TaxTMI 
TaxTMI 
2000 (3) TMI 1132
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.... star hotel at Sandra (W), Mumbai. For the said project they made an application for import of marble slabs under Export Promotion Capital Goods Scheme to DGFT. The said application of the appellants was for 3 kinds of marble slabs viz. SERPEGGIANTE, GREEL THASSOS, RPSA PASTELLO of the Italian made. For their project they wanted to import the above types of marbles. The appellants stated that the proposed hotel under construction is a 5 star deluxe hotel with a vast lobby and deluxe guest rooms. The floorings and claddings of these areas with marble gives beauty and sense of opulence to the guests especially international visitors. The above Italian marble viz. SERPEGGIANTE (2) GREEL THASSOS (3) RPSA PSTELLO selected by their designers and foreign franchisers reflect their superior taste and style which are not available in the local market. Also the polishing of these marbles are to international standard. The prime areas are therefore, being decorated with these marbles and the remaining areas will have local materials. On the basis of the application, appellants were given EPCG Licence dated 23rd May, 1996 (Page 36 of the Paper book). The Licence provides that they have permissi....
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....ted that paragraph 38 of the Policy refers to concessional rate of Customs duty which is contained in Notification 110/95 and binding on the Customs authorities inasmuch as it states that the capital goods (including) 10% of the of value capital goods may be imported at a concessional rate of customs duty according to the conditions given in the table in the said paragraph subject to an export obligation to be fulfilled over a period of time. He further stresses that when the Govt. of India has made reference to the concessional rate of Customs Duty in para 38 of the Policy it is binding on the Customs Department to give exemptions and to give the concessional rate of duty in terms of Notification 110 of 95. He relied on the judgment of Bombay High Court in the case of Shivshankar Tilakraj v. U.O.I. and Ors. reported in 1987 (28) E.L.T. 342 (Bom.) for the proposition that customs authorities are not empowered to sit in judgments over the power exercised by the office of the Controller of Imports and Exports and also judgment of Tribunal in Vimpex Dyechem v. C.C. - 1992 (62) E.L.T. 741. He further argued that the trade notices or other forms of communication given by the DGFT contai....
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....lace. Firstly, when the goods are imported, at the time of import the Customs Authorities will look into the licence for valid importation of the same. Secondly, after such importation and satisfying the conditions of the licence, the Customs authorities would look into the licence from the I.T.C. angle, thereafter when any importer claims exemption from Customs Duty, the authorities have to look into the exemption notifications in a strict way. He therefore, states that the Customs authorities have to see from the I.T.C. angle as well as the revenue angle viz. goods imported as such vis-a-vis the exemption notifications. He would, therefore, argue that the customs authorities are not prevented from looking into the exemption notifications and the conditions thereof. He would cite the judgment of the Supreme Court in Sheshank Sea Foods P. Ltd v. U.O.I. - 1996 (88) E.L.T. 626. He would state that the customs authorities are entitled to look into and act in accordance with exemption Notification 110 of 95 in terms of the judgment of the Delhi High Court in respect of Exports Apparel Group Ltd. v. C.C. - 1997 (91) E.L.T. 307. He would state that in view of the judgment of the Supreme ....
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....ct to an export obligation to be fulfilled over a period of time. The period for fulfilment of export obligation shall be reckoned from the date of issue of the import licence: Duty Export Obligation Period 15% CIF Value 4 times CIF Value 5Yers Zero duty (in case CIF value is Rs.20 Crores or more) 6 times CIF Value 8 Yers The export obligation shall be on FOB basis. However, in the case of zero duty imports, the licence holder may apply for fulfilment of the export obligation by exporting 4 times the CIF value of the capital goods on FE basis within a period of 8 years. The provisions of paragraph 138 of this Policy shall apply for calculating the export obligation on NFE basis." The term "capital goods" have been defined under Notification No. 110/95 which is described below. We also extract definition of "capital goods" contained in table in the said notification. "TABLE 1. Capital goods. 2. Capital goods in SKD/CKD condition to be assembled into capital goods by the importer. 3. Components of capital goods required for assembly or manufacture of capital goods by the importer. 4. Spare parts not exceeding 20%....
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....lated. In this case, the issue is whether Marble Slabs come within the scope of Notification No. 110/95-Cus. For getting the benefit under Notification No. 110/95-Cus. all the conditions and not merely the condition of the goods covered by a valid EPCG licence, have to be satisfied. I hold that the goods in question do not fall in any of the categories to the said Notification. The benefit of concessional rate of duty cannot be therefore, extended to the said goods. The other arguments of the importer are not relevant." In the said order he has held that the benefit under notification or the conditions contained in the notification has to be specified. He has not described as to how the conditions are being specified. One of the conditions contained in the notification is the existence of licence issued under the EPCG scheme that is reflected into the notification which is present in this case. That nobody denies it. The second condition is execution of legal undertaking in terms of Clause (3) of the exemption notification. That also nobody denies. But is it sufficient for the importer to claim exemption under the notification. The imported goods must necessarily come within the....
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.... the word in other Acts." The above observations and the craves have been approved by the Supreme Court in the case of MSCO P. Ltd. v. UOI - AIR 1985 (S.C.) 76 P.78. The ld. Counsel Shri Patil invited our attention to the term "plant" defined under various dictionaries and books. "McGraw Hill 4th Edition: "Plant: The land, buildings, and equipment used in an industry." Academic Press Dictionary of Science and Technology: "Plant" : An Engineering Production facility, a factory, electric power station or the like. "Words and Phrases, Permanent Edition Vol. 7A" "Plant" : is an all embracing term expressive of land, buildings, and the equipment of the business conducted on the premises. Plant is an entity itself, wholly distinct from the land, buildings, machinery and appliances which compose it." The word "plant" has not been identically defined in any of the various dictionaries. The importers can get benefit of the exemption notification only if the marble can be considered as a component of a plant within the meaning of the term plant as defined in the notification. As stated earlier, the definition contained in the EXIM Poli....
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....y rendering services. Such a wider definition not being available in the exemption notification the argument that when any specific licence under EPCG has been produced the exemption has to automatically follow is not well founded".(emphasis supplied). This argument of the ld. counsel therefore, in this regard as to as we never found the term plant has been used in a wider scope in the EXIM Policy than in the exemption notification. The Customs Authorities are considering the exemption Notification. Therefore we are following the said judgment of the Bharat Starch Industries Ltd. 11. In the case of Exports Apparel Group Ltd. the Delhi High Court 1997 (91) E.L.T. 307 had held that it is for the customs authorities to examine the goods that have been imported in terms of the licence and for and the duty of customs if any, is leviable thereon in terms of Notification 203 of 92 issued under Section 25 of the Customs Act. At para 10, 11, 12 and 13 the High Court has held as follows : "10. As to what is the effect of the Circular dated 27 April, 1994 issued by the Directorate General of Foreign Trade giving guidelines in respect of duty-free licences issued under duty exempti....
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....ejudice the case of either of the parties. We will, therefore, dismiss the petition." From the reading of the above it will be very clear that the Customs Authorities have to do their duty of considering and interpreting the exemption notification in terms of the goods imported and it will not be disharmonious approach as a Government as a whole and the Central Govt. will not be following any uniformity in approach as contained in Article 77(3) of the Constitution. This has been fully explained in para 11 of the said judgment of the Delhi High Court which has been extracted above. In fact the Tribunal when it passed the Order No. 2761, dated 7-7-1997 in the case of Bharat Starch Industries Ltd. has followed the said judgment of the Delhi High Court. Respectfully following the Delhi High Court judgment (supra) we would hold accordingly. We therefore, reject the contentions raised by the ld. Counsel Shri Patil for the appellants. No doubt the ld. Counsel has cited the judgment of the Tribunal in Universal Surgkal v. C.C. - 1988 (37) E.L.T. 58 for the preposition that in respect of the goods which are not itemised in terms of notification yet the Tribunal allowed importation of suc....
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.... term "plant" in the policy is wider, in that it includes goods used directly or indirectly. However, directness or otherwise of the use does not come into question in this case. A hotel, as a commercial, entity or a physical structure, cannot exist without walls and floors and there is no dispute that the marble slabs in question will be used to clad walls and floors. Marble is therefore used directly in the hotel. 16. In my view, the ratio of the Tribunal's decision in Commissioner v. Bharat Starch Industry, an unreported decision, has no direct bearing on the issue of whether the goods in question are a plant or not. The Tribunal said in that decision that, in applying a notification, what is to be considered is the definition of a term in the notification and not the definition in the import policy. The appellant before us does not base its claim in the definition of the policy alone; that is pressed into service as a adjunct. What is claimed is that the goods are plant within the meaning of the Customs notification. 17. The judgment of the Supreme Court in Commissioner of Income Tax v. Taj Mahal Hotel - AIR 1972 SC 168 in which the Court held that sanitary and pipeli....
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....) Member (T) DIFFERENCE OF OPINION In view of the difference of opinion between the two members, the following question as referred for decision by a third member to be nominated by the President: "Do marble slabs imported by the appellant come within the term "plant" as specified in the Explanation to Notification 110 of 95." Sd/- (G.N. Srinivasan) Member (J) J.N. Srinivasa Murthy, Member (J) The difference of opinion in the Bench Order No. 1167-68/98-WZB, dated 8-6-1998 was referred to me by the Honourable President under letter dated 11-2-1999 to hear the same and answer the question raised in the said order whether "Do marble slabs imported by the appellant come in the term "plant" as specified in explanation to Notification 110/95. On the receipt of the file, both sides were notified, and both sides were heard. The facts of the case are dealt with in the Bench order in paragraphs 1 to 3 in pages 1 to 3, which is not required to be narrated again. 19. Shri M.H. Patil, the ld. Counsel for the appellant has submitted in the course of the arguments that the appellant has imported marble slabs as capital goods under paragraph 7(7) of the EXIM Pol....
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....ted 18-10-1995 and the Notifications 110, 111 & 130/95 regarding the capital goods rendering services, and the items supports the case of the appellant. The absence of the wording "directly or indirectly" in the notification is immaterial which refers to the manufacture of goods, and it has nothing to do with the rendering of the services, as the marbles are directly used. The utilization of it is not disputed. The discussion in paragraph 3 at page 19 by the ld. Technical Member of the latest case law 1998 (24) RLT 427 in the case of Vivek Alloy Co. v. C.C.E. under paragraph 4 supports the case of the appellant in paragraph 10 to 15 of the order. In 1998 (97) E.L.T. 159 it is mainly based on the licence of DGFT and there was no issue regarding the plant. The EXIM Policy is treated only as a adjunct, and the notification is relied on by the appellant in the main. The decision of the Supreme Court in Shashank Sea Foods Pvt. Ltd. and 1997 (91) E.L.T. 307, Delhi High Court in the Export Apparel case, it is held that the customs officers can investigate on the licence, but not its correctness or competence of the authority. The other angle of examination is for the purpose of levying cu....
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....ed by the ld. Judicial Member words contained in one act should not be followed in another act (Paragraph 12). It is also observed that the words directly or indirectly are missing in the notification, which is narrower aid restricted one than the EXIM Policy. All matters concerning the exemption of duty are to be dealt with by the Department of Revenue Ministry of Finance as per the allocation of business Rules, 1961 under Government of India as observed in paragraph 11 of the order. The only point in dispute is whether the marble slabs is a capital goods under Notification No. 110/95 and importability is not in dispute. The appellant's hotel is not a factory for the production of licence by the excise authorities, as per paragraph 6 of the notification. The policy is clear regarding the capital goods and plant. As per 1996 (81) E.L.T. 349 paragraph 46 the interpretation of the notification must be made by the customs authorities for the purpose of levy of customs duty. The customs authorities have to satisfy themselves that the conditions of the notification are complied to grant exemption thereunder. The finding of the ld. Judicial Member in paragraph 11 of the order is prop....
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....oods imported assembled or were manufactured or installed in the importers factory and a certificate from the Jurisdictional Asstt. Commissioner, Central Excise should be produced within 6 months from the date of completion of imports or condition such extended period allowed by the Asstt. Commissioner of Customs. Under the table item No. 1 capital goods is eligible for such concessional rate of duty imported under a scheme under a valid licence in condition No 1. In the explanation to this notification under the table the capital goods is defined in Sub-clause (i) meaning any plant machinery equipment and accessories required for manufacture or production of other goods including packaging machinery and equipments etc. and used in manufacturing, mining, agriculture, aquaculture, etc. and third category is for rendering services. The notification refers to Export and Import Policy from 1-4-1992 to 31-3-1997 revised in March, 1995 duly published by the Government of India and Ministry of Commerce and the DGFT with the licence authority for the purpose. Under the Clause 5 Export obligation in relation to the importers other than those rendering services meant export of a manufactured....
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....e Policy under which the licence is issued. The notification cannot be isolated to interpret regarding the grant of exemption on a concessional rate of duty on the imported goods under the said notification. They are inter-linked with each other and they cannot be separated as held by the ld. Technical Member. 24. From the contention of the both sides and the Bench order, it is apparent that the plant or is not specifically and clearly defined in the notification. In the absence of it, how it is to be meant has to be considered in the light of the case laws cited in this case by both sides, (a) AIR 1972 SC 168 in the case of Commissioner of Income Tax v. Taj Mahal Hotel under Clause B it is held in paragraph 6 that "where the definition of a word has not been given, it must be construed in a popular sense. If it is a word of everyday use popular sense means the sense with which the people are conversant and with the subject matter with which the statute is dealing when attribute to it. This is regarding the interpretation of the statute and the construction of undefined word. The plant is defined under Section 10(5) of the Income Tax Act and that is considered in the judgment an....
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....anation must be read as to harmonize to clear any ambiguity in the main provision. This decision helps in this case for interpreting the Notification 110/95. (e) 1998 (97) E.L.T. 159 in the case of Commissioner of Customs v. Bharat Starch industries, in which the Customs Notification 111/95 is considered in paragraph 10 and 11. According to it, goods imported under EPCG licence should satisfy the requirement laid down in the exemption notification to qualify for concessional assessment envisaged therein. "It is noted that production of EPCG licence is only one of the conditions for eligibility. The licensing Policy 1992-97 contains the definition of capital goods which is much wider than that in the explanation to Notification No. 111/95. The import policy definition defines capital goods inter alia as meaning plant, machinery, equipment or accessories required for manufacture or production either directly or indirectly of goods or in rendering services. Such a wide definition not being available in the exemption notification, the argument, that when any specific licence under EPCG has been produced, the exemption has to automatically follow, is not well founded. The customs author....
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....lant. It does not mean that automatically he should get the concessional rate of duty benefit. The ITC angle regarding the import of marble slabs is conclusive. The correctness and the competence cannot be questioned in these proceedings. From the view of the customs duty, customs authorities have to examine the goods for levy of the proper customs duty, which is in their purview. It is observed in the impugned order dated 28-2-1997 that on the 1st check appraisement procedure the goods confirmed the declared parameter in the order. In paragraph 10 of the order, the ld. Judicial Member has observed on the decision referred above in Bharat Industries. 1997 (91) E.L.T 307 - Export Apparel Groups Ltd. (Delhi High Court) enables the customs officers to examine the goods as per licence and levy of customs duty under Section 25 of the Customs Act. So there is no bar for the customs authorities, even in this case, and it is also not disputed by the appellant. The decision of the Tribunal in 1988 (37) E.L.T. 58 in the case of Universal Surgical v. C.C., does not improve the position from the above decision as the importation was allowed of non-item goods in terms of notification in that ca....