2004 (2) TMI 96 - AT - Customs

Tribunal Modifies Import Ruling: Confirms Confiscation, Lowers Fine, Removes Penalty for Insufficient Evidence.

The Tribunal upheld the Commissioner's decision that the imported goods were components, not a complete Hot Mix Plant, denying duty exemption under ... CHA for clearance of imported goods from Germany - Importer - Joint Venture - Hot mix plant batch type with electronic controls and bag tyre filter arrangement 160 tons per hour capacity valued at DM - Exemption (Customs) - Fulfilment of Condition No. 38 of Notification No. 17/2001-Cus - Imposition of Penalty - HELD THAT:- Admittedly, the contract for the road construction work was awarded to the Joint Venture of SPCL and IVRCL by the National Highways Authority of India under an agreement executed between NHAI (represented by General Manager (East-I) and the SPCL-IVRCL Joint Venture (represented by authorized representatives of the two companies). The Joint Venture was constituted under the Joint Venture Agreement, dated 23-10-2000, which we have perused. This Agreement indicates that the parties had agreed to from a Joint Venture to prequalify and, if successful, tender for the road works of NHAI 'under joint and several responsibilities sharing risks, liabilities, payable and receivable monies in proportion as mutually agreed towards performance of these contracts and their successful completion'. As the Joint Venture was a legal entity i.e. a juridical person as ruled by the Apex Court in the case of New Horizons [1994 (11) TMI 203 - SUPREME COURT], it was also a 'person' for the purpose of Condition No. 38 which stipulated that the goods should be imported by a person who had been awarded a contract for construction of roads in India by NHAI. Therefore, we are of the view that the importation and clearance of goods by IVRCL should be considered as having been done by the Joint Venture fulfilling Condition No. 38 of the Notification. In view of the Supreme Court's ruling that a Joint Venture is a legal entity in the nature of partnership, we are unable to follow Gammon India (supra) which, we respectfully observe, was decided per incuriam. Whether the goods imported and cleared under the Bill of Entry filed by IVRCL were eligible for the benefit of exemption in terms of Sr. No. 217 of the Table (read with Item No. (1) in List-11) annexed to the notification - It is clear from the facts that some of the components viz. structures for the hot mix plant were supplied by Marshall, that the amount paid to them towards cost of such components and cost of assembling of Hot Mix Plant was DM 356,574, that the amount paid by IVRCL to Lintec for the components supplied by the latter was DM 550,000 and that the total cost of the hot mix plant as erected at the project site was DM 906,574. Lintec's letter to IVRCL vide Annexure-5 itself had called upon the appellants to place the necessary order with Marshall for their share of the deal of setting up hot mix plant. Only 9 containers were listed in the first annexure to that letter, which represented the 'Lintec scope of supply'. The second annexure to the letter, representing the 'Marshall scope of supply', mentioned 2 containerised items besides structural parts. The documentary evidence is squarely in support of the Commissioner's finding that only some components of hot mix plant were imported from Germany by the appellant-company. The term 'accessories' does not figure in the description of goods at Item No. (1) of List-11 under the notification. Moreover, some essential components of hot mix plant were not imported but locally procured. The appellants have not established that all those parts locally procured through Marshall were only accessories to the hot mix plant. On the other hand, the available evidence shows that those parts were essential components of the plant. The imported goods in question did not come anywhere near the description at Item No. (1) of List-11 under the notification and, therefore, the benefit of exemption cannot be extended to them. Thus, we hold that the appellant-company satisfied Condition No. 38 of Notification No. 17/2001-Cus. but the goods imported and cleared under Bill of Entry No. 369413, dated 28-12-2001 was not a hot mix plant covered by Item No. (1) of List-11 read with Sr. No. 217 under the notification and, therefore, the benefit of exemption under the notification was not available to them. The final assessment of the Bill of Entry as ordered by the Commissioner is sustained. It follows from our findings already recorded that the appellants had misdeclared the goods in the Bill of Entry. Therefore, we do not find any reason to interfere with the order of confiscation of the goods u/s 111(m) of the Customs Act. However, the redemption fine of Rs. 5 lakhs imposed by the Commissioner on IVRCL u/s 125 of the Customs Act appears to be on the higher side. Thus, we reduce the fine to Rs. 1 lakh. A penalty of Rs. 1 lakh was imposed on IVRCL u/s 112 of the Act by the Commissioner. We find that this penalty is not supported by requisite finding against the importer. Such a penalty can be imposed only if it is found on the basis of adequate evidence that the appellant-company had rendered the goods liable to confiscation u/s 111 of the Act. Such a finding is not forthcoming in this case. We, therefore, set aside the penalty. The impugned order shall stand modified to the aforesaid extent and the appeal stands disposed of. Issues Involved:1. Whether the imported goods conform to the description of item No. 1 in List-11 under Notification No. 17/2001-Cus.2. Whether IVRCL was an eligible importer in terms of Condition No. 38 of the Notification.Summary:Issue 1: Description of Imported GoodsThe appellants filed Bill of Entry for clearance of imported goods declared as 'Hot mix plant batch type with electronic controls and bag tyre filter arrangement 160 tons per hour capacity' under Customs Tariff Heading 8474.80 at 'nil' rate under Notification No. 17/2001-Cus. The Commissioner of Customs held that the imported goods were only components and not a complete Hot Mix Plant, thus denying the benefit of duty exemption. The Tribunal found documentary and oral evidence supporting the Commissioner's finding that only some components of the hot mix plant were imported, and not the complete plant. Therefore, the goods did not satisfy the description at Item No. (1) of List-11 under the Notification, and the benefit of exemption could not be extended to them.Issue 2: Eligibility of IVRCL as ImporterThe contract for road construction was awarded to the Joint Venture of SPCL and IVRCL by NHAI. The Tribunal held that the Joint Venture was a partnership, and any of the partners, including IVRCL, was competent to import goods for the Joint Venture. The Tribunal referenced the Supreme Court's judgment in New Horizons Ltd. & Another v. Union of India & Others to support the partnership concept of a Joint Venture. The Tribunal concluded that IVRCL fulfilled Condition No. 38 of the Notification, thus being an eligible importer.Additional Findings:The Tribunal sustained the final assessment of the Bill of Entry and the order of confiscation of goods u/s 111(m) of the Customs Act for misdeclaration. However, the redemption fine was reduced from Rs. 5 lakhs to Rs. 1 lakh, and the penalty of Rs. 1 lakh imposed u/s 112 of the Customs Act was set aside due to lack of requisite finding against the importer. The appeal was disposed of with these modifications.