2008 (5) TMI 13 - SC - Customs

Supreme Court affirms exemption for imported crane under Heading 84.26, values at US $34,84,500

Commissioner of Customs, (Prev.) Versus M/s Reliance Petroleum Ltd.

The Supreme Court upheld the validity of exemption notification No.11/97-Cus and classified the imported crane as a mobile crane under Heading 84.26, ... Exemption under notification no. 55/97 customs to various imported goods including EOT mobile crane required for setting up crude petroleum refinery subject to fulfilment of certain conditions - The terminologies used in the notification would have an important role to play. Where the exemption notification ex facie applies, there is no reason as to why the purport thereof would be limited by giving a strict construction thereto. Revenue appeal dismissed with cost. Issues Involved:1. Validity of the exemption notification No.11/97-Cus dated 1.3.1997 as amended by notification No.55/97-Cus dated 13.6.1997.2. Classification of the imported crane as a mobile crane or material handling equipment.3. Valuation of the imported crane.Detailed Analysis:1. Validity of the Exemption Notification:The appeal questioned the validity of the exemption notification No.11/97-Cus dated 1.3.1997, as amended by notification No.55/97-Cus dated 13.6.1997, which granted exemption to various imported goods, including EOT mobile cranes required for setting up crude petroleum refineries, subject to certain conditions. The Supreme Court upheld the validity of the notification, emphasizing that it must be interpreted broadly. The notification aimed to grant exemptions to equipment necessary for setting up crude petroleum refineries, and the equipment in question fell under this category.2. Classification of the Imported Crane:The core issue was whether the imported crane, when placed on a vehicle, fulfilled the description of a mobile crane or material handling equipment. The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) and the Commissioner (Appeals) had classified the crane under Heading 84.26, which pertains to mobile cranes, and granted the benefit of the exemption notification. The Tribunal noted that the crane, even though imported in parts and reassembled, was intended to function as a mobile crane. The Tribunal emphasized that the crane's mobility, provided by the self-propelled modular transport system (SPMTS), was essential for its function at different locations in the refinery. The Supreme Court agreed with the Tribunal's findings, stating that the crane was indeed a mobile crane and fell under the exemption notification.3. Valuation of the Imported Crane:The valuation of the crane was another significant issue. The respondent had declared the value of the imported crane as US $34,84,500 (CIF), which was contested by the customs authorities, who assessed the value at DFL 60,00,000/-. The Commissioner (Appeals) and the Tribunal found that the valuation by the customs authorities was not justified. The Tribunal noted that the crane was a second-hand machinery imported for a specific job and had already been re-exported. The Tribunal also highlighted that the customs authorities had not provided adequate comparable goods for valuation and had incorrectly added 1% transportation charges, contrary to Rule 9(2)(b) of the Valuation Rules. The Supreme Court upheld the Tribunal's findings, stating that the valuation provided by the respondent was plausible and that there was no evidence of fraud or suppression by the respondent.Conclusion:The Supreme Court dismissed the appeal, upholding the findings of the Commissioner (Appeals) and the Tribunal. The Court emphasized that the purpose of the exemption notification was to facilitate the setting up of crude petroleum refineries and that the imported crane, classified as a mobile crane, fell within the scope of the exemption. The Court also agreed with the Tribunal's valuation of the crane, noting that the customs authorities had not provided a justified basis for their valuation. The appeal was dismissed with costs assessed at Rs.50,000/-.This comprehensive analysis preserves the legal terminology and significant phrases from the original judgment, providing a detailed understanding of the issues and the Court's reasoning.