TMI Blog2019 (1) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... y project’ for agricultural and industrial use. The importer furnished the requisite certificate from the Sponsoring Authority viz. the District Collector, Mahbubnagar as required under Notification No.14/2004 dated 8.1.2004, who certified that the goods were to be used at the initial setting up of a water supply project, for Agricultural and industrial use - It is not disputed that the Sponsoring Authority’s revised certificate/letter dated 15.5.2007 had clarified that the project in question is a water supply project and the said project goes through a process of making the water fit for agricultural use and thereby making them qualify as a process plant which is within the inclusive clause of the notification. Had the said letter dated 15.05.2007 been not there, still the certificate of the year 2006 issued by the Sponsoring Authority is sufficient for availing the exemption under the said notification. The Hon’ble Supreme Court in the matter of M/s. Zuari Industries Ltd. Vs. Commissioner of Central Excise & Customs [2007 (3) TMI 12 - SUPREME COURT OF INDIA] has laid down that once the project has been approved as a water supply project by the Sponsoring Authority, the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em are required for implementing the irrigation project which encourages providing irrigation for agriculture lands and recommended for grant for duty concession under project for agriculture and Industrial use eligible for zero duty benefit as per Customs Tariff 9801 in accordance with notification No. 14/2004 dated 8.1.2004. It has been informed that during the course of adjudication before the adjudicating authority, a revised certificate/recommendation letter dt. 15.5.2007 from District Collector was furnished indicating that the goods were to be used at the initial setting up of a water supply project, for Agricultural and industrial use. Therefore the respondent claimed benefit of Notification No. 14/2004-Cus. and claimed nil rate of duty since the goods imported are specifically for initial setting up of water supply project. They have also claimed that classification of the goods imported are covered under Customs Tariff Heading No. 9801, on the ground that these equipments/items/raw materials will be used in the initial set of water supply project for agricultural and industrial use. Adjudicating authority vide Order-in-Original dated 2.8.2007 rejected the contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot applicable on the facts of this case. 5. The Notification No. 14/2004-Cus., dated 8.1.2004 granted exemption from payment of CVD on water supply project falling under Tariff Heading 9801 of First Schedule to the Customs Tariff Act, 1975 as well as exemption from payment of basic customs duty leviable thereon. An explanation to the notification defined Water Supply Project thus: Water Supply Project includes a plant for desalination, demineralisation or purification of water or for carrying out any similar processes intended to make water fit for agricultural or industrial use. The said notification is extracted as under:- Water supply projects for agricultural and industrial use - Exemption In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts Water Supply Projects, falling under heading 9801 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), from whole of the duty of customs leviable thereon under the said First Schedule, and from whole of the additional duty leviable thereon und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustan Construction Co. Ltd.; this Tribunal vide Order No. A/86528-86529/2018 dated 25.5.2018 dismissed the Appeal filed by the Revenue. In that matter also, while rejecting the claim of the respondent therein, the department relied upon the decision of this Tribunal in M/s. Pratibha Industries Ltd. case (supra) and upheld the order of the first appellate authority. The relevant portion of the said decision is extracted as under:- ......Thus in the entire project of irrigation we are concerned with only the part of the project relating to Water Conductor System . 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. The other objection raised by revenue regarding the fact that the term Water Supply Projects , both under heading 9801 of the First Schedule to the Customs Tariff Act, 1975 as well as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectricity, 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 that an item like Captive Power Plant in a given case could be treated as a capital goods for the fertilizer project. It would depend upon the facts of each case. If a project is to be installed in an area where there is shortage of electricity supply and if the project needs continuous flow of electricity and if that project is approved by the Sponsoring Ministry saying that such supply is needed then the Revenue cannot go behind such certificate and deny the benefit of exemption from payment of duty or deny nil rate of duty. To the said effect is the judgment of the Calcutta High Court in the case of Asiatic Oxygen Ltd. (supra) in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 16 Appeal No. C/964 965/07 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 interpreted as it deals with industrialization. It has to be read in the context of the above Notification No. 11/97. 4.4 In the instant case the entire irrigation project has not been imported. Just one component of the irrigation project has been imported therefore the ratio of the said decision does not apply. Had the complete irrigation project been imported then all components forming part of the irrigation projects would have been classified as irrigation project. In view of above we hold that the project would be classifiable as Water Supply Project . Since the project is classifiable as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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