TaxTMI 
TaxTMI 
2022 (8) TMI 660
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....e. Both the blast furnaces were commissioned in 2007-2008 whereas the ARC furnace and the 60MT ladle furnace were commissioned on 18-12-2008. 4. In their Unit-IV they have one coke oven plant of capacity of 0.35 MTPA, which was commissioned on 28-08-2012. 5. The Appellants use refractory bricks/materials for lining the furnaces. A refractory brick is designed mainly to withstand high heat, but also has a low thermal conductivity to save energy. 6. During the period from 04-11-2009 to 30-07-2013 the Appellants imported several sets of refractory materials/bricks for re- lining and also for maintenance purposes for the ARC furnace and the 60MT ladle furnace. 7. The refractory materials were imported under the EPCG scheme covered by Chapter 5 of the Foreign Trade Policy (FTP) read with Notification No. 102/2009-Cus dated 11-09-2009 and 103/2009-Cus also dated 11-09-2009. Notification No. 102/09-Cus dated 11-09- 2009 relates to imports at zero rate of duty under the EPCG scheme whereas Notification No. 103/2009-Cus dated 11-09-2009 relates to imports at 3% rate of duty under the EPCG scheme. Under the aforesaid two notifications the following goods were allowed to be imported at co....
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....ing the imported refractory materials and permitting their redemption on payment of a fine of Rs. 80,00,000/-. A penalty of Rs. 20,00,000/- was also imposed on the Appellants. Hence, this appeal. 15. We have heard both the sides and perused the appeal records. 16. The Miscellaneous Application No C/Misc/75155/2022 filed by the Appellant under Rule 23 of the Customs Excise & Service Tax (Procedure) Rules, 1982, was taken up first. This application has been filed to bring on record the following additional evidence (documents), namely; (i) The installation certificates signed by the jurisdictional Assistant/Deputy Commissioner of Central Excise as evidence of receipt and actual use of the imported refractory bricks. (ii) The Export Obligation Discharge Certificates (EODC's) or Redemption Certificates issued by the DGFT in respect of the EPCG Licences/Authorisations involved, and (ii) Letters from the Customs authorities at the port of import intimating cancellation and return of the bonds executed by the Appellant. 17. Shri A.K Prasad, the Ld. Advocate for the Appellant submitted that the above documents were very relevant for deciding the issue at hand. He also stated that ....
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....basic function. These refractory bricks can also be said to have been indirectly used in the manufacture of goods of the Appellant. In the instant case the refractory bricks were used as replacement of the existing refractory bricks when they get damaged with use. Hence, the Appellant had correctly availed of the exemption under the two Notifications. 22. The expression 'refractories for initial charge' finds mention in the inclusive part of the definition of 'capital goods'. The word 'includes' is used to enlarge the scope of a definition. It means that though ' refractories for initial charge' are not covered by the main part of the definition (only replacements are covered) the government thought it fit to enlarge the definition and also include 'refractories for initial charge' in the definition of ' capital goods'. It, therefore, cannot be said that only 'refractories for initial charge' are covered by the definition of 'capital goods' and not their replacements. 23. Even otherwise, if the imported goods are covered by another part of the definition of 'capital goods' the benefit could not be denied to the Appellant. Since the refractories meant for re-lining and repair of t....
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....3A. Captive power plants, including captive generating sets, up to a capacity of KVA and the spares for such plants and sets as recommended by the Development Commissioner. 3B. Fuel, lubricants and consumable for goods specified at items 3 and 3A as approved by the Commissioner of Customs on the recommendation of the Development Commissioner. 3C. Furnace oil required for the boilers used in the textile units as approved by the Commissioner of Customs on the recommendation of the Development Commissioner". 24.3 The Department was of the view that since Furnace Oil could be procured duty free only if it was required for boilers in textile units, M/s Jayant Agro Organics Ltd could not procure the Furnace Oil duty free since they were not a textile unit. The Mumbai Bench of this Tribunal held that since Furnace Oil is covered under the category of 'consumable' listed at Sl No 7 of Annexure-1 to Notification No. 1/95- CE dated 04.01.1995, the benefit could not be denied in respect of Furnace Oil procured by the party. The above decision has been confirmed by the Hon'ble Supreme Court as reported in 2009(238)ELTA24(SC). 24.4 On the same analogy, though the definition of 'cap....
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....r a notification issued under Section 25 of the Customs Act, is the importer's covenant to pay the duty or the differential duty, as the case may be, in the event of breach of mandatory post-import conditions of such notification. When such post-import condition of the notification is violated by the importer, the duty or the differential duty, as the case may be, becomes leviable and, ipso facto, the provisions of Section 28 get attracted for collection of such duty. Of course, it can be rightly said that, in the process of collection of the duty amount, the bond is enforced against the importer. To put it differently, Section 28 of the Act is the provision for enforcing the bond executed by the importer. Case law cited for and against this proposition will be discussed later." 27. The wordings of the two exemption notifications, no doubt, require the importer to pay the duty foregone on imports if the conditions of the notification are not fulfilled and the importer is required to execute a bond in that regard. But these are only enabling provisions for recovery of the duty foregone along with interest. These cannot be a substitute for the provisions enshrined in Section 28 of t....
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..../2022. In other words, even the DGFT, which is responsible for conceptualization and implementation of the EPCG Scheme, was satisfied that the Appellants have correctly availed the exemption under the EPCG scheme. Hence, charge of willful misstatement or suppression of any facts cannot sustain. 30. Based on the EODC certificates issued by the DGFT the corresponding bonds executed by the Appellants in terms of the two EPCG Notifications have since been cancelled and returned by the Customs authorities . Copies of letters from customs authorities cancelling the bonds have already been filed with the Miscellaneous Application No C/Misc/75155/2022. This means that the Customs Authorities were satisfied that the Appellant had fulfilled the conditions of the notifications and there was no short levy or non-levy. Hence, charge of willful misstatement or suppression of any facts cannot sustain. 31. Since no valid bond exists at the moment ( they having been cancelled) there can be no question of invoking these non-existent bonds for demanding duty in the instant case. 32. In the instant case the imported refractory bricks/materials have been confiscated under Section 111(o) of the Custo....
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....arned advocate of the appellants are not relevant as they relate to procurements by 100% EOU's and not to imports under EPCG. 40. We have examined the submissions before us. 41. We agree with the submission of the Ld. Advocate for the Appellants that the refractories imported by the appellants are covered by the definition of 'accessory' and, hence, included in the definition of 'capital goods'. Thus, the definition of 'capital goods' not only includes refractories for initial charge but also those imported as replacement for the purpose of re-lining or maintenance of the furnaces. The Appellants have, therefore, correctly availed the benefit of the above two exemption notifications. 42. The first part of the definition of capital goods uses the term 'means'. The term 'means' is exhaustive in nature and is meant to cover all the items mentioned therein, namely, plant, machinery, equipment or accessories, as ordinarily understood, required for the manufacture or production, either directly or indirectly of goods. Refractory bricks are clearly accessories required for lining of the furnace, and hence indirectly used for manufacture of finished goods by the appellants. The us....
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....eiving its ordinary, popular, and natural sense whenever that would be properly applicable, but to enable the word as used in the Act.... to be applied to something to which it would not ordinarily be applicable." Therefore, the inclusive part of the definition cannot prevent the main provision from receiving its natural meaning." 46. Therefore, we hold that refractories meant for re-lining of furnaces, i.e., for replacement, are covered by the 'means' part of the definition of 'capital goods' and this interpretation cannot in anyway be restricted or controlled by the use of the expression 'refractories for initial lining' used in the inclusive part of the definition of 'capital goods'. 47. As regards the decision of the Hon'ble Supreme Court decision in the case of Commissioner of Cus(Import), Mumbai vs Dilip Kumar Company (supra) cited by the learned authorized representative, the same is not relevant since this is not a case of any doubt being there in the coverage of the imported refractory bricks in the definition of 'capital goods'. 48. The decision in the case of Rayalseema Hi-Strength Hypo Ltd vs CC(Export), Chennai (supra) cited by the Ld. Authorised representative, i....