TMI Blog2018 (6) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... them are classifiable as Irrigation project under heading 98010012 or as Water Supply Projects notified vide N/N. 42/96 Cusdt 23.7.96 under heading 98010019? - N/N. 14/2004-Custom dated 8.1.2004 - Held that:- This Water Conductor System only relates to the lifting of water from one point and through pump houses and pipelines supplying to the recipient tanks at destination. Thus the entire project may be of Irrigation, but the part we are dealing with is only related to movement and lifting of water from one point to another. Thus it cannot be called an irrigation project but it can only be called a Water Supply project in that sense. Revenue has argued that since the project of the appellant is just lifting and supplying the water the same is not covered by the said expression. Revenue has relied on the decision of Tribunal in case of Pratibha Industries [2004 (9) TMI 278 - CESTAT, MUMBAI] - Held that:- It is seen that the facts in the said case are significantly different. In the said case the goods imported were not machineries but were pipes and therefore they were not covered under chapter heading 9801. In the instant case the goods imported are machineries and term Wate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d M/s NCC filed an appeal before the Hon ble Commissioner of Customs (Appeal), Mumbai who set aside the Order in original and allowed their appeal. Hence this appeal has been filed by the revenue. 2. Ld AR argued that as per Regulation 4 of the PIR-1986 the assessment under the 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 in accordance with the PIR-1986. She argued that it obviously means that the contract should relate directly to those goods which are proposed to be imported. She argued that while the original contract was between Jyoti Ltd and foreign supplier the respondents cannot be registered under PIR 1986 as there exists no contract between the importer M/s. HCC / M/s NCC and the foreign supplier. She placed reliance on the judgement of Hon ble Supreme Court in the case of Mihir Textiles Ltd. vs. Collector of Customs, Mumbai reported in 1997 (92) ELT. 9 (SC). 2.1 She further argued that Irrigation Project is a specific entry under CTH 98010012. The terms and conditions for availing the benefit of this entry and the rate of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed. She argued that ehe present Project is a Lift Irrigation Project which simply lifts/pumps/transports water from the river to the irrigation area. So it is not a project intended to make water fit for agricultural useand therefore it is not covered within the scope of Water Supply Project under SI. No. 26A of Notification No. 42/96-Cus dated 23.07.1996 and Notification No. 14/2004-Cus dated 08.01.2004. She argued that as per the ratio of M/s. Pratibha Industries Ltd. the same is not a water supply project. 2.4 She also placed reliance on the judgement of J.V.Gokal Co. 2017 (348) ELT. 445 (Bom.) wherein it was held by the Hon ble Bombay High Court that benefit of exemption was not available to Ductile pipes imported for the purpose of implementation of drinking water supply projects.She argued that exemptions are to be strictly interpreted. She placed reliance on following judgements. a) Novopan India Ltd. vs. Collector of C.Ex and Customs, Hyderabad reported in 1994 (73) ELT. 769 (SC) b) Liberty Oil Mills (P). Ltd. vs. Collector of Central Excise, Bombay reported in 1995 (75) ELT. 13 (SC) c) Gammon India Ltd. vs. Commissioner of Customs, Mumbai reported in 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce on the following decisions: (i) Jain Irrigation Systems Ltd. vs. CCE 2016 (343) ELT 562 (T);Affirmed by Supreme Court in 2017 (345) ELT A70 (SC) (ii) Eddy Cranes Engineers vs. CCE 2018 TIOL 542 CESTAT MUM 3.1 Ld Counsel argued that according to the department, an importer can register contract with foreign suppliers alone under Regulations 4 and 5. He argued that the regulation 4 prescribes assessment under the said heading 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 contract, which have been registered with the appropriate Customs House in the manner specified in regulation 5 . And regulation 5 provides that every importer claiming assessment of the goods falling under heading 98.01, .., shall apply in writing to the proper officer . He submitted that the Respondents (HCC) have entered into a contract with consortium of M/s. Jyoti Ltd. and its consortium partners, namely C.K.D. Blansko and C.K.D. NoveEnergo (foreign suppliers) placing a work order upon them for various pump stations under the Godavari Lift Irrigation Scheme project. Subsequently, M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods imported by the Respondents for such supplies. 3.4 He argued that the goods imported in the present case is parts for setting up pumping stations for water supply project for irrigation. Exemption is available to machinery/equipment for the purpose of water supply project for irrigation . Certainly, parts of pumping stations used for pumping water from the river to the field is machinery/equipment for the purpose of water supply project for irrigation . Thus, the decision of the Tribunal in the case Pratibha is not invokable in the present case. He argued that the CESTAT in Pratibha (Supra) interpreted the definition of drinking water supply project , which is an inclusive definition, rather rigidly in a restrictive manner. Such an interpretation of an inclusive definition, is contrary to the following decisions of Supreme Court: (i) CIT v. TajMahal Hotel - (1971) 3 SCC 550. (ii) Regional Directors, ESIC v. High Land Coffee Works, (1991) 3 SCC 617 (iii) State of Bombay Hospital v. Mazdoor Sabha, (1960) 2 SCR 866 Further, a coordinate Bench vide Misc. Order No. 568/2007, dated 12-11- 2007 in Appeal No. C/384/2007 (reported at Subhash Projects Marketi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Project Import once it is validly issued by the sponsoring authority. Further, the Revenue cannot go behind the certificate of the Project Authority and deny the benefit of the exemption under project import. 3.7 He pointed out that the decision of Supreme Court in Zuari (supra) has been followed by the CESTAT in the context of water supply projects, in the following cases: a) CC vs. Rochem Separation System India Ltd.2015 (251) ELT 438 (T) b) IMS Petrogas Ltd. vs. CC2017-TIOL-686-CESTAT-MUM 3.8 He further argued that the objection that the project in question is an irrigation project and not water supply project for agriculture was not a ground raised in the SCN dated 18.4.07. Reliance was placed in this regard on the decision of Supreme Court in CC vs. Toyo Engineering India Ltd. - 2006 (201) ELT 513 (SC). 4. We have considered rival submissions. The issues that need to be decided are i) If the appellants can be granted registration when they are not direct party to the import contract. ii) If yes, then If the items imported by them are classifiable as Irrigation project under heading 98010012 or as Water Supply Projects notified vide notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of water from Godavari River at Gangaram (V), Eturunagaram (M), Warrangal District, Andhra Pradesh with single steel pipeline with 3000mm, 2500mm, 2000mm diameter connecting i) from Intake to Dharmasagar via Bhimghanpuram, Salivagu, ii) from R.S. Ghanpur to Chittakodur via Aswaraopally, iii) from Dharamsagar to Tapaspally via Gandiramaram and Bommakur, to irrigate an ayacut of 2.85 lakh acres with 7 stage lifting in a distance of 196.85 Kms. To introduce flexibility in the system during operation each pipeline is supported by 2 Nos. of pump sets at each pumping station. The water conductor system of the scheme runs through the territories of Warangal District, Intermediate tanks of the viz. Bhimghanpuram, Salivagu, Dharmasagar, Ghanpur, Aswaraopally, Chittakodur, Gandiramaram, Bommakur and Tapaspally are in Warangal District and tanks are at distance about 100 km, 40 km, 18 km, 35 km, 66 km, 51 km, 81 km respectively from Warangal town. This part of the project is described in detail in para 4.4.1 of the Project Report of Godavari Lift Irrigation Scheme as Water Conductor System. Thus in the entire project of Irrigation we are concerned with only the part of the project re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entire project would be classified as Fertiliser plant. In other word if a power plant is imported along with the fertiliser plant as part of common project then it would be classified as fertiliser project.Hon be Apex Court observed as follows. 9. Firstly, on the facts we find that the assessee had given to the Sponsoring Ministry its entire Project Report. In that report they had indicated that for the expansion of the fertilizer project they needed an extra item of capital goods, namely, 6MW Captive Power Plant. In their application, the assessee had made it clear that the fertilizer project was dependant on continuous flow of electricity, which could be provided by such Captive Power Plant. Therefore, it was not open to the Revenue to reject the assessee s case for nil rate of duty on the said item, particularly when the certificate says so. In the judgment of this Court in the case of Tullow India Operations Ltd. (supra), this Court held that essentiality certificate must be treated as a proof of fulfilment of the eligibility conditions by the importer for obtaining the benefit of the exemption notification. We may add that, the essentiality certificate is also a proof t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case, as capital goods along with 13 other items. The assessee has also treated the Captive Power Plant as one of the capital goods required for the expansion of the fertilizer project. In the above circumstances, all the items in the list annexed to the certificate have been certified and recommended by the Sponsoring Ministry as the entire capital goods required for the substantial expansion of the fertilizer project. Therefore, in our view, the assessee is right in its contention that, in this case, 6MW Captive Power Plant is one of the items out of 14 items constituting capital goods required for the substantial expansion of the fertilizer project, and, therefore, it fell under Serial No. 226(i) as goods required for the fertilizer project entitled to the benefit of nil rate of duty. 11. Before concluding, we may point out that, on behalf of the Department, a large number of authorities were cited on interpretation of entries in the Customs Tariff Act, 1975. It is not necessary to examine those authorities on interpretation. Suffice it to state that, Heading 98.01 is a specific entry. It is not a general entry. It is not a residuary entry. It needs to be liberally ..... X X X X Extracts X X X X X X X X Extracts X X X X
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