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M/s. Ivrcl Infrastructure & Projects Ltd. Versus Commissioner Of Customs

2015 (4) TMI 562 - SUPREME COURT

Denial of exemption claim - import of hot mix plant or only parts notification dated 1.3.2001 - exemption from payment of customs duty and additional duty leviable under the Customs Tariff Act - imports to be made by a Joint Venture Company and not by one of the partners of the said company - Held that:- 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 .....

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ater, were made voluntarily. Reliance on the said statements, therefore, by the authorities below cannot be said to be unwarranted in law.

It is clear that on a holistic reading of the letter what has been imported is "the basic character" of the hot mix plant and not a complete plant as it is clear that what is manufactured indigenously would alone ultimately complete the plant. - Equally the letter dated 20.1.2002 being a letter by the National Highways Authority of India does not t .....

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ppellant considerable relief. The redemption fine of ₹ 5,00,000/- imposed by the Commissioner was reduced to a fine of ₹ 1,00,000/- and a penalty of ₹ 1,00,000/- imposed by the appellant has also been set aside. In the circumstances, the appeal is dismissed with costs of ₹ 1,00,000 - Decided against assessee. - CIVIL APPEAL NO. 5282 OF 2004 - Dated:- 15-4-2015 - A.K. Sikri And R.F. Nariman JJ. For the Appellant : Mr. Rajesh Kumar,Adv For the Respondent : Mr. Arijit Prasad .....

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2. 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: & .....

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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 effec .....

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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." A purchase order was placed by the appellant on M/s .....

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veyer apart from agreeing to set up the plant after it is imported. Vide a Bill of Entry dated 28.12.2001, the import of equipment from M/s Lintec was made by the appellants, who claimed that the said items fell within the scope of the exemption notification dated 1.3.2001 and, therefore, were exempt from payment of customs duty on the same. 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 exempti .....

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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. The Commissioner, therefore, held:- "14.2 Coming to the issue whether the goods imported are the complete plant or not, I find that M/s. IVRCL, placed an order for the supply of the whole plant on M/s. Marshall - Lintec, Chennai, (a Joint Venture collaboration between M/s. Marshall & M/s. Lintec, Germany). M/s. Marshall - Lintec, Chennai, entere .....

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rted components and the indigenous components in the indigenously manufactured containers. Further, the scope of supply included testing, erection and commissioning of the plant by M/s. Marshall. The cost of the plant is divided in the ratio approximately 60:40 between the partners M/s. Lintec, Germany and M/s. Marshall. 14.3 Further the agreement includes the cost of transportation of the imported components to the factory of M/s. Marshall. As per their Technical Transfer Contract, M/s. Lintec .....

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onents. The examination of the imported goods confirmed that out of 11 segments of the whole plant to be supplied in a fully assembled condition to the importers, only one assembled segment viz. drum container covering the screening and drying drum had been supplied apart from the components in another commercial container. 14.4 I also find that Shri S. Ramachandran, Sr. Vice President of the importing firm has clearly admitted, in his voluntary statement dated 03.01.2002 that the goods imported .....

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r 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. 14.6 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, .....

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overed 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. CESTAT held:- "10. The next issue is whether the goods imported and cleared under the Bill of Entry filed by IVRCL were eligible for the benefit of exemption in terms of Sr. No.217 of the Table (read with Item No.(1) in List-11) annexed to the Notificat .....

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the exemption. The description reads : "Hot mix plant batch type with electronic controls and bag type filter arrangement 160 tons per hour capacity." The Revenue has argued that a complete hot mix plant was not imported and that only some components thereof were imported. The appellants have contended that, barring some steel structures, all the essential components of hot mix plant were imported in terms of purchase order placed on the German supplier. We have come across two purchas .....

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se order is the final price as settled through negotiations with the German Supplier. We have already noted that both the purchase orders are identically numbered and identically dated. Any negotiation between IVRCL and the Germany supplier should have taken place on 21.7.2001 itself. No evidence of any such negotiation is available on record. We have also come across the work order issued by IVRCL to M/s Marshall Sons & Co. (Mfg.) Ltd., Chennai. This work order gives the following descripti .....

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on of structures, apart from assembling of the equipments supplied by Lintec. It is clear from these facts that some of the components viz. structures for the hot mix plant were supplied by Marshall, that the amount paid to them towards cost of such components and cost of assembling of Hot Mix Plant was DM 356,574, that the amount paid by IVRCL to Lintec for the components supplied by the latter was DM 550,000 and that the total cost of the hot mix plant as erected at the project site was DM 906 .....

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in support of the Commissioner's finding that only some components of hot mix plant were imported from Germany by the appellant- company. 11. Coming to the oral evidence under Section 108 of the Customs Act, we note that it was stated by Sh. P.S. Banik of Marshall that they were the Indian agents of Lintec for sale of hot mix plants in India and that, as per orders received from IVRCL, they had provided bitumen tanks and storage silo (containers with internal fabrication) and other structura .....

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e plant had not arrived and that the imported components did not have the essential characteristics of hot mix plant. 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 couns .....

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ant has argued that Rule 2(a) of the general rules for the interpretation of the schedule to the Customs Tariff Act would make it clear that so long as essentially the plant in question had been imported, merely because all items that go into the making of such plant were not imported would not matter. Further, it is clear that such imports can also be made in unassembled form. His further argument was that the plant as a whole had been imported and only structural work had to be done by Marshal .....

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l as by persons who deposed on their behalf which would show that in any case even the essential portions of the plant had not been imported. We have heard learned counsel for the parties. We find that the first argument made by Shri Lakshmikumaran can be disposed of immediately. 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 .....

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mbled 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. On the other hand, the applicable test would be what has been laid down in a catena of decisions. Two such decisions will suffice. In Commissioner of Customs (I .....

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re, deserves a strict construction, although construction of a condition thereof may be given a liberal meaning." Similarly in G.P. Ceramics Private Limited v. Commissioner, Trade Tax, Uttar Pradesh, (2009) 2 SCC 90, this Court held:- "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 .....

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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 tha .....

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ri 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. 5. It is settled law that statements made to an Officer of Customs are admissible in evidence under Section 108 of th .....

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ive of National Highways Authority of India, having never been retracted later, were made voluntarily. Reliance on the said statements, therefore, by the authorities below cannot be said to be unwarranted in law. Shri Lakshmikumaran in a written submission has accepted that statements given under Section 108 are admissible as evidence. However, he has cited a number of authorities to the effect that when such statements are in direct conflict with documentary evidence, the latter should be given .....

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effect: "The above mentioned items shall be assembled in the indigenously procured steel structural container to make up the complete mixture container." However, Shri Lakshmikumaran relied upon the following statements in the said letter: "We wish to mention at this stage that the steel structures which include containers, tank and storage silo are low technology fabrications and do not form essential components/ parts to the main Hot Mix Plant systems and import of such items f .....

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