passed the following order : "(i) I hold that the goods imported vide Bill of Entry No. 369413, dated 28-12-2001 are only components and not Hot Mix Plant. (ii) I deny the benefit of duty exemption vide Notification No. 17/2001. (iii) I order the finalisation of the provisional assessment by treating the goods imported as components of the plant. (iv) I confiscate the goods under Section 111(m) of the Customs Act, 1962, for misdeclaration of the description of the imported goods. However, I give the importers the option to redeem the goods on payment of a fine of Rs. 5,00,000/- (Ruppes five lakhs only) under Section 125 of the Customs Act, 1962. (v) I also impose a penalty of Rs. 1,00,000/- (Rupees One lakh only) under Section 112(a) of the Customs Act, 1962 on the importers M/s. IVRCL Infrastructure Projects Ltd., Hydrabad." 2.Heard both sides. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02 issued to the Chief Commissioner of Customs by the Chief General Manager (Technical) of NHAI. Leaned Counsel argued that the relevant entry in List-11 under the Notification required to be given a liberal interpretation. The word "with" occurring in the entry ["Hot Mix plant batch type with electronic controls and bag type filter arrangements, more then 120 T/hour capacity"] was not to be taken in a restrictive sense so as to deny the benefit of the Notification to the goods imported, particularly in view of NHAI's recommendation. In this context, reliance was placed on the Tribunal's decision in Konkan Synthetic Fibres Ltd. v. CCE, Mumbai [2003 (157) E.L.T. 433 (Tribunal) = 2003 (59) RLT 935]. 3.On the second issue whether IVRCL was an eligible importer in terms of Condition No. 38 of the Notification, Counsel submitted that the view taken by the Commissioner was not correct inasmuch as a Joint Venture was not a legal person and any of the two partners (viz. IVRCL and SPCL) of the Joint Venture was competent to import requisite machinery for the road project under the Joint Venture Agreement as well as under the contract between the Joint Venture and NHAI. Ld. Counsel relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Ltd. [2003 (156) E.L.T. 883] in this context. Reliance was also placed on the Supreme Court's judgments in Novopan India Ltd. v. CCE [1994 (73) E.L.T. 769 (S.C.)] and Mediwell Hospital Health Care (P) Ltd. v. UOI [1997 (89) E.L.T. 425 (S.C.)]. In his rejoinder, ld. Counsel argued that the ratio of the Apex Court's decision in New Horizons (supra) was not correctly applied in Gammon India (supra). 6.We have given careful consideration to the submissions. There are two substantive issue before us, as stated by ld. Counsel. The second issue stated by him will be considered first as it is more fundamental then the first. Admittedly, the contract for the road construction work was awarded to the Joint Venture of SPCL and IVRCL by the National Highways Authority of India under an agreement executed between NHAI (represented by General Manager (East-I) and the SPCL-IVRCL Joint Venture (represented by authorized representatives of the two companies). The Joint Venture was constituted under the Joint Venture Agreement, dated 23-10-2000, which we have perused. This Agreement indicates that the parties had agreed to from a Joint Venture to prequalify and, if successful, tender for the ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Notification to the imports made by IVRCL, who was neither a contractor nor a sub-contractor of the purpose of Condition No. 38, according to the Commissioner. Obviously, ld. Commissioner has treated the SPCL-IVRCL combine as a Joint Venture Company and as a legal entity distinct from the constituent companies. He fell into a gross error inasmuch as the SPCL-IVRCL combine was not a Company by itself but only a Joint Venture in the nature of partnership. There was no evidence on record to show that SPCL and IVRCL had set up a Joint Venture corporate entity for the purpose of contracting with NHAI and executing the road project. What they formed was a sort of partnership wherein SPCL and IVRCL had joint and several responsibilities and liabilities in respect of execution of the contract awarded by NHAI. SPCL and IVRCL were in the shoes of the partners of the partnership firm and the former was to function more or less like a managing partner. The Joint Venture had the trappings of a partnership firm under the Indian Partnership Act. Therefore, in our view, the general principles of partnership under the Indian Law were applicable to the SPCL-IVRCL Joint Venture. Accordingly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the National Highways Authority of India. In the instant case, such a contract was awarded by NHAI to the SPCL - IVRCL Joint Venture, which, as we have already found, was a partnership of the two companies. Any of the partners was competent to import goods for and on behalf of the contractor viz. the Joint Venture. Therefore, IVRCL (appellant-company) satisfied Condition No. 38 of the notification. The Revenue has taken a contra view by relying on the Tribunal's decision in Gammon India (supra), wherein it was held that M/s. Gammon India Ltd., the partner-in-charge in a Joint Venture with M/s. Atlanta Infrastructure Ltd. was not competent to import and present Bill of Entry for clearance of goods covered by Entry No. 217 to the Table to Notification No. 17/2001-Cus. on behalf of the Joint Venture. Ld. Counsel for the appellants has expressed the view that the concept of Joint Venture was not correctly understood in Gammon India Ltd. (supra). Counsel, in this connection, has relied on the Supreme Court's decision in New Horizons (supra). 8.In the case considered by the Apex Court, a Joint Venture company viz. New Horizons Ltd. (NHL, for short) consisting of a few Indian companies (w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etent to act on behalf of the Joint Venture Company. Their lordships recognized the partnership concept of Joint Venture and, from a commercial standpoint, found NHL to be a Joint Venture vide paragraphs 24, 25 and 26 of their judgment : The expression "joint venture" is more"24. frequently used in the United States. It connotes a legal entity in the nature of a partnership engaged in the joint undertaking of particular transaction for mutual profit or an association of persons or companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks. It requires a community of interest in the performance of the subject-matter, a right to direct and govern the policy in connection therewith, and duty, which may be altered by agreement, to share both in profit and losses (Black's Law Dictionary, 6th Edn., p. 839). According to Words and Phrases, Permanent Edn., a joint venture is an association of two or more persons to carry out a single business enterprise for profit (p. 117, Vol. 23). A joint venture can take the form of a corporation wherein two or more persons or companies may join together. A joint venture corporation has been defined as a corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell. After a threadbare analysis of case law on 'lifting/piercing the corporate veil", they held in para 38 as below : - "Seeing through the veil covering the face of NHL it will be found that as a result of reorganisation in 1992 the Company is functioning as a joint venture wherein the Indian group (TPI, LMI and WML) and Mr. Aroon Purie hold 60% shares and the Singapore based company (IIPL) holds 40% shares. Both the groups have contributed towards the resources of the joint venture in the form of machines, equipment and expertise in the field. The Company is in the nature of a partnership between the Indian Group of companies and the Singapore-based company who have jointly undertake this commercial enterprise wherein they will contribute to the assets and share the risks. In respect of such a joint venture company the experience of the company can only mean the experience of the constituents of the joint venture, i.e. the Indian group of companies (TPI, LMI and WML) and the Singapore-based Company (IIPL)". (Emphasis supplied) 9.We find that, in the case of Gammon Indian (supra), this Tribunal observed to the effect that Gammon - Atlanta Joint Venture was not a corporation and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix plant was not imported and that only some components thereof were imported. The appellants have contended that, barring some steel structure, all the essential components of hot mix plant were imported in terms of purchase order placed on the German supplier. We have come across two purchase orders in the file, marked as Annexures - 4 and 6 of the memorandum of appeal, both identically numbered and identically dated (No. 11 dated 21-7-2001). The Annexure-4/purchase order shows an amount of DM 906,574 while Annexure-6/purchase order shows an amount of DM 550,000 as the total price of what is described as "hot mix plant (batch type) CSD 2500, CAP 160 tons per hour as per specifications enclosed". It has been claimed by the appellants that the amount shown in Annexure-6/purchase order is the final price as settled through negotiations with the German Supplier. We have already noted that both the purchase orders are identically numbered and identically dated. Any negotiation between IVRCL and the German supplier should have taken place on 21-7-2001 itself. No evidence of any such negotiation is available on record. We have also come across the work order issued by IVRCL to M/s. Mars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not complete without addition of the indigenous items. Sh. M.V.N. Rao of NHAI stated, after examining the import documents, that the complete plant had not arrived and that the imported components did not have the essential characteristics of hot mix plant. All these statements - none of them retracted or controverted - coupled with the documentary evidence would prove beyond doubt that the goods imported by IVRCL did not represent anything with essential character of a hot mix plant, let alone a complete plant, to satisfy the description at Item No. (1) of List -11 under the Notification. Therefore, we are unable to accept the Counsel's argument that the imported goods should be treated as 'hot mix plant unassembled.' What was exempted from import duty in terms of Sr. No. 217 read with Item No. (1) of list 11 under the Notification was a complete hot mix plant fully described at the said Item No. (1) and not some components thereof. There can be no doubt or ambiguity with regard to the description of goods at the said Item No. (1). 12.Ld. Counsel has relied on the Tribunal's decision in Konkan Synthetics Fibres Ltd. (supra) to argue that the relevant entry in List 11 should be l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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