2016 (12) TMI 1314 - AT - Customs

Contractor for toll collection wins appeal under exemption notification for road construction projects

The Tribunal allowed the appeal in favor of the appellant, holding that the appellant, acting as a contractor for toll collection under an agreement with ... Benefit of nil rate of duty under Notification No. 21/2002 - interpretation of notification - denial on the ground that appellant is not appointed as a contractor or as a sub-contractor - Held that: - the lower authorities have erred in conceiving the exemption Notification. On perusal of the records we find that the agreement entered into between MSRDC, a Government of Maharashtra undertaking, and the appellant herein clearly indicates that the appellant is the contractor for collection of toll on various toll stations. The said contract is a tripartite contract between MSRDC, M/s Ideal Road Builders Pvt. Ltd. and the appellant herein M/s MEP Toll Road Pvt. Ltd. Reliance placed on the decison of the case of ITS SOLUTIONS INDIA PVT. LTD. Versus COMMISSIONER OF CUS., CHENNAI [2010 (10) TMI 149 - CESTAT, CHENNAI], where it was held that appellants contractor in the contract between the Govt., of Tamil Nadu and the Tamil Nadu Road Development Corporation (TNRDC) and hence they are satisfying clause (a)(iii) of Condition No. 40 of notification no. 21/2002, and entitled for benefit of notification. Appeal allowed - decided in favor of appellant-assessee. Issues:- Interpretation of exemption Notification No. 21/2002, Sr. No. 230 for import of toll barriers- Appellant's status as a contractor or sub-contractor in road construction projects- Application of exemption conditions and benefit eligibilityInterpretation of Exemption Notification:The appeal challenged Order-in-Appeal No: 794/2004-MCH regarding the import of toll barriers by the appellant under Notification No. 21/2002, Sr. No. 230 for toll collection. The lower authorities held that the benefit of the notification applies to a person named as a sub-contractor in road construction contracts by a road construction corporation under the State Government. However, the Tribunal found that the appellant, as per the agreement with MSRDC, is the contractor for toll collection and had sub-contracted the activity. The Tribunal referenced a similar case where the benefit of the exemption notification was extended due to the contractor-subcontractor relationship.Appellant's Contractor Status:The Tribunal noted that the appellant was appointed as a contractor for toll collection and imported the toll barriers for installation on the roads under a tripartite contract. The agreement clearly indicated the appellant's role as a contractor who sub-contracted the toll collection activity. This arrangement was found to fulfill the conditions of the exemption notification, as confirmed by the Tribunal's previous decision in a similar case.Application of Exemption Conditions:The Tribunal concluded that the appellant's status as a contractor for toll collection, as per the agreement with MSRDC, aligns with the requirements of the exemption notification. The toll barriers imported by the appellant were listed in the exemption notification, supporting their eligibility for the benefit. Therefore, the impugned orders were deemed unsustainable, set aside, and the appeal was allowed in favor of the appellant.This judgment clarifies the interpretation of exemption notifications in the context of contractor-subcontractor relationships in road construction projects, emphasizing the importance of contractual agreements and fulfilling the specified conditions for availing benefits under such notifications.