TaxTMI 
TaxTMI 
2008 (7) TMI 494
X X X X Extracts X X X X
X X X X Extracts X X X X
....00 M.Ts. Therefore, it also had a licence for manufacture of not only Superphosphate but also Sulphuric Acid. At the time of the filing of the writ petition, it produced 16,500 M.Ts. Sulphuric Acid per annum which was also sought to be increased to 30,000 M.Ts. per annum. The total expansion project was estimated to be Rs. 215 lakhs out of which the cost of import was to the extent of Rs. 58 lakhs. The petitioner, in order to save foreign exchange, decided to import only one equipment, viz., Steam Turbine. For the purpose of importing the Steam Turbine, it received quotations from three reputed Turbine manufacturers, viz., two in India and one based in Germany, a company called M/s. KKK. The petitioner was advised by the consultants to go in for the turbine manufactured by M/s. KKK of Germany which suited for its technical requirements. Accordingly, the petitioner placed orders with the German Company and opened a Letter of Credit through its bankers on 23-1-1998. 4. The Government of India, with a view to accelerate industrial growth, had issued Project Imports Regulations (PIR), 1986. in respect of the petitioner's project expansion in manufacturing fertilizers, the goods impo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in that the Steam Turbine was an integral part of their Fertilizer Project and the installation of it will not only be a saving in terms of electricity but the Turbine itself will be operated with the energy produced during process. 7. However, the first respondent, after their consultation with the Ministry of Finance, passed an order dated 7-7-1999, which reads as follows :- "I am directed to refer to your letter No. Indl. Lic/1248, dt. August 7, 1998 on the subject mentioned above and to say that the matter was examined in consultation with Ministry of Finance, Department of Revenue, it is informed that the captive power plants of capacity less than 5 MW will be liable to duty at the merit rate and not the rate as applicable to Fertilizers Projects. In view of the above, the list of goods for 475 KW captive power plant does not require any attestation from the Department." Thus saying, they refused to grant an Essentiality Certificate as required. It is this order, which is under challenge in this writ petition. 8. Pending the writ petition, an interim stay was granted on 20-7-1999. Subsequently, it was allowed to be continued by an order dated 20-8-1999. A direct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed the goods (i.e., steam Turbine) required by the petitioner as part of the expansion of its fertilizer project or it should be treated as a captive Power Plant. 12. In the present case, the expansion project envisaged by the petitioner included the Steam Turbine, which is an integral part of the petitioner's expansion project. This was not taken note of by the petitioner. While construing the scope of heading 84.66 (presently 98.01.), this Court in Appraiser, Madras Customs v. Tamil Nadu Newsprint and Papers Ltd. [(1988) 36 E.L.T. 272 (MAD) = MANU/TN/0034/1988] held that the said heading is not a residuary heading or a general heading relating to any class of goods. It is the specific entry introduced with a purpose and it relates to goods imported for initial setting up of a unit or a substantial expansion of an existing unit. It was held that when an importer registers a contract under the specific entry No. 84.66 (now 98.01), all the goods imported by him under that contract will be subjected to duty only as per that entry and it will not be open for the Revenue to pick out some of the goods imported under that contract and impose a different rate of duty on the footi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cording to the assessee, an essentiality certificate constituted a proof fulfilment of the eligibility conditions by the importer for obtaining the benefit of exemption notification. According to the assesee, project imports fell under a specific Heading 98.01. According to the assessee, the import of capital goods indicted in the list annexed to the essentiality certificate showed that the sponsoring Ministry cleared the project on the footing that, in this particular case, looking to the ground reality in the area in which the plant was located, in which there was paucity of electricity, 6 MW Captive Power Plant was an essential requirement for expansion of the fertilizer project. According to the assessee, the essentiality certificate along with the attested list constituted a proof of the need to expand the fertilizer project and for that Captive Power Plant was an essential part. According to the assessee, it was not open to the Revenue to say that the Captive Power Plant was not an essential requirement for the expansion of the fertilizer project, once an essentiality certificate stands issued by the sponsoring Ministry. In this connection, reliance is placed by the assessee ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e us, it has been vehemently urged that although the essentiality certificate stood issued by the sponsoring Ministry, there is non-application of mind by that Ministry with regard to the list of items appended to the certificate. According to the Department, the said list has not been countersigned by the competent authority in the sponsoring Ministry. We do not find any merit in the said contention. The list consists of 14 items. The Department has accepted 13 out of 14 items as capital goods required for the fertilizer project, therefore, it cannot be said that the sponsoring Ministry had not applied its mind to the list appended to the essentiality certificate. This point needs further clarification. The power plant in the conceptual sense or in the technical sense is certainly different from the fertilizer plant. However, when we come to Heading 98.01 of the Customs Tariff Act, 1975, the assessment is for the project. As stated above, Heading 98.01 is the specific entry applicable in the case of Project imports. An item like a power plant could be in a given case an independent plant. Generally, it is a stand-alone equipment. However, when it becomes a part of the entire Proje....