TaxTMI 
TaxTMI 
2013 (9) TMI 510
X X X X Extracts X X X X
X X X X Extracts X X X X
....at Rs.53,49,828/- was cleared on payment of duty of Rs.19,65,328/-, the Cone Type Stone Crusher valued at Rs.4,36,90,266/- was cleared by availing duty exemption benefit of Rs.1,60,50,182/- under Sl.No.230 of Notification No.21/2002 dated 01/03/2002. The benefit of duty exemption on Cone Type Stone Crusher imported under Notification No.21/2002 was subject to the condition that the importer undertook that the same would be used exclusively for construction of roads and the importer will not sell or otherwise dispose of the goods in any manner for a period of five years from the date of import. The importer also executed an undertaking to that effect at the time of importation. Intelligence received by the officers of SIIB, Mumbai Customs, indicated that the appellant/importer had diverted the Cone Type Stone Crusher before the stipulated period of five years and was not adhering to the end use the condition stipulated in the Notification and therefore, the officers visited the premises of the appellants on 01/02/2008. As per the contract produced by the appellant at the time of importation, the road construction equipment including the aforesaid stone crushers were imported for exe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that M/s. Ashoka Highways Bhandara Ltd is a company appointed as Concessionaire by the consortium Ashoka-IDFC, who had entered into a construction agreement with NHAI for the construction of roads from KM 405 to KM 485 of NH-6 on BOT basis. When questioned about the ownership of the Nordsberg Secondary cone type crushing plant model LT1100 seized by the officers of the Customs from the project site of M/s.Ashoka Buildcon Ltd., he stated that the said cone type stone crusher plant belonged to M/s.Ashoka Buildcon Ltd. When asked how this cone type stone crusher arrived at the Deoli, District Gondia on NH-6, he informed that the said cone type crushing plant has arrived at the project site through road transport from their project at Chittorgarh in the third week of December, i.e. on 22/12/2007. He further confirmed that the said cone type crusher was being used by M/s. Ashoka Buildcon Ltd. for crushing aggregates required for the construction work against the contract awarded by NHAI. 5. Statement of Shri S.P. Londhe, Director of M/s. Ashoka Buildcon Ltd. was recorded on 19/02/2008. In his statement, Sri. Londhe, inter alia, admitted that M/s.Ashoka Buildcon Ltd-Valecha Engineerin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....venture and to facilitate the clearance of the stone crusher, transfer documents, i.e., high seas sale agreement was executed with a nominal value as Ashoka Buildcon Ltd. was the lead member of the joint venture and possession and operational responsibility was supposed to be of M/s.Ashoka Buildcon Ltd. only for execution of Chittorgarh Bypass project and the high seas sale agreement was made to facilitate the filing of the Bill of Entry in the name of the joint venture and except for 2% of the CIF value as mentioned therein, no other consideration was made to M/s.Ashoka Buildcon Ltd. by the joint venture as the machine was to be operated by M/s.Ashoka Buildcon Ltd. 7. Statement of Shri S.D. Parakh, Managing Director of M/s. Ashoka Buildcon Ltd. was recorded on 25/07/2008 wherein he admitted and confirmed the facts stated by Shri S.P.Londhe in his statements. He also confirmed that he had authorised Shri S.P. Londhe to import the equipment in the name of joint venture for availing duty exemption and the diversion of the cone type stone crusher from Chittorgarh to the project site of M/s. Ashoka Buildcon Ltd. in Maharashtra was done with his permission. 8. On completion of investi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntract for the said Chhattisgarh Bypass got over the imported equipment became free and was available for use elsewhere. Therefore, the equipment was given to M/s.Ashoka Buildcon Ltd. who was the lead partner of the importer joint venture. The equipment was also used for the construction of roads by M/s.Ashoka Buildcon Ltd. in respect of a contract awarded by NHAI for construction of roads in the Gondia District in Maharashtra. Therefore, they have substantially complied with the conditions of the Notification. They have not sold or otherwise disposed of the imported equipment; what they have done is to allow the equipment to be used by the lead partner instead of keeping such a costly equipment idle which would have only resulted in waste of important assets. The purpose of the Notification is to reduce the cost of construction of roads by granting duty concession on equipment required for the construction of roads and considering this broad policy objective of the Government, it may be seen that the appellant has not indulged in any malpractice. Further the appellant could have got back the equipment any time inasmuch as the ownership vested with them. 3) The Ld. Counsel also re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....given by the senior officials of the appellant's firm. Therefore, a joint venture was formed to get the contract from NHAI. When the contract was awarded, they realized that the equipment has to be imported in the name of the contractor. Since the machinery in this case had already been imported by M/s. Ashoka Buildcon Ltd. the lead partner of the joint venture, a high seas sale agreement was entered into between the importer and the joint venture so that the bill of entry can be filed in the name of the joint venture and the benefit of NotificationNo.21/2002 can be availed. From the statements given by the various officials of the joint venture, it is clear that the high seas sale agreement was entered into only for the purpose of availing customs duty exemption on the advice of the CHA and the appellants also knew very well that Chhattisgarh Bypass would be completed soon and they will no longer being able to utilize the equipment after completion of the project. Therefore, the equipment was transferred to M/s. Ashoka Buildcon Ltd. for use elsewhere than in the approved project. The said transfer was not intimated to Customs authorities at any point of time. It is his contention ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xecution of Chittorgarh Bypass project. From the statement, it is evident that the high seas sale agreement was made to facilitate the filing of the Bill of Entry in the name of the joint venture and except for 2% of the CIF value, no other consideration was paid to M/s. Ashoka Buildcon Ltd. It has been further admitted in the statement that on completion of Chittorgarh Bypass Project, the equipment was transferred to District Gondia, Maharashtra for some other project and this decision was taken not by the Joint Venture but by the Managing Director of M/s.Ashoka Buildcon Ltd. The above statement of Shri S.P.Londhe has been confirmed by Shri.S. D Parakh, Managing Director of M/s. Ashoka Buildcon Ltd. in his statement dated 25/07/2008, wherein he had clearly admitted that the entire transaction was managed in such a way as to avail the benefit of notification No.21/2002 and the diversion of the machinery after the completion of the project at Chittorgarh was also taken by him and he had directed Shri S.P. Londhe to shift the machinery from Chittorgarh to Maharashtra. From this statement it is evident that the entire transaction was a sham and was done with a fraudulent intention to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 40 (b) reads as follows:- the importer, at the time of importation, furnishes an undertaking to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, to the effect that he shall use the imported goods exclusively for the construction of roads and that he shall not sell or otherwise dispose of the said goods, in any manner, for a period of five years from the date of their importation. 11.2 From the wordings of the notification, it can be seen that there are two conditions which needs to be satisfied to avail the benefit. One is with regard to the user and the other one is with regard to the use of the imported equipments. The use as stated in the notification is construction of roads and the user should be the importer who furnishes the undertaking to the Customs authorities. The undertaking stipulates that the importer shall not sell or otherwise dispose of the said goods in any manner for a period of five years from the date of importation. In other words, it is the user who has to undertake the use and not anybody else. Secondly, the importer should be the owner of the goods at the time of importation; otherwise, the condition regar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which is the joint venture. Thus the importer violated the terms and conditions of the notification by transferring/alienating the goods within a period of five years contrary to the undertaking given by it. 11.3 The Hon'ble apex Court in the case of Novopan India Ltd. and Gammon India Ltd. (cited supra) has clearly held that exemption notification should be strictly construed since it is an exception. The relevant extracts from the Novopan India Ltd. case is quoted verbatim herein below:- We are, however, of the opinion that, on principle, the decision of the Court in Mangalore Chemicals -and in Union of India v. Wood Papers, referred to therein -represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound -does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to have been enacted purposelessly. Furthermore, it is also a well settled canon of interpretative jurisprudence that the Court should not give such an interpretation to provisions which would render the provision ineffective or odious. Seen from this perspective, we are of the considered view that the importer appellant has violated the conditions of exemption and he is not eligible for the benefit of exemption. Accordingly, we uphold the confirmation of duty demand along with interest thereon made in the impugned order. 11.6 As regards the confiscation of the impugned goods, the end-use condition relating to the goods stands clearly violated. Therefore, they are rightly liable to confiscation under the provisions of section 111(o) of the Customs Act and we hold accordingly. 11.7 Regarding the quantum of fine of Rs.90 lakhs imposed on the goods, some leniency might be called for. Though the goods were diverted, they were used for the construction of roads though by a different user which could be considered as a mitigating factor in this case. Therefore, we are of the view that the fine imposed ought to be reduced substantially. Accordingly, we reduce the redemption fine impose....