AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (8) TMI 674
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....port of Capital Goods namely "Stainless Steel Slitting Machines" & "Cold Roll Forming Mills" falling under Customs Tariff Item No. 84552000 and also Spares/ Parts and Components against a total number of 10 (Ten) Bills of Entry. All 3(three) SHIS licenses were either fully or partly used for import of Spares/Parts/Components of capital goods as mentioned above. 3. It was observed that while debiting duty from the aforesaid three licenses, about 100% and 15% respectively of the license values were used for such imports of Spares/Parts/Components, in violation of Para 3.16.3 of the Foreign Trade Policy (2009-14) and condition nos. 4(i) & 4(iii) of the Notification No. 104/2009 dated 14-09-2009, which resulted in non-payment of customs duty of Rs. 2,16,77,057/-. The importer also did not submit an undertaking at the time of the clearance as required under condition 5A of the notification. 4. Relevant portions of Rules and Notifications in this regard are mentioned below:- (a) Para 3.16.3 of the Foreign Trade Policy (2009-14) specifically restricts import of spares/parts/components of the Capital Goods maximum to the extent of 10% of the scrip value when imported under S....
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....e being an inclusive definition, it does not incorporate "Parts, Spares & Components" within the extended definition of the Capital goods. The legislative intent becomes further clear from the fact that the same Policy had framed separate definitions of 'Spares', 'Parts' & 'Components' in Para 9.57, 9.44 & 9.14 of the Foreign Trade Policy respectively. The definitions are as follows:- (i) "Part" means an element of a sub-assembly or assembly not normally useful by itself, and not amenable to further disassembly for maintenance purposes. A part may be a component, spare or an accessory. (ii) "Component" means one of the parts of a sub-assembly or assembly of which a manufactured product is made up and into which it may be resolved. A component includes an accessory or attachment to another component. (iii) "Spares" means a part or a sub-assembly or assembly for substitution, that is ready to replace an identical or similar part or sub-assembly or assembly. Spares include a component or an accessory. II. Had such 'Spares', 'Parts' & 'Components' been squarely eligible to fit within the definition of "....
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....on that such Capital Goods can be imported in CKD/SKD conditions too. Therefore, different wordings and different treatment in respect of two different Export Promotional Schemes under the same Policy, clearly indicate the legislative intent of not allowing import of Capital Goods in either CKD or SKD condition using SHIS licenses. In the absence of explicit provision, it cannot be presumed that import of Capital Goods in CKD/SKD conditions is admissible by debiting Customs duty from multiple licenses either. VI. There is no denial of the fact, that the "Roller Sets, Spares, Blades and Parts of Rolling Mill falling under CTH 8455 9000 and 82089090 respectively, are nothing but Parts of Capital Goods. Such Work Rolls don't have any independent function. They become functional only when they are attached to the Capital Goods of which they are integral parts. Customs Tariff Heading No. 8455 9000 covers "Other Parts" of Metal Rolling Mills. This implies that the Roller Sets and other Spare parts are basically nothing but Spares/Parts of capital goods. The Managing Director of the company had admitted this fact in his statement recorded under section 108 of the Customs Act,....
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....tal Goods imported earlier and for that reason, such goods do not get covered within the ambit of clause 1(b) of the subject notification; X. The ld. adjudicating authority grossly erred in interpreting the Policy as well as the conditions laid down in the Customs notification in proper perspective. The condition (4) (iii) of the notification specifically mentioned that imports of Spares, Parts & Components are allowed "upto ten percent of the duty credit amount in the said scrip originally issued". Para 3.16.3 of the Foreign Trade Policy (2009-14), as amended similarly stipulates that ".....Only in respect of Capital Goods imported earlier, upto 10% value of the Duty Credit Scrip can be used for import of components, spares/parts of such Capital Goods". A combined reading of the notification and the Policy makes it clear that in both the cases, the emphasis has been given on the phrase "the duty credit scrip". The notification, in condition (4) (iii) has given further prominence to the phrase "scrip originally issued", which indicates that for the purpose of the Notification, each and every individual scrip would be taken into consideration separately, and conditions laid....
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....ital Goods imported under SHIS Scheme had been installed and the department had also accepted the same as a fulfilment of the obligations contained in the licence. (ii) They have furnished the undertakings as per Condition 5A of the said notification, as amended, which were subsequently cancelled on the basis of the certificate issued by the independent Chartered Engineer. (iii) The decision in the case of Commissioner of Customs, Chennai vs. JSW steel Ltd. [2016(340) ELT 262 (Tri Chennai)), cited by them is squarely applicable in the instant case as there was a Contract between supplier and Respondent under single quoted price for the import of entire equipment of plant and machinery for setting up of their "Stainless Steel Slitting Line and Cold Rolled Forming Mill Lines" for production of "Railway Wagon and other related parts" in their factory. (iv) In view of the above, the ld. adjudicating authority has rightly held that the allegations in the Show Cause Notice were not sustainable and hence dropped the charges. Accordingly, they prayed for rejecting the appeal filed by the revenue. 10. Heard the Ld. Authorized Representative for the Revenue and ....
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.... the Respondent are not merely spares/parts as alleged in the Notice. They are 'Capital Goods' as defined in the policy which is reproduced above. Further, we observe that the restriction of 10% is only with respect to import of components, spares/parts of capital goods imported earlier. Thus, import of capital goods (including accessories thereof) which have not been imported earlier, can be imported by utilizing SHIS without any restriction. The import of Parts/Spares/Components in the form of" Roller Sets", "Spacers", "Spares for Cold rolling Mills" & "Blades for slitting Machines" falling under Customs Tariff Item Nos. 84559000 & 82089090 respectively come under the ambit of definition of "Capital Goods", which are to be used in the setting up "Cold Roll Forming Mill Lines" for manufacture of 'Engineering goods'. In this regard, we observe that the Respondent has submitted Chartered Engineer's Certificate explaining the use of the imported spares/parts in the plant. 11.4. We observe that in respect of all the 10 BEs, the respondent has imported capital goods or their accessories along with their spares/parts and therefore the benefit of the exemption is c....