TMI Blog2015 (5) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... vocate that even though the judgment laid down in Mihir Textiles case (1997 (4) TMI 75 - SUPREME COURT OF INDIA) passed under the old regulations, however the Hon’ble Supreme Court has categorically held that the contract need to be registered prior to the Order of Clearance was passed. - in terms of Regulation No.(4) of the PIR, 1986, the contract should be registered prior to clearance of the goods and not at the time of warehousing of the goods. In the present case the project contract has been registered prior to clearance of the goods for home consumption, hence eligible to the benefit of project import benefit. - Decided in favour of appellant. - Customs Appeal No. C/A/76050/2014 - Order No. FO/A/75227/2015 - Dated:- 11-5-2015 - Dr. D. M. Misra, Hon ble Judicial Member And Dr. I. P. Lal, Hon ble Technical Member,JJ. For the Petitioner : Shri C. S. Lodha, Sr. Shri Vipin Kr. Jain, Advocate For the Respondent : Shri A. K. Das, Special Counsel ORDER Per Dr. D. M. Misra: This Appeal is directed against the Order-in-Original No.KOL/CUS/PORT/42/2014 dated 10.06.2014 passed by Commissioner of Customs (Port), Kolkata. 2. Briefly stated factsof the case ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e import consignments covered under Contract No.EPIL-GSZ:02/2010 dated 23.08.2010 covered under Project Import Registration No.S-37C(P)Proj-09/2012A(6), shall be assessed on merit, without extending the benefit of the project import. 3. Ld. Sr. Advocate, Shri C.S.Lodha for the Appellant, narrating the background facts, submitted that the Appellantare an EPC Contractor, have been entrusted with the job of setting up of Green-Field Fertilizers Plant at Panagarh Industrial Area, Durgapur by oneM/s Matrix Fertilizers and Chemicals Ltd. The Appellant had also entered into a separate Contract with M/s. Matrix for supply of certain equipments required for the said Fertilizers Project. For off-shore items, initially it was agreed that the equipments required for the said Fertilizers Project would be imported by the Appellant, and M/s. Matrix would then buy these equipments on High Sea Sale basis, in their own name as an importer of such goods. 3.1. The ld. Sr. Advocate has further submitted that the Fertilizer Project is eligible to the benefit of the Project Import assessment under Customs Tariff Heading 98.01, for which it was necessary to register the Contract with the Customs Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods were provisionally assessed and cleared on furnishing security in the form of two bank guarantees for ₹ 33,00,23,605/- and ₹ 1,10,00,000/- (totaling ₹ 34,10,23,605/-)and cash security of ₹ 5,52,22,549/-to cover the differential duty involved. 3.4. The ld. Sr. Advocate has submitted that while finalizing the assessment, the ld. Commissioner had denied the benefit of Project Import assessment mainly on the ground that the Appellant had failed to comply with provisions of Project Import Regulations, 1986, inasmuch as the project contract was registered on 29.03.2012, whereas the goods have been imported prior to the said date of registration and warehoused by filing into-bond bills of entry. Thus the mandatory provisions of regulations (4) (5) of PIR,1986 are not complied with.He has also observed that once the goods are classified under a particular heading at the time of filing into-bond bill of entry, the classification cannot be altered to 98.01 of CTA,1975 at the time of clearance of the goods by filing ex-bond bills of entry. 3.5. Ld. Sr. Advocate argued that interpretation of clauses (4) (5) of the Project Import Regulations, 1986 reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration of the contract should have been obtained before the order granting permission for clearance of the goods was passed.Then, the Hon ble Supreme Court proceeded to observe that in all these cases before the court, the Contracts were not registered at all before the order of the clearance was passed. They Ld. Advocate has submitted thatin contrast to the facts of this aid case, in the present case, the Contracts were registered on 29.03.2012 and request for clearance for home consumption had been made thereafter. 3.8. The ld. Sr. Advocate in support of his contention has placed reliance on the decision of this Tribunal in the case of Bharat Earth Movers Ltd. Vs. CC, 2006(201)ELT 602(Bang.). He has submitted that at para 4 of the said decision, the Tribunal analyzing the ratio laid down in Mihir Textiles case (supra) had observed that Clause (4) of the Project Import Regulations,1986 under Chapter Heading 98.01of CTA specifically omits reference to the condition regarding registration being done before depositing in a warehouse and it has been prescribed before clearance for home-consumption. Therefore, the observation of the ld. Commissioner that the Contracts were required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Dunlop India Ltd. Vs. CC 1997(95) ELT 162(SC). The plea of the assesseethat since out of charge Order has not been effected, the application under regulation 4 cannot rejected, has not been acceptedobserving that Regulation (4) cannot override the mandatory provision of Regulation (5) to the effect that registration application has to be made on or before importation . It is the contention of the Ld. Sr. Advocate that this reasoning is contrary to the principle that the Registration should be effected before the clearance of the goods for home consumption and also it is bad law as it was passed without referring to the meaning of import referred to in the said Regulation 5 and interpreted by the Hon ble Supreme Court in Gardens Silk Mills Kiran Spg. Mills case(supra). Hence, the said judgment cannot be considered as a binding precedent. 3.12. The ld. Sr. Advocate further submitted that the meaning of import, as recorded by the ld. Adjudicating Authority, is erroneous and contrary to the principle of law laid down by the Hon ble Apex Court in GardenSilk Mills Ltd. vs. UOI, 1999(113) ELT 358. The ld. Commissioner has observed that import of goods into India would commence, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant eligible to Project Import assessment benefit, as has been held in the case of PratibhaIndustires s case (supra). It is his submission that registration not having been done on or before importation, the benefit of Project Import, cannot be extended to the Appellant. 4.1 Further, Analyzing the judgment of the Hon ble Supreme Court in Garden Silk Mills case (supra), he submits that the observation of the Hon ble Supreme Court at para 16 of the said judgment consists of two parts. In the first part it describes the meaning of importation and the later part it has been emphasized what is the taxable event. The portion relating to filing of bill of entry occur in the latter part, does not have any bearing on the definition of import mentioned in the first part. Thus, once the goods which had come into India from outside the country, form part of the land mass within the country, then the import or importation is complete, and it would not depend on or wait for the time, when the bill of entry for home-consumption, is filed, if at all, at a later date. 4.2 It is his submission that the eleven consignments in question were imported prior to registration of the contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of filing the ex-bond bills of entry for home clearance, the classification cannot be altered. 5.2. Assailing the impugned order, the appellant on the other hand, argued that the meaning and interpretation of import' recorded by the adjudicating authority is contrary to the principle of law laid down by the Apex Court in Garden silk Mills and Kiran Spinning s case. It is their argument that in the said Regulations, the requirement of Registration of the contract is on or before clearance of the imported goods rather than on or before its importation (bringing into India)/warehouse of the goods. Also, it is argued that the principle of law laid down by the Hon ble Supreme Court in Mihir Textile Ltd. s case(supra) has been mis-quoted and not understood in its proper perspective, hence misapplied to the facts and circumstances of the present case. To substantiate their argument, the appellant have referred to the erstwhile provisions of Project import regulations, 1965, the PIR, 1986 and Board s instruction prescribed in the CBEC manual. 5.3. To appreciate the rival contentions, and to address the question of law raised, it is necessary to examine the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Project Imports (Registration of Contract) Regulations, 1965, except as respect things done or omitted to be done before such supersession, the Central Board of Excise and Customs hereby makes the following regulations, namely : REGULATION 1.?Short title and commencement. (1) These regulations may be called the Project Imports Regulations, 1986. (2) They shall come into force on the 3rd day of April, 1986. REGULATION 2.?Application. These regulations shall apply for assessment and clearance of the goods falling under heading No. 98.01 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). REGULATION[3.?Definitions. - For the purposes of these regulations, - REGULATION 4.?Eligibility. The assessment under the said heading No. 98.01 shall be available only to those goods which are imported (whether in one or more than one consignment) against one or more specific contracts, which have been registered with the appropriate Custom House in the manner specified in regulation 5 and such contract or contracts has or have been so registered, (i) before any order is made by the proper officer of customs permitting the clearance of the goods for home consumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expected to be imported. The importer shall apply for such registration in writing to the proper officer of Customs. 5.6. A plain reading of Regulation 4 and the instruction of CBEC mentioned above leaves no room for doubt that the timing stipulated for registration of the contract is on or before clearance of the goods for home consumption i.e when it leaves the customs barrier. Needless to mention, clearance of goods for home consumption as mentioned in Regulation (4) of PIR,1986 cannot be construed as crossing of the Indian territorial waters and depositing it in the warehouse. Unhesitatingly, it could be said that the clearance of the goods is for home consumption i.e. when the goods move out of the customs control so as to mix with the mass of goods for consumption. 5.7 These regulations had been considered by this Tribunal in Bharat Earth Movers Ltd. case (supra). In that case, the goods had arrived and warehoused in terms of the Appellant s letter dated 28.01.2002 on the ground that the assessee would be making an application for registrationof their contract under the Project Import and for extending the benefit of concessional rate of duty for the goods imported a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Project Import benefit to the Appellant. The ld. Commissioner has observed that the Hon ble Supreme Court has laid down three conditions that are necessary to be satisfied for extending the benefit. At para 4 of the impugned Order-in-Original it is recorded as: It is also clear from the case law of M/s. Mihir Textiles Ltd. vs. Collector of Customs, Bombay {1997(92)ELT 9(SC)}, wherein Hon ble Supreme Court has held that three conditions are to be satisfied for the entitlement of Project import benefit that (1) goods should have been imported against a specified contract registered with the appropriate Customs House; (2) such registration should have been made in the manner prescribed by the regulations; and (3) Registration of the contract should have been obtained before the order for warehousing has been passed. The Hon ble Supreme Court further held that unless all these three conditions are satisfied, no importer can claim, as a matter of right, the concessional relief provided in the entry in the present case, where the goods imported and the Bills of Entry were filed, the contract was not registered. 5.9 The ld. Sr. Advocate has vehemently argued that the Condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t all before the Order of clearance was passed. In other words, the aspect of clearance of goods was put on the forefront so as to ascertain the fulfillment of the condition of Registration of Contract. We agree with the contention of the ld. Advocate that even though the judgment laid down in Mihir Textiles case (supra) passed under the old regulations, however the Hon ble Supreme Court has categorically held that the contract need to be registered prior to the Order of Clearance was passed. 5.12 Therefore, reading the aforesaid judgment, we do not harbor any hesitation to say that in terms of Regulation No.(4) of the PIR, 1986, the contract should be registered prior to clearance of the goods and not at the time of warehousing of the goods. In the present case the project contract has been registered prior to clearance of the goods for home consumption, hence eligible to the benefit of project import benefit. 5.13 In view of our above finding, the Appellant are eligible to the benefit of project import under Chapter 98.01 of CTA,1975 for goods covered under the project contract registered on 29.03.2012 with the Customs department,kolkata, hence the other issues raised becom ..... 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