Capital goods under SHIS were recognised for integrated plant imports, sustaining exemption for phased consignments.

Imported equipment supplied for a continuous annealing line and a continuous galvanizing line under an integrated expansion project was treated as capital goods, because the contract covered a complete plant and machinery package and the consignments were only phased deliveries of that single supply. The definition of capital goods under the Foreign Trade Policy and Notification No. 104/2009-Cus. was treated as materially identical, extending to plant, machinery, equipment and accessories used for manufacture, production, modernization, technological upgradation or expansion. Goods already accepted as capital goods under the EPCG regime were not denied SHIS treatment merely on that basis, and the contrary Revenue precedent was considered inapplicable. The exemption was therefore upheld for the importer.

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Issues: Whether the imported goods were capital goods eligible for exemption under the Status Holder Incentive Scheme and whether the benefit of Notification No. 104/2009-Cus. was available for clearance of the goods covered by the bills of entry.

Analysis: The import contract was for supply of equipment for a continuous annealing line and a continuous galvanizing line for an expansion project, and the goods formed part of an integrated plant and machinery package. The same contract price covered the entire supply, and the imports were made in phased consignments because the complete plant could not be shipped in one lot. The definition of capital goods in the Foreign Trade Policy and in the notification was treated as materially identical, covering plant, machinery, equipment and accessories required for manufacture, production, modernization, technological upgradation or expansion. The goods had already been accepted as capital goods under the EPCG regime, and the distinction sought by Revenue between EPCG and SHIS was rejected. The precedent relied on by Revenue was held to be inapplicable because the present imports were not mere components lacking essential character but parts of a specific plant and machinery project.

Conclusion: The imported goods were held to be capital goods eligible for SHIS benefit, and the exemption under Notification No. 104/2009-Cus. was upheld in favour of the assessee.

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