Essar Power Gujarat Ltd Vs C.C.-Jamnagar (prev) (CESTAT Ahmedabad)
CESTAT Ahmedabad held that the assessment in real sense takes place at the time of ex-bonding of the warehouse goods. Therefore, the effect of rate of duty, any exemption notification prevailing at the time of filing the ex-bond bill of entry shall be applicable and not the one which is applicable at the of in-bonding of the good.
Facts- The appellant has set up a 1200 Megawatt Thermal Power Plant at Salaya in the state of Gujarat, which was granted the status of Mega Power Project by the Ministry of Power, Government of India vide their letter F.No. C- 8/2007-IPC dated 08.02.2010. For setting up this project the appellant had entered into a contract dated 24.08.2007 with M/s Global Supplies FZE and also placed separate purchase orders dated 16.04.2008, 21.11.2009 and 26.05.2008 on M/s. Shinkawa, Japan, Arewa T & D & M/s. IDC & Technologies, Israel for import of capital goods.
Since these capital goods were required for setting up the project were eligible for exemption from payment of custom duty, if the contracts/purchase orders for importing the same were registered under the Project Import Regulation, 1986,(PIR,1986- for short). The appellant had accordingly applied to the sponsoring ministry for necessary approval and based there on also applied to the customs for registering of contracts entered with the aforesaid 4 vendors under the PIR , 1986.
In case of 61 bills of entry covered by Order-In-Original dated 29.04.2015 is concerned, the contracts were registered under PIR, 1986 prior to filing of bill of entry for home consumption, while in respect of 2 bills of entry dated 22.06.2010 and 22.12.2009 covered by Order-In-Appeal dated 19.11.2014 the contracts were registered prior to the assessment of bills of entry and orders for clearance for home consumption having been passed.
The limited issue in dispute in the present appeals are as under –
(i) Whether benefit of project import is available when contract is registered with the customs authorities after filing an into bond Bill of Entry but before filing of an ex-bond bills of entry for home consumption.
(ii) Whether change in classification is permissible at the time of ex-bonding from the warehouse for the home consumption.
Conclusion- We are of the view that at the time of clearance of the goods either from the port for home consumption or either from the warehouse under ex-bond bills of entry the correct custom tariff head has to be applied. For example, if by mistake wrong classification was made in the into bond bill of entry, the same cannot be allowed to be continued while filing the ex-bond bills of entry and in the ex-bond bills of entry the error has to be rectified and clearance shall be effected under the correct classification. Therefore, the revenue’s contention that the appellant are not allowed to change the classification in the ex-bond bills of entry is absolutely incorrect an illegal.
It is settled law that in case of warehousing goods at the time of ex-bond clearance for home consumption, the goods have to be re-assessed under section 2(2) of Customs Act, 1962.
Held that it is clear that the assessment in real sense takes place at the time of ex-bonding of the warehouse goods. Therefore, the effect of rate of duty, any exemption notification prevailing at the time of filing the ex-bond bill of entry shall be applicable and not the one which is applicable at the of in-bonding of the good even though the different rate of duty was applied in the in-bond bill of entry.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellant has set up a 1200 Megawatt Thermal Power Plant at Salaya in the state of Gujarat, which was granted the status of Mega Power Project by the Ministry of Power, Government of India vide their letter F.No. C- 8/2007-IPC dated 08.02.2010. For setting up this project the appellant had entered into a contract dated 24.08.2007 with M/s Global Supplies FZE and also placed separate purchase orders dated 16.04.2008, 21.11.2009 and 26.05.2008 on M/s. Shinkawa, Japan, Arewa T &D & M/s. IDC & Technologies, Israel for import of capital goods. Since these capital goods were required for setting up the project were eligible for exemption from payment of custom duty, if the contracts/purchase orders for importing the same were registered under the Project Import Regulation, 1986,(PIR,1986- for short). The appellant had accordingly applied to the sponsoring ministry for necessary approval and based there on also applied to the customs for registering of contracts entered with the aforesaid 4 vendors under the PIR , 1986. In case of 61 bills of entry covered by Order-In-Original dated 29.04.2015 is concerned, the contracts were registered under PIR, 1986 prior to filing of bill of entry for home consumption, while in respect of 2 bills of entry dated 22.06.2010 and 22.12.2009 covered by Order-In-Appeal dated 19.11.2014 the contracts were registered prior to the assessment of bills of entry and orders for clearance for home consumption having been passed. The limited issue in dispute in the present appeals are as under :-
(i) Whether benefit of project import is available when contract is registered with the customs authorities after filing an into bond Bill of Entry but before filing of an ex-bond bills of entry for home consumption.
(ii) Whether change in classification is permissible at the time of ex-bonding from the warehouse for the home consumption (only in respect of appeal No. C/11282/2015)
2. Shri Vishal Agarwal, Learned Counsel along with Shri. Akshit Malhotra and Ms. Dimple Gohil , Learned Advocates appeared on behalf of the appellant. On the issue that whether project import is available when contract is registered with the customs authorities after filing an into bond Bill of Entry but before filing of an ex-bond bill of entry for home consumption, he submits that the impugned order have proceeded to deny of project import to the appellant on an erroneous premise that Regulation 5 required the application for registration of contracts to be made only before the goods entered into territorial borders of India which is completely untenable, baseless and premised on unharmonious reading of Regulation 4 and 5 of PIR, 1986. He submits that on perusal of Regulation 4 of PIR it is evident that it categorically stipulates that contract have to be registered in the manner specified in Regulation 5 before any order is made by the proper officer of customs permitting clearance of goods for home consumption. Regulation 4 having specifically provided that the contract has to be registered on or before an order for home consumption is made. The phrase “ on or before” in regulation 5 ought to be read as “ on or before clearance for home consumption”. In the instant case it is not in dispute that all the contracts and purchase order in question were registered by the appellant before an order of clearance for home consumption was passed in all 63 bills of entry. Consequently there is no contravention of Regulation 4 or 5 of the PIR, 1986. He referred to CEEC customs manual of instruction para 3.1 and 3.2 of Chapter 5. According to which benefit of PIR, 1986 is available as long as the contract is registered prior to an order for clearance of goods for home consumption is made by the proper officer. He submits that the issue in dispute is no longer res- integra and stands settled in appellants favour by order of this Tribunal in the case of Essar Projects India Ltd vs. Commissioner of Customs port, Kolkata reported in 2015(329) ELT 130 (Tri. Kol). A similar finding was arrived at by the Hon’ble Tribunal in the case of National Aluminium Company vs. CC reported in 2019 (366) ELT 354 (Tri. Kol.).He also relied upon the following Judgments:-
