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TMI Blog2023 (10) TMI 1516X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and "I" blast furnace of 2.5 million capacity each. For the purpose of setting and commissioning the aforementioned blast furnaces, the Appellant invited tenders from prospective bidders through Enquiry Specification No. TSGP-05-PRJ-001 dated December, 2003. 2. The SCN was issued alleging that the Appellant had entered into sham agreements with a view to split the consideration for supply of imported equipments under FOB Agreement into designs & drawings and other post importation activities so as to evade customs duty. Accordingly, Show Cause Notice sought to add the consideration paid to agreement holders under the above four Agreements, to the assessable value of equipments/goods imported under FOB Agreement by re-assessing 77 Bills of Entry under FOB Agreement, for import of goods by PWIT. 3. SCN dated 21.8.2012 had also sought to deny benefit of EPCG scheme under Notification No. 97/2004-Cus dated 17.9.2004 in respect of 19 BsOE for following reasons: * Location of HBF was not mentioned in EPCG Authorization No. 0230001781 & 0230001782 and * Location of HBF was mentioned in EPCG Authorization No. 0230002342 after amendment from licensing authority; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of FTP, which defines the capital goods to include spares. It means that the spares can be imported for preproduction purposes also. e. Further, Para 5.3.4(i) of the Handbook of Procedures of the Foreign Trade Procedures, 2006-07 allows import of spares for installation and maintenance of capital goods imported / to be imported under EPCG scheme. f. In view of the foregoing, it is submitted that demand of Rs.9,76,71,819 is required to be set aside on merits. 6 In respect of the differential Customs Duty demand the following submission are made : a) Pursuant to Enquiry Specification floated by the Appellant, 'Pre-First Offer' dated 15.1.2003 was submitted by SMS Demag SpA [later on renamed as M/s. Paul Wurth Italia SpA (PWIT)] and L&T. In the 'Pre-First Offer', civil and structural design work for HBF was indicated separately under the scope of work. Furthermore, the offer also contained price break up for imported supplies, imported services, indigenous supplies and indigenous services. [Copy of 'Pre-first Offer' dated 15.1.2003 is enclosed as Exhibit-A1 in Vol-9, pages 1-4]. Subsequently, PWIT vide their letter dated 30.6.2005 submitted its 'First Offer'. [Copy of Fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N, which was subsequently accepted by the respective parties. Pursuant to acceptance of the Letter of Intent, the Appellant signed six agreements with PWIT, based on the Technical Specification dated July 2005 and Fourth Offer. [Copy of three Letters of Intent are enclosed as Exhibit E-1, E-2 and E3, Vol-1, pages 700-702]. g) The appellant has provided the details of the six agreements along with price break up is mentioned herein below: Table-A Sr. No. Agreement No./date & Purchase Order No. Agreement Title Consideration (Amt in Euro) Hereafter referred as Exhibit 1 TATA STEEL/HBF/ FOB dated 1.8.2005 & P.O. No.2400000254 Agreement for Design,Manufacture and Supply of imported plant machinery & equipment with auxiliaries for "H" Blast Furnace at Tata Steel. Agreement: 34,900,000 Amended to: 34,693,600 FOB Agreement K, Vol-11, Pages 770822 2 TATA STEEL/HBF/ FDR-CIVERC dated 1.8.2005 & P.O. No. 2300010743 Agreement for supply of imported designs and drawings for civil and structural work, utility and other services, assembly, erection, refractory work, blowing in operation commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a date between 7th and 9th September 2005. However, the date of signing/witnessing of these agreements was inadvertently indicated as 1.8.2005 by a handwritten entry made by Mrs. P. Jayaram of the Appellant-company on the Agreements. 7. The Adjudicating authority while confirming the demand, has given following findings : i) The Appellant has entered into four different agreements (viz. FDR- CIVERC, FDR-EQP, SUP & TAS) which were fraudulently executed with a malafide intention to split the consideration for supply of imported equipments under FOB Agreement and divert it towards four such Agreements. All the goods & services imported under the above four agreements were pre-importation activity and consideration paid for the same has been fraudulently distinguished from the price payable for the equipment imported under FOB Agreement ii) Agreement FDR-CIVERC executed by the Appellant for execution of 'Civil & Structural design work' was fraudulently conceived and executed for services relatable to post importation work. Entire amount paid under the aforesaid CIVERC Agreement was for the various Civil & Structural Drawings & Designs imported by the Appellant in connect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted the actual scope & division of work & responsibility between the consortium partners. Supervision services received under SUP Agreement was for total supervision and nature of supervision was not clearly defined. Hence, entire scheme of contract for supervision services is fraudulently conceived and executed by diverting the consideration towards value of equipments ix) The Appellant has deliberately and intentionally under declared the value of goods imported for setting up of HBF, with sole intention of evading payment of duties. Due to arbitrarily splitting the lumpsum offer amount suppression of relevant facts, & willful mis-declaration, the Appellant has evaded payment of customs duty x) The Appellant had availed undue benefit of concessional rate of duty on those clearances which were otherwise liable for assessment at merits rate of duty. The Appellant has imported prime capital goods for the first time cleared under guise of 'Spares' on the strength of invalid EPCG Authorizations xi) The department is bound to re-determine the value of imported goods if the declared value has been doubted and if it is proved that some elements of cost & services covered under f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is required to be set aside on merits. 12. The learned counsel appearing on behalf of the appellant TISCO submits that the Show Cause Notice has been issued on 21.8.2012, for the imports carried out under 77 Bills of Entry during the period 22.11.2006 to 22.11.2007. The demand pertaining to Bills of Entry prior to 21.8.2007 are beyond the maximum permissible period of five years. As per the appellant Rs.31.89 crores out of the total confirmed demand of Rs.42.54 crores falls under this category. 13. It is submitted that since the confirmed demand is not sustainable both on merits as well as on account of limitation, it is submitted that the Confiscation under Section 111 (m) and (o) of the Customs Act 1962 and penalties imposed under Section 114A and 114AA of the Customs Act 1962 are required to be set aside. 14. The learned Counsel appearing on behalf of appellants Larsen and Toubro Ltd and A B Das, adopts the details arguments adduced by the counsels of TISCO. He further submits that L & T has entered into the Contract with TISCO for execution of the Civil Works, erection and commissioning works purely as a business transaction. There is nothing brought in the SCN o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed demand on this account does not survive and we set aside the same. 20. In respect of the spares imported by them under EPCG, the imported assemblies, sub-assemblies, components, sub-components are held as allowed as spares under the Foreign Trade Policy at Para 9.57. Apart from this, Paragraph 6 of 5.1 of FTP, which defines the capital goods to include spares, meaning that the spares can be imported for pre-production purposes also. In order to obtain the Discharge Certificate for the EPCG License issued by the DGFT, the appellants have provided the details of spares imported by them and DGFT is satisfied with the imports made. Therefore, when the FTP allows such imports under the EPCG, the Customs Dept. cannot question the same and in fact have no authority to do so. The Bombay High Court in the case of Bhilwara Spinners Ltd. Vs. Union of India - 2011(267) 49 (Bom.), has held as under : 18. It is not the case of the customs authorities that the decision of the licensing authorities to convert the 'zero duty EPCG licence' into '10% duty EPCG licence' was not a bona fide decision or the said decision was vitiated by mala fides. Since the policy empower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enquiry Specification floated by the Appellant, 'Pre-First Offer' dated 15.1.2003 was submitted. In the 'Pre-First Offer', civil and structural design work for HBF was indicated separately under the scope of work. This offer contained price break up for imported supplies, imported services, indigenous supplies and indigenous services. [Copy of 'Pre-first Offer' dated 15.1.2003 is enclosed as Exhibit-A1 in Vol-9, pages 1-4]. b) Subsequently, PWIT vide their letter dated 30.6.2005 submitted its 'First Offer'.Copy of First Offer is enclosed as Exhibit B-1, Vol-9, pages 6-11]. c) A revised proposal bearing no. SBF/051-05 dated 25.7.2005 ('Second Offer') was submitted by PWIT. [Copy of the of Second Offer is enclosed as Exhibit B-2, Vol-9, pages 12-21]. d) On account of further discussion and amendment in scope of work, "Third Offer" dated 28.7.2005 was submitted by PWIT along with Responsibility Matrix and price summary as per division of work under Attachment-A. [Copy of the of Third Offer is enclosed as Exhibit B-3, Vol-9, pages 22-44]. This Third Offer provided for division as import of supply and services, indigenous supply and services and supply of spare parts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. R. P. Singh on behalf of the Appellant on a date between 7th and 9th September 2005. However, the date of signing/witnessing of these agreements was inadvertently indicated as 1.8.2005 by a handwritten entry made by Mr. P. Jayaram of the Appellant-company on the Agreements. The Revenue is trying to make a big issue out this, which at the most would be some kind of clerical error, when the entire pre-first offer to the Fourth Offer details are carefully viewed. 27. In view of the foregoing, we conclude that the Revenue has built the present case purely on presumptions and assumptions basis, without actually verifying the documentary evidence placed before them. The Adjudicating authority has failed to appreciate these documentary evidence and has confirmed the demand by simply relying the assumptions made during the issue of the SCN. Hence, we hold that the confirmed demand of Rs. 32,76,67,821 is legally not sustainable and we set aside the same. 28. The appellant has also raised the point about the demand being issued for the period which is beyond even the extended period of five years. They have submitted that the Show Cause Notice has been issued on 21.8.2012, for the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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