TMI Blog2022 (8) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... ustive in nature and is meant to cover all the items mentioned therein, namely, plant, machinery, equipment or accessories, as ordinarily understood, required for the manufacture or production, either directly or indirectly of goods. Refractory bricks are clearly accessories required for lining of the furnace, and hence indirectly used for manufacture of finished goods by the appellants. The use of the expression refractories for initial lining in the inclusive part of the definition of capital goods does not in any way restrict the meaning of the terms used in the means part of the definition. The refractories meant for re-lining of furnaces, i.e., for replacement, are covered by the means part of the definition of capital goods and this interpretation cannot in anyway be restricted or controlled by the use of the expression refractories for initial lining used in the inclusive part of the definition of capital goods . Extended period of limitation - HELD THAT:- The Ld. Advocate of the Appellant is agreed upon, that notwithstanding the fact that Section 28 has not been invoked in the show cause notice or in the impugned order, the department cannot ignore those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 102/09-Cus dated 11-09- 2009 relates to imports at zero rate of duty under the EPCG scheme whereas Notification No. 103/2009-Cus dated 11-09-2009 relates to imports at 3% rate of duty under the EPCG scheme. Under the aforesaid two notifications the following goods were allowed to be imported at concessional rate:- S.No. Description of goods (1) (2) 1. Capital goods for pre-production, production and post production including second hand capital goods. 2. Capital goods in Semi Knocked Down (SKD)/Completely Knocked Down (CKD) conditions to be assembled into capital goods by the importer. 3. Spare parts of CIF value upto 10% of the CIF value of goods specified at Serial Nos. 1 and 2 as actually imported and required for maintenance of capital goods so imported, assembled, or manufactured. 4. Spare parts of CIF value upto 10% of the book value of the existing plant and machinery of the authorization holder. 8. The imports had been effected bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise as evidence of receipt and actual use of the imported refractory bricks. (ii) The Export Obligation Discharge Certificates (EODC s) or Redemption Certificates issued by the DGFT in respect of the EPCG Licences/Authorisations involved, and (ii) Letters from the Customs authorities at the port of import intimating cancellation and return of the bonds executed by the Appellant. 17. Shri A.K Prasad, the Ld. Advocate for the Appellant submitted that the above documents were very relevant for deciding the issue at hand. He also stated that all the installation certificates were available even before the show cause notice dated 27.10.2016 was issued. Since these are department s own documents the adjudicating authority should have at least considered these before deciding the matter. 18. Since we were of the view that the documents produced by way of the said Miscellaneous Application are pertinent and relevant, the said Miscellaneous Application was allowed. 19. Thereafter, Shri A.K.Prasad, the Ld. Advocate for the Appellants made the following submissions. 20.1 The two Notifications permit import at concessional rate not only of capital goods but also of spares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main part of the definition (only replacements are covered) the government thought it fit to enlarge the definition and also include refractories for initial charge in the definition of capital goods . It, therefore, cannot be said that only refractories for initial charge are covered by the definition of capital goods and not their replacements. 23. Even otherwise, if the imported goods are covered by another part of the definition of capital goods the benefit could not be denied to the Appellant. Since the refractories meant for re-lining and repair of the existing furnaces are covered in the category of accessories required for replacement ,the imported goods were squarely covered by the definition of capital goods and eligible for concessional rate of duty under the above two exemption notifications. 24.1 In the case of Jayant Agro Organics Ltd vs CC CE Vadodara [2003(157)ELT684(Tri-Mum)] the issue was whether Furnace Oil could be procured duty free by a 100% EOU under Notification No. 1/95-CE dated 04.01.1995. The relevant portion of the Notification is reproduced below :- In exercise of the powers conferred by sub-section (1) of section 5A of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Oil could be procured duty free only if it was required for boilers in textile units, M/s Jayant Agro Organics Ltd could not procure the Furnace Oil duty free since they were not a textile unit. The Mumbai Bench of this Tribunal held that since Furnace Oil is covered under the category of consumable listed at Sl No 7 of Annexure-1 to Notification No. 1/95- CE dated 04.01.1995, the benefit could not be denied in respect of Furnace Oil procured by the party. The above decision has been confirmed by the Hon ble Supreme Court as reported in 2009(238)ELTA24(SC). 24.4 On the same analogy, though the definition of capital goods specifically refers to refractories for initial charge , the appellants case is covered by the initial part of the definition of capital goods- as accessories required for replacement . 24.5 Similar views have been held in the case of CCE Jaipur vs Vansthali Textile Industries Ltd. [ 2013(296)ELT285(Tri-Del)]. 25. Even otherwise, spares were permitted to be imported under the two exemption Notifications subject to a limit of 10% of the book value of the existing plant and machinery of the Appellants. The total book value of the Appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the bond is enforced against the importer. To put it differently, Section 28 of the Act is the provision for enforcing the bond executed by the importer. Case law cited for and against this proposition will be discussed later. 27. The wordings of the two exemption notifications, no doubt, require the importer to pay the duty foregone on imports if the conditions of the notification are not fulfilled and the importer is required to execute a bond in that regard. But these are only enabling provisions for recovery of the duty foregone along with interest. These cannot be a substitute for the provisions enshrined in Section 28 of the Customs Act, 1962. The exemption notification being a subordinate legislation cannot override the statutory provisions of Section 28 enacted by the Parliament. As per the department this is a case of short levy or non-levy or short payment or non-payment of duty. In that case provisions of section 28, including its limitation periods, will apply. 28. The demand is barred by limitation. The period involved is November 2009 to July, 2013 whereas the show cause notice has been issued on 07.10.2016 i.e. beyond the time limit of one year from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es cancelling the bonds have already been filed with the Miscellaneous Application No C/Misc/75155/2022. This means that the Customs Authorities were satisfied that the Appellant had fulfilled the conditions of the notifications and there was no short levy or non-levy. Hence, charge of willful misstatement or suppression of any facts cannot sustain. 31. Since no valid bond exists at the moment ( they having been cancelled) there can be no question of invoking these non-existent bonds for demanding duty in the instant case. 32. In the instant case the imported refractory bricks/materials have been confiscated under Section 111(o) of the Customs Act, 1962. Redemption fine of Rs. 80,00,000/- has been imposed in lieu of confiscation. It is submitted that since the imports were duly covered by the 2 notifications, the question of confiscating the goods does not arise. Hence, no fine was called for. 33. Further, because of wear and tear the refractory bricks/materials lining the furnaces are replaced periodically and in most cases within six months. Therefore, at the time of issue of the show cause notice, in October 2016, none of the refractory bricks imported during the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or maintenance of the furnaces. The Appellants have, therefore, correctly availed the benefit of the above two exemption notifications. 42. The first part of the definition of capital goods uses the term means . The term means is exhaustive in nature and is meant to cover all the items mentioned therein, namely, plant, machinery, equipment or accessories, as ordinarily understood, required for the manufacture or production, either directly or indirectly of goods. Refractory bricks are clearly accessories required for lining of the furnace, and hence indirectly used for manufacture of finished goods by the appellants. The use of the expression refractories for initial lining in the inclusive part of the definition of capital goods does not in any way restrict the meaning of the terms used in the means part of the definition. 43. In the case of P. Kasilingam and Others v. P.S.G. College of Technology [AIR 1995 S.C. 1395], the Hon ble Supreme Court explained the import of includes in a definition as follows : The word incudes when used, enlarges the meaning of the expression defined so as to comprehend not only such things as they signify according to their n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be restricted or controlled by the use of the expression refractories for initial lining used in the inclusive part of the definition of capital goods . 47. As regards the decision of the Hon ble Supreme Court decision in the case of Commissioner of Cus(Import), Mumbai vs Dilip Kumar Company (supra) cited by the learned authorized representative, the same is not relevant since this is not a case of any doubt being there in the coverage of the imported refractory bricks in the definition of capital goods . 48. The decision in the case of Rayalseema Hi-Strength Hypo Ltd vs CC(Export), Chennai (supra) cited by the Ld. Authorised representative, is also not relevant since the matter in hand does not involve any difference of opinion between the DGFT and the Customs. 49. The Board s Circular dated 30.09.2009 also cited by the learned authorized representative does not reflect the correct position of law in the light of the view held by us in the preceding paragraphs. In any case, the said Circular is not binding on us. 50. We also agree with the Ld. Advocate of the Appellant that notwithstanding the fact that Section 28 has not been invoked in the show cause notice or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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