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TMI Blog1987 (9) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that it was not imported either for initial setting up of the plant or for substantial expansion of an existing unit. When the party went up in appeal, the Appellate Collector of Customs upheld the orders of the Assistant Collector holding that repairs or improvement of defects no doubt directly result in increasing the production but that this is not what was contemplated by substantial expansion within the meaning of Tariff Heading 84.66. The Appellate Collector observed that the context clearly meant either all round additional capacity or, streamlining of existing equipment as a part of new technological renovation should be contemplated. 2.We have heard Shri D.N. Kohli, consultant for the appellants and Shri J. Gopinath, SDR for the department. 3. It is observed that the Mill was granted an Industrial Licence to increase their production from 30,000 tonnes to 75,000 tonnes per annum and for this purpose, they obtained from their indigenous suppliers, a Cold Soda Pulping Plant, which was producing cold soda pulp to the extent of 30 to 35 tonnes per day against the expectation of 90 tonnes per day. On the basis of advice of their consultants, it was decided by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p;[per : Harish Chander, Member (J)]. - I have perused the judgment proposed to be delivered by my learned Brother. After giving my anxious and careful consideration, I find with regret that I cannot persuade myself to agree with the view expressed by the learned Brother on the question of granting the benefit of Project Imports under Heading 84.66 of CTA 75. The appellant approached the Revenue Authorities for registration of contract under Project Import (Registration of Contract) Regulation, 1965 for the import of newsprint Twin Flow Refiner for the expansion of their production capacity. The appellant also forwarded the Import Licence No. l/CG/2034013, dated 14-11-1979 duly endorsed by the licensing authority for the assessment under Heading 84.66 as Project Imports. It was contended that the mill took up expansion of newsprint manufacturing for increasing its capacity from 30,000 tonnes per annum to 75,000 tonnes per annum in stages. Accordingly, new paper machine was imported in 1966 and new soda Recovery Boiler and B.L. Evaporators in 1967 and these were cleared under contract registered. The remaining plant including cold soda pulping were procured indigenously, Cold Soda P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xisting unit". He has also referred to another judgment of the Tribunal in the case of Punjab State Electricity Board v. Collector of Customs reported in 1987 (27) E.L.T. 432 = 1987 (10) E.C.R. 120 where the Tribunal had held that auxiliary equipment required for initial setting up of a unit or the substantial expansion of an existing unit of a specified power project it should be relatable to a particular and specified power project. Shri Kohli states that in the present matter the imported machine was relatable to the project and as such the appellant was entitled to the benefit of project import. He has pleaded for the acceptance of the appeal. 8. Shri J. Gopinath, the Ld. SDR, who has appeared on behalf of the respondent, states that the appellant is not entitled to the benefit of project import and has referred to heading 84.66. He has also referred to Notification No. 183, dated 28-4-1965 as amended. He states that there should be increase in the installed capacity and not in the working capacity. He has referred to the Revision Application and states that even in the Revision Application the appellants themselves have admitted that the refiner was imported for arriving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adras vide Order No. 133/86-B2 dated 22-12-1986 in Appeal No. CD(SB)(T) 1512/81-B2 that where the appellant's request for the benefit of grant of the Project Import was not accepted, the Tribunal had observed as under :- "From a perusal of this, it is clear that the project was already working and was closed down only for annual maintenance inspection. It is further clear that the warranty on the machines expired in December, 1976 but CGE were willing to share the cost of the additional modifications subject to several conditions. Therefore, it cannot be accepted that the imports made were either for the initial setting up or substantial expansion of the existing unit. This would mean that the goods were not eligible to the benefit of "Project Imports" and for asessment under Heading 84.66 CTA". The facts of the present case are similar to the earlier judgment. The judgments cited by Shri Kohli do not help him. The decision of the Tribunal in the case of Saurashtra Cement and Chemical Industries Ltd. was upheld by the Hon'ble Supreme Court in view of the submissions of the Ld. SDR, Shri J. Gopinath. Accordingly, I uphold the findings of the lower authorities and hold that the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the capacity. 4. The appellants were relying on the Tribunal's decision in the case of Bharat Heavy Electricals Limited [1984. (17) E.L.T. 525 = 1984 E.C.R. 1345]. This decision was in their favour even if what was done in the present case was considered as modernisation. 5. The decision of the Tribunal in the case of Punjab State Electricity Board was also in favour of the appellants, because the twin flo refiner was clearly relatable to the particular project, namely the newsprint and paper mill. 6. The learned Judicial Member had referred to the decision of the Tribunal in the case of Kerala State Electricity Board. That decision too was in the appellants' favour. In that case, it had been held as a question of fact that the imports were not made for initial setting up or substantial expansion of the existing unit. The present case, as already submitted by him, was clearly one of expansion. 7. The Bench enquired from Shri Kohli whether any evidence was on record to show that there had actually been a substantial expansion of capacity after the twin flo refiner had been installed. Shri Arzare, Deputy General Manager (Projects and Development) of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled capacity" and in the ''actual capacity". 10. Shri Saha also referred to the Project Imports Regulations, 1986, issued with reference to the revised Customs Tariff based on the Harmonized System. In these Regulations, the expression "substantial expansion" had been defined as an expansion which would increase the existing installed capacity by not less than 25%. This would clearly show that even under the earlier Regulations a substantial expansion of installed capacity was necessary in order to confer eligibility to the concession. 11. In reply, Shri Kohli submitted that the present case would be covered even by the definition in the revised Project Imports Regulations. The original installed capacity should be taken as 30,000 tonnes, which would be increased to 75,000 tonnes by adding the twin flo refiner. 12. As regards the use of the term "modification" by the foreign consultants, Shri Kohli submitted that they were not familiar with the nuances of the English language and no reliance should be placed on the use of this term by them, against the backgrund of the facts on record. 13. I have carefully considered the views expressed by the two learned M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also been pointed out that the Tribunal's order in this case has been upheld by the Hon'ble Supreme Court. The learned consultant for the appellants had argued that the Tribunal's decision in the case of Punjab State Electricity Board [1987 (27) E.L.T. 432 = 1987 (10) E.C.R. 120] was in their favour. It should be noted that in that case the article imported, namely a vehicle for transporting 100 MVA transformers, was held as not qualifying for assessment under Heading No. 84.66. It was held, firstly, that the vehicle was not "auxiliary equipment" within the meaning of the Heading; and secondly, that even if it was considered to be so, it was not relatable to any particular project and therefore, not eligible. Shri Kohli's argument is that in the present case the twin flo refiner was relatable to a particular project. This has not been denied, but that does not mean that the decision in the case of Punjab State Electricity Board gives any support to his case. Certainly the Tribunal did not say in that case that anything which was relatable to a particular project would qualify for assessment under Heading No. 84.66. 19. The case of Kerala State Electricity Board, as seen f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appeal is dismissed." As pointed out by the learned Departmental Representative, the Tribunal took the view that on the facts and circumstances of that case, the conditions for registration were substantially fulfilled. 21. Reliance has been placed on the observations of the Bench that "modernization and revamping do not in themselves preclude substantial expansion of an existing unit". The appellants appear to take this observation as meaning that modernization and revamping could be considered as equivalent to substantial expansion. But the words used by the Bench do not lend themselves to such a construction. One may say "a bureaucrat is not precluded from being a philosopher". This is far from saying that every bureaucrat is necessarily equivalent to a philosopher. I am, therefore, of the view that the Tribunal's order in the case of BHEL a does not contain a decision that modernization and revamping are equivalent to substantial expansion, and therefore, does not support the case of the appellants. 22. Shri Saha had referred to the wording of the Project Imports Regulations, 1986. I do not think these are of much assistance in the present case. It is a moot qu ..... 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