Ajay Garg Vs Commissioner of Excise Customs (Import) (CESTAT Mumbai)
CESTAT Mumbai held that re-deployment of auxiliary equipment post completion of project doesn’t amount to violation of Project Import Regulations, 1986. Accordingly, appeal allowed and impugned order is set aside.
Facts- The limited issue in these appeals, of M/s Era Infra Engineering Ltd, M/s Aravali Power Company Pvt Ltd, Shri Ajay Garg, Shri Hem Singh Bharana, Shri Vishesh Kumar Walia and Shri Om Prakash Srivastava, is the empowerment vesting in the customs authorities to levy duties of customs u/s. 28 of Customs Act, 1962, besides confiscation of such goods, in the absence of any specific restriction on re-deployment of goods comprising ‘project import’, chargable to duty corresponding to heading 9801 of First Schedule to Customs Tariff Act, 1975 and subject to Project Imports Regulations, 1986 consequent upon finalization of provisional assessment.
Conclusion- In re Jacsons Thevara, the issue for consideration was that imported machinery, which were not ‘auxiliary equipment’, was transferred beyond the scope of Project Import Regulations, 1986. In re NRB Bearings, the Tribunal followed the decision in re Jacsons Thevara as the dispute pertained to equipment that could not be categorized as ‘auxiliary equipment, and the transfer to another unit of the importer was assailed by following the judicial decisions as existing then. In re Sunshine Pulp & Papers Pvt Ltd the ratio of the decision in re Jacsons Thevara was followed. The decision of the Hon’ble Supreme Court in re Toyo Engineering India Ltd assigned a specific disposition of ‘auxiliary equipment’ that were not intended to merge with the asset of the project itself and was determined as deserving of separate treatment. Accordingly, exception, set out in the impugned circular of Central Board of Excise and Customs (CBEC), was afforded regularization thereof. It may be noted that the said circular enlarged upon the Project Imports Regulations, 1986 primarily for the purpose of enabling assessment of ‘auxiliary equipment’ within the scope of Project Import Regulations, 1986. Though the circular did also restrict the transferability to registered projects such condition was not enshrined within the Project Import Regulations, 1986. It is in that context the Tribunal, in re NOCIL and in re Whirlpool of India Ltd, held that the disposal of ‘auxiliary equipment’ that were eligible at the threshold and having had the provisional assessment were duly finalized, could not be subjected to duty thereafter in the absence of specific restrictions providing for recovery of duty as consequence of breach.
