The appellant entered into a Joint Venture Agreement with M/s
Shapoorji Pallonji & Company Limited for the purpose of
construction of roads in the State of Andhra Pradesh. The Joint
Venture was awarded a contract by the National Highways
Authority of India for construction of roads as a part of the
Golden Quadrilateral, Phase-2 Project in Andhra Pradesh.
The description reads : "Hot
mix plant batch type with electronic controls and bag type
filter arrangement 160 tons per hour capacity."
Vide a notification dated 1.3.2001, in exercise of powers
under Section 25(1) of the Customs Act, certain items were
exempted from payment of customs duty and additional duty
leviable under the Customs Tariff Act.
We are concerned with
serial No.217 of this notification which reads as follows:
"217. 84 or any other Goods specified in List 11 Nil Nil 38
Chapter required for construction of roads."
The conditions by which the exemption is attracted is set out in
item 38 as follows:
"38. If, -
a) the goods are imported by -
i) the Ministry of Surface Transport, or
(ii) a person who has been awarded a contract for the
construction of roads in India by or on behalf of the
Ministry of Surface Transport, by the National
Highway Authority of India, by the Public Works
Department of a State Government or by a road
construction corporation under the control of the
Government of a State or Union Territory; or
(iii) a person who has been named as a sub-contractor
in the contract referred to in (ii) above for the
construction of roads in India by or on behalf of the
Ministry of Surface Transport, by the National
Highway Authority of India, by Public Works
Department of a State Government or by a road
construction corporation under the control of the
Government of a State or Union Territory;
b) 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;
and
c) in case of goods of serial nos. 12 and 13 of List 11, the
importer, at the time of importation of such goods, also
produces to the Deputy Commissioner of Customs or the
Assistant Commissioner of Customs, as the case may be, a
certificate from an officer not below the rank of a Deputy
Secretary to the Government of India in the Ministry of
Surface Transport (Roads Wing), to the effect that the
imported goods are required for construction of roads in
India."
List 11 with which we are concerned contains several entries.
We are concerned with Entry No.1 which reads as follows:
"(1) Hot mix plant batch type with electronic controls and
bag type filter arrangements more than 120 T/hour
capacity."
The Customs Authorities, however, maintained
that what was imported was not a hot mix plant but only certain
parts of such plant and, therefore, the exemption notification
would not apply.
Various representations were then made to the
Chief Commissioner of Customs to allow the goods into India
without payment of customs duty.
On 22.2.2002 the goods were
assessed provisionally and then allowed to be cleared. By an
order of the same date, the Commissioner of Customs held that
the exemption notification did not apply for two reasons.
As
per condition 38 of the said notification, imports have to be
made by a Joint Venture Company and not by one of the partners
of the said company.
Secondly, the exemption applies to a
complete plant that is imported and not to parts/components of
such a plant
Shri M.V. Narasimha Rao, Project
Director of NHAI, with reference to the exemption
certificate issued by them, after careful scrutiny of the
related import documents and also the examination
proceedings dated 24.01.2002, has clarified that the goods
under import were not the complete plant and that the
imported components did not have the essential
characteristics of the plant.
Under Notification No.17/2001, that the benefit of
duty exemption is available only for the import of the
plant in full either in CKD or SKD condition. The subject
import can be considered only as a part of the plant.
Therefore, the goods under import are not eligible for the
duty exemption as provided under the Notification
No.17/2001."
An appeal was carried by the appellant to CESTAT which set
aside the Commissioner's reasoning on condition 38 of the
notification.
It held that there was in fact no Joint Venture
Company formed and the Joint Venture between the appellant and
M/s Shapoorji Pallonji & Company Limited was in the nature of a
partnership, in which case any of the partners could import
goods covered by the exemption notification.
However, it agreed
with the Commissioner that what had in fact been imported was
not a complete plant and, therefore, it would follow that the
exemption notification would not be available on this score.
Apex court held that
All these statements - none of them
retracted or controverted - coupled with the documentary
evidence would prove beyond doubt that the goods imported
by IVRCL did not represent anything with essential
character of a hot mix plant, let alone a complete plant,
to satisfy the description at Item No. (1) of List-11 under
the Notification. Therefore, we are unable to accept the
counsel's argument that the imported goods should be
treated as 'hot mix plant unassembled.' What was exempted
from import duty in terms of Sr. No.217 read with Item
No.(1) of list 11 under the Notification was a complete hot
mix plant fully described at the said Item No. (1) and not
some components thereof. There can be no doubt or
ambiguity with regard to the description of goods at the
said Item No. (1)."
The subject matter before us is an
exemption notification issued under Section 25 of the Customs
Act, 1962.
The interpretative notes that have been referred to
by Shri Lakshmikumaran are in the Customs Tariff Act.
Note 2(a)
referred to by Shri Lakshmikumaran reads as follows:
"2. (a) Any reference in a heading to an article shall
be taken to include a reference to that article incomplete
or unfinished, provided that, as presented, the incomplete
or unfinished article has the essential character of the
complete or finished article. It shall also be taken to
include a reference to that article complete or finished
(or falling to be classified as complete or finished by
virtue of this rule), presented unassembled or dis-
assembled."
It is clear that such note will have no application to an
exemption notification which is issued under Section 25 of the
Customs Act.
Therefore, the fact that an unassembled plant
which is incomplete but which has the essential character of a
complete plant is not the test to be applied in the present
case
it is settled law that
"34. The principles as regards construction of an exemption
notification are no longer res integra; whereas the
eligibility clause in relation to an exemption notification
is given strict meaning wherefor the notification has to be
interpreted in terms of its language, once an assessee
satisfies the eligibility clause, the exemption clause
therein may be construed liberally. An eligibility
criteria, therefore, deserves a strict construction,
although construction of a condition thereof may be given a
liberal meaning."
"29. It is now a well-established principle of law that
whereas eligibility criteria laid down in an exemption
notification are required to be construed strictly, once it
is found that the applicant satisfies the same, the
exemption notification should be construed liberally."
Judged by this test,
it is clear that a hot mix plant of the
type mentioned alone is exempt from payment of customs duty.
Obviously, what is meant is that such plant in its entirety must
be imported albeit in an unassembled form. Judged by this test,
it is clear that the concurrent findings of fact of the
Commissioner and the CESTAT requires no interference by this
Court inasmuch as both authorities have held that a complete
plant in an unassembled form has not in fact been imported.
Further, both authorities have relied upon statements made by
none other than the Vice President of the Appellant who after
retracting a statement made on 3.1.2002 has made a subsequent
statement on 21.2.2002 admitting that the imported goods were
only components and had not attained the essential
characteristics of a plant. The subsequent statement has not
been retracted.
Further, Shri P.S. Banik an employee of
Marshalls also made a statement that the plant in its entirety
consisted of 11 containerised sections of which a few were
indigenously produced by Marshalls.
Shri Bhattacharjee also an
employee of Marshalls added that what was manufactured
indigenously was essential for the functioning of the plant.
Further, Shri M.V.N. Rao, of the National Highways Authority of
India stated that a complete plant had not been imported and
that the components of such plant which were imported did not
have the essential characteristics of a hot mix plant.
It is settled law that statements made to an Officer of
Customs are admissible in evidence under Section 108 of the
Customs Act, 1962.
In the present case, both the oral evidence and the
documentary evidence ultimately lead to the same conclusion:
namely, that what was imported was not a hot mix plant that was
complete in itself.
6. It may be pointed out that CESTAT has already given the
appellant considerable relief. The redemption fine of
Rs.5,00,000/- imposed by the Commissioner was reduced to a fine
of Rs.1,00,000/- and a penalty of Rs.1,00,000/- imposed by the
appellant has also been set aside. In the circumstances, the
appeal is dismissed with costs of Rs.1,00,000/-.-2015 S.C. MSKLAWREPORTS
