Commissioner of Customs Vs GE India Industrial Pvt Ltd (CESTAT Chennai)
CESTAT Chennai held that exemption of Basic Customs Duty under notification no. 21/2002-Cus. dated 01.03.2002 read with notification no. 12/2012-Cus. dated 17.03.2012 available as there is no violation of conditions. Further, demand proposed on misconception of facts and law is unjustified.
Facts- The respondent filed various Bills of Entry for import of Wind Operated Electricity Generator (hereinafter referred to as WOEG). The respondent availed BCD concession towards import of blades / towers and foundation mounting parts etc. under Sl.No.224 (2 & 3) along with condition No.35 and Sl.No.362 (2) & (3) along with condition No.45 of the Customs notification no. 21/2002-Cus. dated 01.03.2002 and notification no. 12/2012-Cus. dated 17.03.2012 respectively.
It is the case of the department that though the goods may have been used for the specified purpose, the condition clearly stipulates that the importer himself should use the goods. In other words, the importer should not sell the goods to any one and should have used the goods for the specified purpose by himself. Since it was noted that the respondent had violated the above conditions, show cause notice was issued proposing to demand duty along with interest and also for imposing penalty. After due process of law, the original authority observed that there is no violation of conditions and dropped the proceedings. Aggrieved by such order, the department is now before the Tribunal.
Conclusion- Hon’ble High Court in the case of Nordex Pvt. Ltd. vs CC Tuticorin had analysed the issue on the basis of the practical need to transport the Rotor Blades to the customer’s premises for assembling the WOEG. There is no violation of the conditions of the notification and both the conditions have been fully satisfied by the respondent. The respondent has used the imported blades only for the specified purpose and the allegation that the respondent has sold it and not complied with the condition is factually incorrect.
Held that the judgment of the Hon’ble Jurisdictional High court in the case of Nordex India Pvt. Ltd. is squarely applicable to the instant case. Following the same, we find that the demand proposed in the SCN is on misconception of facts and law. The impugned order does not call for any interference. The appeal filed by the department is dismissed.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The above appeal is filed by the Department against the order passed by the Commissioner who dropped the proceedings initiated vide show cause notice No.06/2016 dated Nil/2/2016 alleging that the respondent herein wrongly availed exemption of Basic Customs Duty (BCD) under Notification No.21/2002-Cus. dated 01.03.2002 read with notification no. 12/2012-Cus. dated 17.03.2012 in as much as they had violated the condition of the Notifications.
2. Brief facts are that the respondent filed various Bills of Entry for import of Wind Operated Electricity Generator (hereinafter referred to as WOEG). The respondent availed BCD concession towards import of blades / towers and foundation mounting parts etc. under Sl.No.224 (2 & 3) along with condition No.35 and Sl.No.362 (2) & (3) along with condition No.45 of the Customs notification no. 21/2002-Cus. dated 01.03.2002 and notification no. 12/2012-Cus. dated 17.03.2012 respectively. These conditions stipulate that the importer at the time of importation has to (a) furnish a certificate to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, from an officer not below the rank of Deputy Secretary to the Government of India in the Ministry of Non-Conventional Energy Sources recommending the grant of this exemption and in the case of the goods at (2) to (5), the said officer certifies that the goods are required for the specified purposes; and (b) furnish an undertaking to the said Deputy Commissioner or Assistant Commissioner to the effect that, –
(i) in the case of wind operated electricity generators upto 30KW or wind operated battery chargers upto 30 KW, he shall not sell or otherwise dispose off, in any manner, such generators or chargers for a period of two years from the date of importation;
(ii) in the case of other goods specified at (2) to (5), he shall use them for the specified purpose; and
(iii) in case he fails to comply with sub conditions (i) or (ii), or both conditions, as the case may be, he shall pay an amount equal to the difference between the duty leviable on the imported goods but for the exemption under this notification and that already paid at the time of importation.
3. It is the case of the department that though the goods may have been used for the specified purpose, the condition clearly stipulates that the importer himself should use the goods. In other words, the importer should not sell the goods to any one and should have used the goods for the specified purpose by himself. Since it was noted that the respondent had violated the above conditions, show cause notice was issued proposing to demand duty along with interest and also for imposing penalty. After due process of law, the original authority observed that there is no violation of conditions and dropped the proceedings. Aggrieved by such order, the department is now before the Tribunal.
4. Ld. A.R Ms. Anandalakshmi Ganeshram reiterated the grounds of appeal. It is submitted by the Ld. A.R that the intention of the Government as per the notification is that not only the product should be used for the specified purpose but the importer himself should use the product. Though many amendments came at later dates, for the past 20 years, the Government has not changed the condition to relieve the importer from fulfilling this condition that importer has to use the product himself. The respondent has wrongly sold the parts to the customer which is complete violation of the condition of the notification. Thus, the duty demand raised in the SCN ought to have been confirmed by the adjudicating authority. Ld. A.R prayed that the appeal may be allowed.
5. Ld. Advocate Mr. Udit Jain appeared along with Ms. Akanksha Dikshit, Advocate and argued for the respondent. It is submitted that the allegation in the SCN is mainly founded on the basis of the agreement entered with the customer. That it is alleged that parts of WOEG including blades were first sold by the respondent and thereafter assembled at the customer’s site. The department has taken the view that the respondent / importer has not used the imported goods for the specified purpose of manufacture of WOEG. It is submitted by the Ld. Counsel for the respondent that two separate agreements were entered by the respondent with its customers (a) for supply of WOEG parts (b) for erection and commissioning of the WOEG equipment. The respondent imported blades for manufacture of WOEG and claimed the benefit of BCD exemption under the notification. The benefit under the said exemption notifications is available to blades only if the conditions are fulfilled by the importer. The conditions are (1) that iimporter should furnish a certificate issued by the specified officer of the Ministry of Non-Conventional Energy Sources recommending the grant of exemption and certifies that the goods are required for the specified purpose and
(2) that importer should furnish an undertaking to the effect that he shall use them for the specified purpose.
6. Ld. Counsel submitted that the respondent has furnished the Ministry’s recommendation as well as the undertaking required as per the notification. After the import of goods, in terms of the agreements entered with customers, the blades were supplied to the customers along with other parts of WOEG and was assembled at the customer’s site by the respondent thereby fulfilling the conditions of the exemption notification. Merely because the goods were transported directly to the customer’s premises, it cannot be said that the respondent has not used the goods for specified purpose.
7. Ld. Counsel submitted that the very same issue was considered by the Hon’ble High Court in the case of Nordex Pvt. Ltd. vs CC Tuticorin – 2022 (382) ELT 195 (Mad.) wherein the Hon’ble High Court had analysed the issue on the basis of the practical need to transport the Rotor Blades to the customer’s premises for assembling the WOEG. There is no violation of the conditions of the notification and both the conditions have been fully satisfied by the respondent. The respondent has used the imported blades only for the specified purpose and the allegation that the respondent has sold it and not complied with the condition is factually incorrect. The Ld. Counsel prayed that the appeal may be dismissed.
8. Heard both sides.
9. The issue involved in this appeal is the denial of benefit of BCD exemption notification no. 21/2002-Cus. dated 01.03.2002 (Sl.No.224-condition No.35) and notification no. 12/2012-Cus. dated 17.03.2012 (Sl.No.362 Condition No.45) to the goods imported by the respondent. The allegation of the department is that the respondent has violated condition No.45 (ii) of the notification. The details and the serial number of the above two notifications are noticed below :-
