AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (3) TMI 530
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....ing lists) and two irrevocable Letters of Credit dated 8-12-2000 and 11-7-2011 (Axis Bank Ltd., Dubai) were also filed with the Bills of Entry. The invoices showed M/s. Reliance Infra Projects International Ltd., British Virgin Islands, as the exporter of the goods. SPL sought provisional assessment of the goods on the basis of a provisional Mega Power Project Status Certificate dated 21-9-2011 issued by the Ministry of Power, Govt. of India. In a letter dated 10-10-2011, they also informed the Deputy Commissioner of Customs that the words "expansion project" in para (a) of the said certificate were subsequently deleted by the Ministry. A copy of the amendment dated 4-10-2011 was also produced by SPL. 2. Earlier, on 24-9-2011, SPL had submitted an application to the Deputy Commissioner of Customs for registration of an EPC Contract dated 31-7-2010 with its amendments under the Project Import Regulations, 1986 (PIR, for short) for the purpose of availing the aforesaid exemption for the goods covered by the two Bills of Entry. The following documents were also produced in support of SPL's application : (i) Annexure A, (ii) List of goods certified by Chief Executive Officer,....
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....ods imported earlier for the project were cleared on payment of duty by RIL as importer, (e) that, by virtue of Cus. Notification 65/2011, the benefit of exemption could be availed only by the project developer/owner i.e., SPL, (f) that the description of goods under Heading 9801 was relevant to classification only, and (g) that the clearance of earlier consignments under merit assessment did not preclude SPL from getting the project contract registered under PIR and availing exemption for the present consignments. 4. With reference to the above submissions of SPL, further queries were made and additional documents called for SPL by letter dated 19-10-2011 replied to the queries (vide infra) and furnished the required documents (vide infra) : Queries/Documents : I. Ministry of Power's provisional Mega Power Project Status Certificate dated 21-9-2011. Copies of the documents mentioned in the certificate : (i) Attested copies of contracts with the manufacturers of main equipment. (ii) Attested copies of receipt for payment of advance (not less than 10%). (iii) Tentat....
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....aid project is an expansion project an not an initial setting up category project. (iii) The goods imported for which Bills of Entry Nos. 4875426 and 4875427 both dated 10-10-2011 have been filed, in respect of which duty exemption under sub-para No. 400(b) of Customs Notification No. 21/2002 dated 1-3-2002 read with Customs Notification No. 65/2011 dated 21-7-2011 has been claimed should not be rejected as the goods imported are for expansion project and not for initial setting up. (iv) The provisional Mega Power Project Status Certificate dated 21-9-2011 and the amendment dated 4-10-2011 issued by the Ministry of Power should not be treated as not valid document for claiming duty exemption under Sl. No. 400(b) of Customs Notification No. 21/2002 dated 1-3-2002 read with Notification No. 65/2011 dated 21-7-2011 as the said project is an expansion project and not an initial setting up category project. (v) The registration sought for under CTH sub-heading 9801 and Project Import Regulations, 1986 should not be rejected since, considerable items/goods required for the said project have already been imported and cleared on payment of....
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....2011 whereby SPL's claims were rejected, RIL was directed to file Bills of Entry in respect of the subject goods, and the goods were ordered to be classified under the respective Headings/Sub-headings of the CTA Schedule and be assessed to duty on merits. 7. On appeals by SPL and RIL, the order-in-original came to be upheld, on all issues, by the Commissioner of Customs (Appeals) whose order dated 16-1-2012 is presently under challenge. 8. We have perused the grounds of the two appeals and heard the submissions of the learned counsel for the appellants and the learned Special Consultant for the respondent. 9. The case of SPL (a) The existing 220 MW gas-based power plant at Samalkot is owned by RIL and not by SPL, and the findings to the contra are factually incorrect and even beyond the scope of the show-cause notice. Though initially the 2400 MW Samalkot power project was envisaged as an "expansion project" of RIL in relation to the existing 220 MW power plant and accordingly all necessary clearances from the Ministry of Environment & Forests (MoEF), Govt. of India were obtained by RIL, all such clearances were eventually transferred to SPL and there....
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.... Samalkot gas-based Power Plant. (d) The authorities below while holding that the provisional Mega Power Status Certificate issued by the MoP was for "substantial expansion" of the existing 220 MW power plant overlooked the fact that the existing power plant and the 2400 MW power project were owned by different legal entities. (e) The test laid down by Hon'ble Supreme Court to determine whether a unit is to be considered as a new industrial unit or as part of an existing unit should have been applied to the present case by the authorities below. [Commissioner v. Reckitt Colman of India Ltd. : 1997 (92) E.L.T. 457 (S.C.) and Textile Machinery Corporation Ltd. v. CIT : 1977 (2) SCC (368) relied on]. If the test is applied to the present case, the 2400 MW power project has to be held to be setting up of a new power plant. (f) In the case of Mangalore Refinery and Petrochemicals Ltd. v. Commissioner : 2005 (187) E.L.T. 466 (Tri.-Bang.), this Tribunal rejected the department's plea that the benefit of Notification No. 11/97-Cus., dated 1-3-1997 was admissible only to goods imported for the purpose of setting up a new refinery and not admissible to ....
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....tter subsequently signed an Offshore Equipment Supply Contract with M/s. Reliance Infra Project International Ltd., which, in turn, placed order with M/s. General Electric Inc. for supply of the main equipments for the proposed power plant. Later on, through a tripartite agreement between SPL, RPL and RIL, SPL took the place of RPL in the EPC Contract and thereby became the developer/owner of the proposed Samalkot 2400 MW Power Project. The authorities below ought not to have considered the EPC Contract in isolation regardless of the back-to-back contract which RIL had entered into with the foreign supplier. In view of the clear link established by SPL, the EPC Contract ought to have been accepted for registration under the PIR as SPL satisfied the eligibility conditions under Regulation 4 and followed the procedure under Regulation 5 of the PIR. (l) Registration of the EPC Contract should not have been declined on the ground that some equipments required for the project were already imported and cleared on payment of duty. The only consideration relevant to registration of the project is whether the imported goods are required for the project. Neither CTH 9801 nor the....
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...., SPL is the owner of the goods. The Bills of Lading were also endorsed in favour of SPL. (b) Both the Bills of Entry were filed by the high seas buyer qua owner and importer of the goods. Copies of the high seas sale agreements were also furnished. Two per cent loading on the value of the goods as per the relevant Circular of C.B.E. & C. was also done. Therefore both the Bills of Entry are liable to be assessed in the name of SPL. (c) RIL was awarded the EPC Contract for setting up the 2400 MW power project. Since the power project is covered by a provisional Mega Power Project Status Certificate, the import of goods for such project would attract the benefit of the Notification. (d) In case RIL is held to be the importer, the benefit of Notification No. 21/2002-Cus. should be extended to RIL because the benefit of the Notification is qua the goods and not qua the importer. RIL has since filed two Bills of Entry in lieu of SPL's Bills of Entry dated 10-10-2011 (albeit under protest) claiming the benefit of Notification No. 21/2002-Cus., dated 1-3-2002 [Sl. No. 400(b) as amended by Notification No. 65/2011-Cus., dated 21-7-2011]. 11. The....
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....rtment of Government of Andhra Pradesh/Energy Department of Government of Andhra Pradesh/A.P. Pollution Control Board) for an "expansion project" with reference to the existing 220 MW power plant. All imports by RIL from June 2011 to November 2011 were made for this purpose only. The transfer of such clearances/approvals from RIL to SPL would not per se alter the nature of the project and make it a "Greenfield project". 2400 MW power project remains an "expansion project" with reference to the existing 220 MW power plant. (g) An application under the PIR for registration of any EPC contract has to be filed on or before importation. In the present case, the application was submitted after the importation. The contract to be registered should be one between the Indian importer and the foreign supplier. The EPC Contract between SPL and RIL therefore cannot be registered under the PIR. Moreover, the sponsoring authority's recommendation letter required under Regulation 5(4) of the PIR was not produced. The sponsoring authority's recommendation letter is a requirement under the PIR for registration of a contract for assessment of imported goods under CTH 9801, while the pro....
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....in registered with the Customs House, its de-registration in full or part is not permissible as clarified in C.B.E. & C.'s Circular F.No. 528/213/87-Cus. (TU), dated 8-8-1987. The same logic is applicable to non-registration as well. The concept of all the goods imported for a project having to be considered as a composite unit classifiable under Heading No. 84.66 of the CTA Schedule (predecessor to Heading No. 98.01) was approved in the case of Appraiser, Madras Customs v. Tamil Nadu Newsprint Paper Ltd. - 1988 (36) E.L.T. 272 (Mad.). The same concept was embodied in the above Circular dated 8-8-1987. Therefore, what requires to be classified under CTH 9801 is a whole lot of goods imported for the purpose of implementation of a project. A part of this composite unit cannot be classified for assessment as a project import. 12. We have carefully examined the records of the case and have given careful consideration to the rival submissions. The issues raised before us and our findings thereon are as stated hereinafter. (A) Whether the 2400 MW power project can be considered to be "expansion project" with reference to the existing 220 MW power plant : (a) It h....
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....e provisional Mega Power Status Certificate issued to SPL. (c) SPL has expressed their willingness to comply with Condition No. 86(aa) introduced by Notification No. 65/2011-Cus., dated 21-7-2011, in the event of the subject Bills of Entry being accepted for assessment. The said condition, which was added to Sl. No. 400 of Notification No. 21/2002-Cus., reads thus : "(aa) In case of imports for a project for which the certificate regarding Mega Power Project Status issued by an officer not below the rank of Joint Secretary to the Government of India in the Ministry of Power is provisional, the importer furnishes a security in the form of a Fixed Deposit Receipt from any Scheduled Bank for a term of thirty six months or more in the name of the President of India for an amount equal to the duty of customs payable on such imports but for this exemption, to the Deputy Commissioner of Customs or Assistant Commissioner of Custom as the case may be, at the time of importation and if the importer fails to furnish the final Mega Power status certificate within a period of thirty six months from the date of importation, the said security shall be appropriated towards duty of cu....
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.... so certified by the specified authority. The entry classifies the good under CTH 9801, which takes us to Chapter 98 of the CTA Schedule. Chapter Notes 1 and 2 being relevant are reproduced below : Notes : 1. This Chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein even though they may be covered by a more specific heading elsewhere in this Schedule. 2. Heading 9801 is to be taken to apply to all goods which are imported in accordance with the regulations made under Section 157 of the Customs Act, 1962 (52 of 1962) and expressions used in this heading shall have the meaning assigned to them in the said regulations. The text of Heading 9801 reads : Tariff Item Description of goods 9801 All items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipment, auxiliary equipment (including those required for research and development purposes, testing and quality control), as well as components (whether finished or not or raw materials for the manufacture of the aforesaid items and their components, required for the i....
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....n behalf of SPL has not been contested before us. Considering the technological, operational and other differences between the two power plants certified by the experts, we hold the view that the 2400 MW power project cannot be considered to be an "expansion project", in the hands of SPL, with reference to the existing 220 MW power plant owned by RIL. It would follow that, as far as SPL is concerned, the 2400 MW power project should be considered to be "setting up of a new power plant". (f) However, insofar as RIL is concerned, the position is different inasmuch as it has been conceded on behalf of the department that RIL has the option of assessment under Heading 9801 in the 'substantial expansion category". If RIL claims the benefit of project import in respect of the 2400 MW power project as a "substantial (Expansion project", the same can be considered (notwithstanding the technological, operational and other differences between the proposed power plant and the existing one) inasmuch as, admittedly, RIL has imported all other goods required for the project and can achieve substantial increase of power production capacity by adding the new ....
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....egal fiction embodied in Heading 9801. If some of the items/goods are removed from this bundle, the residue will not go to constitute a new power plant or an expanded power plant. Therefore, it is imperative that, for classification under Heading 9801, the bundle of items/goods must be complete so as to be considered to be "required for the setting up of a power plant or for the substantial expansion of an existing power plant". In the present case, it is not in dispute that a substantial part of the material requirements for the 2400 MW power project covered by the EPC contract were imported by RIL and cleared on payment of duty at merit rates. RIL, admittedly, did so from time to time - before the date of issue of the show-cause notice, between that date and the date of passing of the Order-in-Original and even after the passing of the Order-in-Original. Only some items of machinery were covered by the subject Bills of Entry dated 10-10-2011 filed by SPL. It is not in dispute that these items were also imported for the same project. For he reasons stated by us, these items cannot be classified under Heading 9801. What is classifiable under this heading is the entire bundle of goo....