1991 (12) TMI 198 - AT - Customs

Issues Involved:

1. Eligibility for project import benefits under Heading 98.01.
2. Validity of import licence for the imported goods.
3. Application of para 45 of the Import Policy 1988-91.
4. Imposition of redemption fine and penalty.
5. Valuation of imported goods.

Issue-wise Detailed Analysis:

1. Eligibility for Project Import Benefits under Heading 98.01:

The appellant, M/s. Reliance Petrochemicals Ltd., imported four dryer slurry inlet ring heaters, whereas the import licence and packing list indicated only two. The Additional Collector denied the benefit of project import for the extra two heaters, stating that the import licence and the sponsoring authority's recommendation covered only two heaters. The Tribunal, however, noted that the project was in the setting-up stage and referred to the Madras High Court decision in Appraiser, Madras Customs v. Tamil Nadu Newsprint Papers Ltd., which emphasized the purpose of Heading 98.01 to streamline the clearance process for new projects. The Tribunal concluded that the appellants are entitled to project import benefits under Heading 98.01 due to the peculiar facts and circumstances of the case.

2. Validity of Import Licence for the Imported Goods:

The appellant's import licence specifically mentioned two heaters. The Additional Collector argued that only the items explicitly described in the import licence could be assessed under Heading 98.01. The Tribunal acknowledged this but noted that the appellant's argument was based on the necessity of additional heaters due to design changes during the project's erection phase. The Tribunal found that the importation was in accordance with the law and that the goods were covered by the licence, thus allowing the benefit of project import under Heading 98.01.

3. Application of Para 45 of the Import Policy 1988-91:

The appellant invoked para 45 of the Import Policy 1988-91, which allows up to 5% of the value of the capital goods licence to be used for items not covered by it, provided they are needed for the project's expeditious completion. The Additional Collector rejected this, stating that only 42% of the project was completed and the flexibility under para 45 could not be extended. The Tribunal, however, found that the appellant had not exceeded the value of the project import by virtue of the licence and that the import was necessitated by design considerations, thus allowing the benefit under para 45.

4. Imposition of Redemption Fine and Penalty:

The Additional Collector imposed a redemption fine of Rs. 1,00,000 and a penalty of Rs. 10,000 under Section 111(d) of the Customs Act, 1962, for the extra two heaters. The Tribunal set aside these penalties, finding no evidence of mens rea (guilty mind) and noting that the importation was necessitated by design changes and was in accordance with the law.

5. Valuation of Imported Goods:

The value declared in the bill of entry was for two heaters, but the appellant imported four. The Tribunal observed that there was no sufficient material on record to determine the value of the four heaters. It directed the adjudicating authority to ascertain the value after providing the appellant an opportunity for a personal hearing. The Tribunal emphasized that the relief granted in this case was due to its peculiar facts and circumstances and should not be considered a precedent for other cases.

Conclusion:

The Tribunal allowed the appeal, granting the benefit of project import under Heading 98.01 and setting aside the redemption fine and penalty. It directed the adjudicating authority to determine the value of the imported goods after a personal hearing, emphasizing that the decision was based on the unique facts of the case and should not serve as a precedent.

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