2018 (6) TMI 21 - AT - Customs

Tribunal allows project registration under Project Import Regulations without direct foreign supplier contract

The tribunal dismissed the Revenue's appeal, allowing M/s Hindustan Construction Co. Ltd. and M/s Nagarjuna Construction Company Ltd. to register the ... Grant of registration for the project - Classification - custom duty demand - Project import - project relating to Water Supply project - appellants to be granted registration when they are not direct party to the import contract ? - registration denied no contract between the importer and the supplier and that the project is an irrigation project and not a water supply project - Held that:- The regulation does not require the importer to enter into contract with foreign supplier. It merely require existence of a contract under which imports are made - If the Project Import Regulation 1986 do not mandate any such condition the same can not be imposed by the terms of Customs Manual - The Project can be registered under the regulation by the Appellants even if the appellants are not a direct party to import contract. Classification of projects - project relating to ‘Water Conductor System’ - Difference between irrigation project and water supply project - whether the items imported by them are classifiable as Irrigation project under heading 98010012 or as Water Supply Projects notified vide N/N. 42/96 –Cusdt 23.7.96 under heading 98010019? - N/N. 14/2004-Custom dated 8.1.2004 - Held that:- This ‘Water Conductor System’ only relates to the lifting of water from one point and through pump houses and pipelines supplying to the recipient tanks at destination. Thus the entire project may be of Irrigation, but the part we are dealing with is only related to movement and lifting of water from one point to another. Thus it cannot be called an irrigation project but it can only be called a Water Supply project in that sense. Revenue has argued that since the project of the appellant is just lifting and supplying the water the same is not covered by the said expression. Revenue has relied on the decision of Tribunal in case of Pratibha Industries [2004 (9) TMI 278 - CESTAT, MUMBAI] - Held that:- It is seen that the facts in the said case are significantly different. In the said case the goods imported were not machineries but were pipes and therefore they were not covered under chapter heading 9801. In the instant case the goods imported are machineries and term ‘Water Supply Project’ has been described in the explanation. Thus the facts of case are different. Revenue also argued that even if it is a water supply project it would merit classification as Irrigation project as it is part of an irrigation project - Held that:- the entire irrigation project has not been imported. Just one component of the irrigation project has been imported therefore the ratio of the said decision does not apply - Had the complete irrigation project been imported then all components forming part of the irrigation projects would have been classified as irrigation project. Benefit of N/N. 14/2004-Custom dated 8.1.2004 - Held that:- Since the project is classifiable as ‘Water Supply Project’ the benefit of the notification 14/2004-Cus will also be available. Appeal dismissed - decided against Revenue. Issues Involved:1. Eligibility for registration under Project Import Regulations (PIR) 1986 without a direct contract with the foreign supplier.2. Classification of imported items as either an Irrigation Project or a Water Supply Project.3. Entitlement to the benefit of exemption notification 14/2004-Customs dated 8.1.2004.Issue-wise Detailed Analysis:1. Eligibility for registration under PIR 1986 without a direct contract with the foreign supplier:The Revenue argued that the appellants, M/s Hindustan Construction Co. Ltd. (HCC) and M/s Nagarjuna Construction Company Ltd. (NCC), could not be registered under PIR 1986 as they did not have a direct contract with the foreign supplier. However, the tribunal found that Regulation 4 of the PIR 1986 does not mandate that the importer must have a direct contract with the foreign supplier. It merely requires the existence of a contract under which imports are made. The tribunal held that the project could be registered under the regulation by the appellants even if they were not direct parties to the import contract.2. Classification of imported items as either an Irrigation Project or a Water Supply Project:The Revenue contended that the project should be classified as an Irrigation Project under heading 98010012, arguing that specific entries prevail over general/residual entries. However, the tribunal examined the project scope and found that the part of the project in question related to the lifting and transporting of water, described as a 'Water Conductor System' in the project report. The tribunal concluded that this part of the project could be classified as a Water Supply Project, not an Irrigation Project, as it involved moving water from one point to another without making it fit for agricultural or industrial use.3. Entitlement to the benefit of exemption notification 14/2004-Customs dated 8.1.2004:The Revenue argued that the project did not qualify for the exemption as it was not intended to make water fit for agricultural use. The tribunal, however, found that the project was indeed a Water Supply Project and thus eligible for the benefit of the exemption notification 14/2004-Customs. The tribunal also noted that the essentiality certificates issued by the sponsoring authority confirmed the nature of the project and its eligibility for the benefits under the Customs Notification.Conclusion:The tribunal dismissed the Revenue's appeal, holding that the appellants could register the project under PIR 1986 without a direct contract with the foreign supplier, classified the project as a Water Supply Project, and entitled the appellants to the benefits of exemption notification 14/2004-Customs.