2022 (11) TMI 60 - AT - Customs

Tribunal overturns decision denying benefits under Project Imports Regulations, 1986, emphasizing statutory intent.

M/s. Polixel Security System Pvt. Ltd. Versus Commissioner of Customs (Import), New Delhi

M/s. Polixel Security System Pvt. Ltd. Versus Commissioner of Customs (Import), New Delhi - TMI Issues:- Denial of benefit of Project Imports Regulations, 1986- Upholding of payment of customs duty, interest, and penalty- Violation of Regulation 7 of Project Import Regulations, 1986Denial of Benefit of Project Imports Regulations, 1986:The appellants filed appeals challenging the Order-in-Appeal confirming the denial of benefit under Project Imports Regulations, 1986. The appellants were engaged in importing goods for a project and submitted necessary documents for duty exemption. However, the Department alleged a violation of Regulation 7 of PIR, proposing the recovery of total duty, interest, and penalty. The Commissioner (Appeal) confirmed this denial, leading to the appeals before the Tribunal. The appellants argued that the procedural lapse should not override their eligibility for the benefit under PIR and that the delay in submitting required documents was beyond their control. On the other hand, the Department contended that the violation of Regulation 7 was admitted by the appellants and that the Commissioner (Appeal) rightly relied on a previous court decision. The Tribunal analyzed the situation and concluded that the denial based on a procedural provision was incorrect, setting aside the findings and remitting the cases for assessment based on the project contract.Upholding of Payment of Customs Duty, Interest, and Penalty:The Order-in-Appeal upheld the payment of customs duty, interest, and penalty as confirmed by the original adjudicating authority. The appellants argued that the denial of benefits under PIR was unjustified due to a procedural lapse and that their eligibility was not in question. The Department argued that the violation of Regulation 7 was admitted by the appellants and that the Commissioner (Appeal) correctly relied on a court decision. The Tribunal considered the purpose of the statute to grant a beneficial rate of duty for setting up new projects and found that the denial based on a procedural provision was incorrect. Consequently, the Tribunal set aside the findings and remitted the cases for finalizing the assessment based on the project contract.Violation of Regulation 7 of Project Import Regulations, 1986:The main controversy in the case revolved around whether the violation of Regulation 7 of Project Import Regulations, 1986 was sufficient to deny the duty benefit to the appellants. The provision required the submission of a statement within a specified time, but the Tribunal found that the provision was not mandatory but directory. It noted that the conditions of Regulation 7 were meant to facilitate finalization of provisional assessment and did not affect the eligibility for a lower rate of duty. Citing relevant court decisions, the Tribunal concluded that the denial of benefits based on a procedural provision was unwarranted. The Tribunal set aside the findings and remitted the cases for assessment based on the project contract.