TaxTMI 
TaxTMI 
2011 (5) TMI 134
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....e shall be made against a custom duty exemption certificate (CDEC) provided to the applicant by HAL. 2 The applicant has claimed that the goods proposed to be imported by it for supplies to HAL are classifiable under heading 8803 of the First Schedule to the Customs Tariff Act, 1975 [CTA,1975] as parts of aircraft even though based on the individual description of the goods, these may independently be otherwise classifiable under different headings of the said First Schedule. The applicant has also claimed that it is eligible for the exemption from basic Customs duty and additional Customs duty on such imported parts in terms of the entry at Serial No. 10 of Notification No. 39/96-Cus dated 23.7.1996 on the basis of Customs Duty Exemption Certificate (CDEC) made available to it by HAL. The manner of certification and authority by whom the certificate will be signed have been described in the application. 3. The application was admitted by the Authority vide its Order dated 7th January, 2011 after ascertaining the comments of the concerned Commissioner. The following questions have been framed by the applicant for seeking the advance ruling: 1. Whether the applicant would ....
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....try as parts of aircrafts under heading 8803. The Commissioner has also drawn our attention to the Explanatory Notes of heading 8803 of the Harmonized System of Nomenclature (HSN) which is the basis for the First Schedule to the Customs Tariff Act. The Notes stipulate that to be eligible for classification under heading 8803, the following two conditions need to be complied with,- (i) The parts must be identifiable as being suitable for use solely or principally with the goods of the headings 8801 or 8802 ; and (ii) They must not be excluded by the provisions of the Notes to Section XVII. It has been further pointed out by the Commissioner that as per note (2) (b) of Section XVII, the expression "parts" and "parts and accessories" do not apply to the following articles, whether or not they are identifiable as for the goods of this section : " (a) ............. (b) Parts of general use, as defined in note 2 to Section XV, of base metal, or similar goods of plastics (Chapter 39). (c) ............" As per note 2 to Section XV, throughout the Schedule, the expression "parts of general use" means: (a) Articles of heading 73.07, 73.12, 73.....
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....lassification provided in the list." In view of the aforesaid developments and in view of the lack of detailed information before it, the Authority does not intend to go into the merits of the classification of various items adopted by the Commissioner of Customs and accepted by the applicant. 8. The second issue which has been raised by the applicant for determination by the Authority pertains to the eligibility of the applicant to claim exemption from basic Customs duty and additional Customs duty in terms of entry no. 10 of the Table in Notification No. 39/96-Cus dated 23.7.1996. Specifically, the question that needs to be addressed is whether the applicant can be said to have fulfilled the conditions specified against Serial No.10 by furnishing a duty exemption certificate obtained by it from the HAL in the form described in the application. A related issue is whether the certificate signed by the General Manager HAL and counter signed by the Managing Director of HAL would be enough or whether the certificate should be signed by an officer not below the rank of a Joint Secretary in the Ministry of Defence. 9. Notification No. 39/96 exempts various goods of the descrip....
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....p; If,- (a) the said goods are imported by the Government of India, the contractors of the Government of India, State Governments, Public sector Undertakings of the Central Government or the State Governments and the sub-contractors of such Public Sector Undertakings; and (b) in the case of imports by contractors or sub-contractors or Public Sector Undertakings referred above, the importer furnishes at the time of import a duty exemption certificate showing:- (1) the details of the purchase order placed by the Ministry of Defence on the contractors or sub-contractors and on the said Public Sector Undertakings and the quantity of the items required to be imported to execute the said order; and (2) the details of the purchase order placed by the said contractors or sub-contractors or the said Public Sector Undertakings, on their foreign suppliers indicating the description and quantity of the items. Explanation.- (i) in the case of imports by contractors of the Government of India, who are contractors of Research and Development Laboratories or Establishments under the Ministry of Defence, the certificate shall be signed by the Chief Controller of Research and Development (R) o....
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....te Tribunal (CESTAT) in the case of Marshal Sons and Co (Mfg.) Limited Vs Commissioner of Customs, Chennai [2007 (220) ELT 199 (Tri-Chennai)] in support of its argument. 12. It has further been stated by the applicant that HAL has been issuing similar certificates to other vendors for claiming the benefit under the notification and that such certificates are being accepted by Customs Authorities as being valid for import of goods without payment of duties. This claim of the applicant was contested by the Departmental Representative during the arguments and it was contended that they are not aware of any such practice being prevalent and even if an error has been committed it cannot be perpetuated. 13. As an additional ground the applicant has reiterated that it is a settled principle of law that substantive benefit cannot be denied due to procedural infirmities. The applicant relies on the decision of the Hon'ble Supreme Court in the case of Mangalore Chemical and Fertilizers Limited Vs. Deputy Commissioner [1991(55)ELT 437 (SC)] wherein it was held that the stringency and mandatory nature of the condition must be defined by the purpose intended to be served. The mere ....
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....ted by the applicant and supplied to HAL or the goods will be imported, stored in bonded warehouse and then supplied to HAL. The import declaration will be made by the applicant in either case. In these circumstances the importer is the applicant and the goods cannot be said to have been imported by a Public Sector Undertaking; clause (ii) of the Explanation will therefore not be applicable to the applicant. 16. The applicant is not covered even by clause (i) of the Explanation to the conditions against Serial No. 10 of the Table in the Notification since the said clause applies to imports by contractors of the Government of India who are contractors of Research and Development Laboratories or Establishments under Ministry of Defence. Though the imported goods are intended for HAL, no claim has been made to the effect that HAL is a R&D Laboratory or Establishment under Ministry of Defence or that the applicant is a contractor for the Government of India. In view of the non-applicability of clauses (i) and (ii) of the Explanation, imports by the applicant would be covered by the residual clause (iii) of the Explanation and the applicant would be required to submit certificates in....
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....ve been used in the condition (a) because Public Sector Undertakings themselves may be engaged as contractors of Government of India. The requirement of furnishing of a duty exemption certificate by the importers specified in condition (b) applies only to imports by contractors or sub-contractors or PSUs. It implies that out of five categories of persons who are eligible to import goods free of duty under the notification, a certificate is required to be given only in respect of imports by the contractors or sub-contractors or PSUs. Imports by the Government of India and State Governments do not require a certificate to be produced. Nature of certificate and the details required therein have been specified in Serial No. (1) and (2) under condition (b). 19.1 The aforesaid interpretation of the scope and application of the Notification No. 39/96-Cus is also supported by the legislative history of the exemption given to aircraft, aircraft parts, aircraft engine etc. Previously exemption to these items was available under Notification No. 155/94-Cus. dated 13.7.94 and the exemption was confined to such goods if imported by the Govt. of India or a State Govt. etc. No certif....
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..... 39/96-Cus. dated 23.7.96 - (i) is intended for imports by certain specified entities; (ii) only some of the entities are required to produce a certificate; (iii) the certificate has to be signed by different authorities for imports by different class of entities. 20. There appears to be a sound rationale in prescribing strict conditionalties for claiming exemption in respect of imports by contractors or sub-contractors. As may be observed goods eligible for exemption against Serial No. 10 of the Table in the notification include not only aircrafts, aircraft parts etc, but also other sensitive security items like arms, ammunition, military stores, radars, torpedoes, guided weapons etc. Aircraft includes fighter aircrafts also. No restriction has been placed if said items are imported by Government of India or the State Governments but strict conditions have been specified in case of import by contractors / sub-contractors or PSUs. Further, if the imports are by PSUs under the Ministry of Defence, a certificate by the functional Director of said undertakings has been deemed sufficient. Similarly for contractors of the Government of India who ....
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....pplied for necessary permissions in time. The controversy was whether the appellant not having actually secured the prior permission would be entitled for the benefit. The grant of permission remained pending on account of certain outstanding inter departmental issues as to which department would absorb the financial impact of the concession. It was noted that the permission was withheld by the Revenue without any justification. A permission of this nature was a technical requirement and could be issued from the time it was applied for. It was in this background that Hon'ble Supreme Court issued directions for granting permission and consequential benefit to the appellant "in view of the admitted position that, apart from the technical objections........, there was no other impediment for the grant of permission". We are afraid the facts of the case cited by the applicant are not similar to the issues before us. 23 In the case of SKF Bearings, the appellant was required to produce a certificate to prove that the imported goods are to be used for initial setting up or for assembly or manufacture of an article and finally that the goods have been so used. The dispute in the said c....