TaxTMI 
TaxTMI 
2026 (3) TMI 1327
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....e of incorporation certificate dated 09.09.2019 by the Registrar of Companies. Consequently, the miscellaneous application is allowed and the cause title be changed from M/s. GMR Ose Hongund Hospet Highways Private Limited to M/s. Ose Hongund Hospet Highways Private Limited. The second application No. C/20532/2025 has been filed to include certain additional documents viz. Share Purchase Agreement dt. 23.03.2016 and other documents, for which the learned AR for the Revenue has no objection. Consequently, the said miscellaneous application is also allowed and the documents are taken on record. 2. The present three appeals are filed against the Order-in-Original No.BLR-CUSTM-AIR-342/2019 dated 21.05.2019 passed by the Commissioner of Customs, Airport & Air Cargo Complex, Bangalore. 3.1. Briefly stated the facts of the case are that on the basis of intelligence that the appellant M/s. Indra Sistemas India Pvt. Ltd. (appellant-1) imported "Toll collection and traffic control equipments" during the period 2012 claiming benefit of exemption Notification No.12/2012-Cus dated 17.03.2012 from payment of duty which is not admissible to them, investigation was initiated by recording ....
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....rivate Limited and M/s. GMR Hyderabad Vijayawada Expressway Private Limited (collectively referred to as appellant-2), both on 16.02.2012. The said contract relates to supply, installation, commissioning and maintenance of TMS at Hongund Hospet at NH-13 and at NH-9, respectively. It is his contention that pursuant to the said agreement and in discharge of their obligation under the said contracts for installation of the TMS, appellant-1 had imported various goods and equipments related to toll management from its parent company M/s. Indra Sistemas, Spain and few unrelated foreign vendors. The appellant-1 availed benefit of Sl.No.368 of the exemption Notification No.12/2012-Cus dated 17.03.2012 on import of specified toll management equipment covered under the exemption notification after following the procedure prescribed under the said Notification. They have fulfilled all the conditions mentioned in the said notification at the time of its import and also they have furnished necessary undertaking to the Deputy Commissioner of Customs that they shall use the imported goods exclusively for construction of the roads and they shall not sell or otherwise dispose of the said goods in a....
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....DBFOT) basis which inter-alia included construction of project facilities such as toll plazas on the NHs. 5.2. It is his contention that in terms of the said Concession Agreement, the appellant-2 were granted the right to appoint sub-contractors for performance of its obligations. Pursuant to the said Concession Agreement, the appellant-2 had entered into an agreement with appellant-1, the sub-contractor, as per the Toll Management System Agreements dated 13.01.2012 and 16.02.2012 for supply, installation, commissioning and maintenance of TMS on the portion of the NHs required to be operated by the appellant-2 under the Concession Agreements with NHAI. In the sub-contractor agreements, it is clearly stipulated that they were entering into such an agreement in order to discharge its obligations under the Concession Agreements and therefore, the sub-contractor agreements would be read in conjunction with the Concession Agreements and all related agreements for the project. Pursuant to the said agreements after appointing sub-contractor, the appellant-2 had intimated NHAI through their various communications that they had sub-contracted the supply, installation and maintenance of T....
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....In response to the said allegation, the learned advocate has submitted that appellant-1 was appointed as a sub-contractor by the appellant-2 with the approval and knowledge of the NHAI to achieve the obligation prescribed under the Concession Agreement between the appellant-2 and NHAI. Reading the sub-contract agreements with the appellant2 and the Concession Agreements harmoniously, it could be inferred that to achieve the intended objective of NH projects, the sub-contractor has been appointed and since appellant-1 has been genuinely appointed as sub-contractor being authorised in terms of the Concession Agreements, a fact not disputed by the NHAI; therefore, clause (a) of the Condition 9 is fulfilled. 5.4. Further, he has submitted that on a harmonious reading of the sub-contract agreement along with the Concession Agreement as well as the intimations filed by the appellant-2 to NHAI and the declaration by the NHAI, it is amply clear that appellant-1 was the sub-contractor of the appellant-2 who participated in the construction of roads i.e. NHs. Further, he has submitted that it is a settled principle of law that in case of any latent ambiguities in a contract, subsequent ev....
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....ition (b); hence, procedural requirements under Notification No.12/2012-Cus. dated 17.03.2012 have been duly satisfied by the sub-contractor and no violation thereof could be alleged. Alternatively, if it is a procedural lapse, it cannot be the sole basis for denying the substantive benefit of the exemption. In support, they have referred to the following decisions:- i. Formica India Division Vs. CCE [1995(77) ELT 511 (SC)] ii. SL Polypack Private Limited Vs. Commissioner CGST &CX, Howrah [2023(1) TMI 931 - CESTAT KOLKATA] iii. Mangalore Chemicals and Fertilisers Ltd. Vs. Dy. Commissioner [1991(55) ELT 437 (SC)] 5.6. Further, it is submitted that the bonds executed by the sub-contractor at the time of import have been subsequently cancelled by the Department, which itself sufficiently establishes that the Customs Department was fully satisfied at the compliance with the conditions under Notification No.12/2012Cus. dated 17.03.2012 in respect of the imported goods. He has submitted that once the bond has been discharged by the Customs authorities, automatically it is meant that no duty is to be paid by the importer; hence, allegation of contravention of....
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....ng Pvt. Ltd. Vs. CC [2019(366) ELT 318 (Tri. Hyd.) - Affirmed in 2019(367) ELT A328 (SC). ii. CCE Vs. HMM Limited [1995(76) ELT 497 (SC)] iii. CCE&C Vs. Nakoda Textile Industries Ltd. [2009(240) ELT 199 (Bom.)] iv. Hindustan Steel Ltd. Vs. State of Orissa [1978(2) ELT 159 (SC)] v. Sij Electronics Comp Tech Vs. CC [2001(129) ELT 528 (Tri.)] 6. Learned AR for the Revenue has reiterated the findings of the learned Commissioner. 7. Heard both sides at length and perused the records. 8. The issues involved in the present appeals for consideration are whether: (i) the benefit of Sl.No.368 of exemption Notification No.12/2012-Cus. dated 17.03.2012 is available to the goods imported for use in the National Highway projects viz. "Toll Management System"(TMS) by appellant-1; (ii) the equipments imported duty-free claiming benefit of Notification No.12/2012-Cus. dated 17.03.2012 and used in the TMS are liable for confiscation under Section 111(o) of Customs Act, 1962 and (iii) penalties are imposable on the appellants. 9. Undisputed facts of the case are that the NHAI floated tender for construction, operation and main....
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....as the sub-contractor in the contracts executed between NHAI and appellant-2 and also, the imported equipments which were undisputedly used only in the TMS, but were disposed / sold within a period of 5 years from the date of its import. The appellants on the other hand claimed that the 'Concession Agreements' entered between NHAI and appellant-2 should be read in conjunction with the agreement between appellant-1 and appellant-2; also all communications exchanged from time to time between the appellant-2 with NHAI and the Customs Department; on cumulative reading these documents, it cannot be said that the appellant-1 has not been appointed / named as sub-contractor in the said 'Concession Agreements' or in pursuance to the said Agreements. 11. To analyse the rival contentions, it is relevant to understand Sl.No.368 and the appended conditions of Notification No.12/2012-Cus. dated 17.03.2012, which read as follows:- Sl.No.368 Sl. No. Chapter or Heading or Subheading or tariff item Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 368 84 or any other Chapter Goods specified in List ....
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....No.9(a), it is clear that a person who has been named as a sub-contractor in the contract referred to in sub-clause(ii) would be eligible for availing exemption for import of goods for use in the construction of roads as mentioned in Sl.No.368 and would be eligible for the said benefit. To understand whether the appellant-1 be considered as a sub-contractor, it is necessary to read certain clauses of Concession Agreements between NHAI and appellant-2 and the subsequent agreements between appellant-1 and appellant-2. The relevant clauses of the 'Concession Agreement' dated 22.03.2010 need to be quoted, which are as below:- CONCESSION AGREEMENT THIS AGREEMENT is entered into on this the 22nd day of March, 2010. BETWEEN 1 THE NATIONAL HIGHWAYS AUTHORITY OF INDIA, established under the National Highways Authority of India Act 1988, represented by its Chairman and having its principal offices at G-5 & 6, Sector 10, Dwarka, New Delhi-110075 (hereinafter referred to as the "Authority" which expression shall, unless repugnant to the context or meaning thereof, include its administrators, successors and assigns) of One Part; AND 2 M/s GMR OSE ....
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....ity had accepted the bid of the Consortium and issued its Letter of Award No. NHAI/BOT/11012/PPPAC/KNT/05/2008/19 dated 8th February, 2010 (hereinafter called the "LOA") to the Consortium requiring, inter alia, the execution of this Concession Agreement within 30 (thirty) days of the date of issue thereof. (F) Consortium has since promoted and incorporated the Concessionaire as a limited liability company under the Companies Act 1956, and has requested the Authority to accept the Concessionaire as the entity which shall undertake and perform the obligations and exercise the rights of the Consortium under the LOA, including the obligation to enter into this Concession Agreement pursuant to the LOA for executing the Project. (G) By its letter dated 9th March 2010 the Concessionaire has also joined in the said request of the Consortium to the Authority to accept it as the entity which shall undertake and perform the obligations and exercise the rights of the Consortium including the obligation to enter into this Concession Agreement pursuant to the LOA. The Concessionaire has further represented to the effect that it has been promoted by the Consortium for the purpos....
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....not the obligation to undertake such review and provide its comments, if any, to the Concessionaire within 15 (fifteen) days of the receipt of such drafts. Within 7 (seven) days of execution of any Project Agreement or amendment thereto, the Concessionaire shall submit to the Authority a true copy thereof, duly attested by a Director of the Concessionaire, for its record. For the avoidance of doubt, it is agreed that the review and comments hereunder shall be limited to ensuring compliance with the terms of this Agreement. It is further agreed that no review and/or observation of the Authority and/or its failure to review and/or convey its observations on any document shall relieve the Concessionaire of its obligations and liabilities under this Agreement in any manner nor shall the Authority be liable for the same in any manner whatsoever 5.2.3 The Concessionaire shall not make any addition, replacement or amendments to any of the Financing Agreements without the prior written consent of the Authority if such addition, replacement or amendment has, or may have, the effect of imposing or increasing any financial liability or obligation on the Authority, and in the event th....
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....the Companies Act, 1956, having its Registered Office at 25/1, SKIP House, Museum Road, Bangalore 560025 and Corporate office at - IBC Knowledge Park, Phase 2, D Block, 10th Floor, 4/1, Bannerghatta Road, Bangalore 560029 hereinafter called the "Concessionaire" or "Purchaser" or "GOHHHPL", (which expression shall include its successors, representatives and permitted assigns) of the FIRST PART. AND Indra Sistemas India Private Limited, a company incorporated in India with its office at 5th Floor, WingB, IFCI Tower, 61, Nehru Place, New Delhi 110019 India (hereinafter called "Indra", or "TMS Provider" or "Contractor" or "Successful Bidder" or "Bidder", which expression shall, unless repugnant to context or meaning thereof, include its successors in title and permitted assignees) of the Other Part. WHEREAS A. The Government of India had entrusted to the NHAI the development, maintenance and management of National Highway No.13 including Section from km 202.000 to km 299.000 (approx. 99.054 kms). B. NHAI had resolved to augment the existing road from l m 202.000 to km 299.000 (approximately 99.054 km) on the Hungund-Hospet section of National High....
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....g to be legally bound hereby, the Parties agree as follow: 1.0. The Concessionaire hereby appoints the Contractor to "Supply, Install, Commission and Maintain the Toll Management System in the Project as detailed out in this Agreement and the Contractor hereby accepts the appointment to provide and perform the said Works for the Project in accordance with this Agreement and Other related documents. This Agreement shall be in effect from 8th December, 2011. 1.1. The mutual rights and obligations of the Concessionaire and the Contractor shall be as set forth in this Agreement; The letter addressed by appellant-2 to the Project Director, NHAI dated 05.04.2012 reads as follows:- 13. Reading the aforesaid quoted cluses of the agreements, it is clear that under the Concession Agreement, the contractor is at liberty to appoint sub-contractors for implementation of the project work which accordingly in the present case, implemented by the appellant-2 by entering into an agreement separately with appellant-1 for TMS. Further reading the letter dt. 05.4.2012 addressed to the NHAI it reveals that it was within the knowledge of NHAI that a sub-contractor has been appoin....
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....r under Sl.No.356, 358 and 359 of notification No.12/2012-Customs, dated 17-03-2012. 2. ... .... 2.1 .... 2.2. ... 2.3. ... 2.4. Whether each sub-contractor (of a contractor) is required to enter into a contract with the GOI or his name should figure in the contract agreement signed between the contractor and GOI for availing the benefit of this exemption. 2.4.1 Field formations are not allowing the benefit of exemption to imports made by the sub-contractor if his name does not figure in the contract signed between the GOI and the Contractor on the ground that as per the condition of the exemption, the importer is required to produce a certificate from DG, Hydrocarbons, that the imported goods have been imported under a contract signed under the New Exploration Licensing Policy, and containing the name of such sub-contractor. 2.4.2 The condition (c) (i) in all the Sl. Nos. of the said notification requires that the importer should produce an EC, which should indicate that the goods have been imported under a contract entered between the Government and the contractor, and it should also contain the name of the sub-contra....
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....construction corporation under the control of the Govt. of a State. In our view, the appellants are covered under the said Clause (a)(ii) of Condition 40 having been given a contract for road building under the afore cited purchase order issued by TNRDC. Moreover, the letter issued by the Govt. of Tamil Nadu cited above clearly establishes the bona fides of the appellants who have undertaken the road construction work on behalf of TNRDC. Hence, we are of the view that the benefit of exemption under the impugned notification cannot be denied to the appellants. Accordingly, we set aside the impugned order and allow the appeal with consequential benefits to the appellants. The said judgment was later followed by the Bombay Bench of this Tribunal in the case of Ideal Road Builders Pvt. Ltd. Vs. CC, Mumbai [2016 (12) TMI 1314 - CESTAT MUMBAI]. 15. As far as compliance of clause (b) of the Condition No.9 of the said Notification is concerned, we find that after completion of the project by installation of TMS on the respective National Highways 9 & 13, the same were transferred by the appellant-1 to appellant-2 as condition of the contract between them. To read the said clause (b) ....
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....our view this is only a passing observation and does not lay down the ratio of the case. In other words, the issue agitated in the said case was not whether the exemption under the notification would be available if the goods are withdrawn after the completion of the project. Being only obiter dicta the same does not have precedential value. This apart, to compel the contractor that the capital goods used in the project cannot be withdrawn even after completion of the project would be highly impractical and impossible. The law does not compel a man to do that which he cannot possibly perform. 'Lex. non cogit ad impossibilia'. The decisions in the case of Caterpillar India Pvt. Ltd, (supra), IBM India Pvt. Ltd., held that the goods supplied to Contractors were available for exemption. The goods involved in these cases are not goods such as cement or steel which form part of the project permanently. The Higher Courts have held that exemption is available even if such goods are supplied to Contractor and that supply to Contractor would mean supply to Project Authority as stated in the Notification. The department cannot then interpret the Explanation inserted in the Notification to re....