2000 (10) TMI 64 - AT - Customs

Imported auxiliary machinery for initial fertiliser plant setup, later-use doubts rejected; project import benefit under Heading 98.01/84.66 allowed.

The dominant issue was whether imported auxiliary machinery, fully utilised for initial setting up of a specified fertiliser project, qualified for ... Classification of machinery and equipment - benefit of the Notification - Project import - imported goods after being fully utilised for the specified fertiliser project - Whether the expression 'specified' in the Tariff item 84.66 of CTA includes named project in a particular place or in several places? - HELD THAT:- Once the fertiliser plant is covered by the industrial plants specified in Heading 98.01 of C.T.A., all the auxiliary equipments which are required for the initial setting up of the unit can be imported under the Project Import Scheme. The mere fact that the equipment would be acting as an aid would not debar them from being covered by Heading 98.01 as it specifically mentions auxiliary equipment which according to Dictionary means a thing that helps; aid. The mere possibility of their use subsequently would not debar the importer from the facility of project import. If the contention of the Revenue is accepted, no equipment can be imported for projects like Konkan Railway Project, Road Development Projects of the National Highway Authority of India, etc. specified under Heading 98.01 as certainly the machinery imported for carrying out these works cannot become a part and parcel of the project or may not be owned by the project authority. We are, therefore, of the view that the grounds on the basis of which both the lower authorities denied the facility of project import to the appellants are not correct. No evidence has been brought on record by the Revenue to prove that the impugned goods were taken for use for any other project after these were utilised for initial setting up of the project for which these were imported except a mere statement during the course of hearing before the Collector (Appeals) that it could be used for other project/plants. We are, therefore, of the view that the appellants are eligible for project import of the goods in question under Heading 98.01. In view of the findings that the benefit of project import is available to the Appellants, the second question referred, to by the Referal Bench being only of academic interest is not answered in the present matter. Issues involved: The classification of machinery and equipment imported by M/s. Toyo Engineering India Ltd. under Heading 98.01 of the Customs Tariff Act, 1975 for the benefit of Project Import under the Project Import Regulation.Details of the Judgment:Issue 1: Denial of benefit under Project Import SchemeThe appeal was filed against the denial of classification under Heading 98.01 for imported machinery and equipment. The imported goods were used in the initial setting up of a fertiliser plant. The Assistant Collector and the Collector (Appeals) rejected the request for registration under Project Import Regulation, stating that the imported goods would remain the property of the importer and could be used for other projects. The Tribunal held that the machinery imported for the specified project qualifies for classification under Heading 98.01 as auxiliary equipment required for the initial setting up of the unit. The Tribunal emphasized that the mere fact that the equipment could be used elsewhere later does not disqualify them from being covered by Heading 98.01.Issue 2: Contract Registration and ComplianceThe Revenue argued that the absence of a specific registered contract for the import of construction material disqualifies the goods from classification under Heading 98.01. They referred to Chapter 98 Note (2) and Regulation 4 of the Project Imports Regulations, 1986. However, these arguments were raised for the first time before the Tribunal, and it was held that new pleas cannot be considered at the appeal stage. The Tribunal found no evidence that the imported goods were used for any other project after the initial setting up, thus confirming the eligibility of the appellants for project import under Heading 98.01.Conclusion:The Tribunal ruled in favor of M/s. Toyo Engineering India Ltd., stating that the machinery imported for the fertiliser plant project qualifies for classification under Heading 98.01 as auxiliary equipment for the initial setting up of the unit. The denial of the benefit of project import was overturned, and it was established that the appellants are eligible for project import of the goods under Heading 98.01. The second question referred regarding the use of imported goods for other projects was deemed of academic interest and not answered in the present matter.