Jai Balaji Industries Limited Vs Commissioner of Customs (Port) (CESTAT Kolkata)
Held that refractory bricks required for re-lining of the furnace are covered within the definition of capital goods and hence eligible for EPCG scheme as per notification no. 102/2009- Cus dated 11.09.2009
Facts-
The Appellants use refractory bricks/materials for lining the furnaces. A refractory brick is designed mainly to withstand high heat, but also has a low thermal conductivity to save energy. Accordingly, the Appellants imported several sets of refractory materials/bricks for relining and also for maintenance purposes for the ARC furnace and the 60MT ladle furnace. The refractory materials were imported under the EPCG scheme covered by Chapter 5 of the Foreign Trade Policy (FTP) read with notification no. 102/2009- Cus dated 11.09.2009 and 103/2009-Cus also dated 11-09-2009.
As per the department, the definition of “Capital Goods” included only those refractory bricks/materials which were required for the initial lining of the furnace. Hence, the refractory bricks used for relining or maintenance of the furnace were not covered by the definition of ‘Capital Goods’ and hence, not eligible for exemption from duty under the EPCG scheme.
Conclusion-
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.
FULL TEXT OF THE CESTAT KOLKATA ORDER
This is an Appeal filed against Order-in-Original dated 25-012018/29-01-2018 passed by the Commissioner of Customs (Port), Customs House, Kolkata.
2. The brief facts of the case are that M/s. Jai Balaji Industries Ltd. (hereinafter referred to as ‘Appellant’) is, inter alia, engaged in the manufacture of iron and steel items, namely, Pig Iron, MS Billet, D I Pipe, Coke, TMT Bars Sponge Iron, etc. They have their two manufacturing units, namely, Unit-III and Unit-IV, located in Banskopa, Durgapur, West Bengal with their Head Office at Bentinck Street Kolkata.
3. In their Unit-III they have two blast furnaces, one ARC furnace and one 60 MT ladle furnace. Both the blast furnaces were commissioned in 2007-2008 whereas the ARC furnace and the 60MT ladle furnace were commissioned on 18-12-2008.
4. In their Unit-IV they have one coke oven plant of capacity of 0.35 MTPA, which was commissioned on 28-08-2012.
5. The Appellants use refractory bricks/materials for lining the furnaces. A refractory brick is designed mainly to withstand high heat, but also has a low thermal conductivity to save energy.
6. During the period from 04-11-2009 to 30-07-2013 the Appellants imported several sets of refractory materials/bricks for relining and also for maintenance purposes for the ARC furnace and the 60MT ladle furnace.
7. The refractory materials were imported under the EPCG scheme covered by Chapter 5 of the Foreign Trade Policy (FTP) read with notification no. 102/2009- Cus dated 11.09.2009 and 103/2009-Cus also dated 11-09-2009.. notification no. 102/2009- Cus dated 11.09.2009 relates to imports at zero rate of duty under the EPCG scheme whereas 103/2009-Cus also 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:-
