Tata Steel Ltd. Vs Commr. of Customs (Port) (CESTAT Kolkata)
CESTAT Kolkata held that the imported assemblies, sub-assemblies, components, sub-components under EPCG are held as allowed as spares under the Foreign Trade Policy at Para 9.57.
Facts-
The appellants Tata Steel Ltd. are engaged in manufacture of iron and steel having its largest production facility in Jamshedpur, wherein the Appellant had commissioned seven blast furnaces having aggregate capacity of 5 million MPTA. Subsequently, the Appellant sought to enhance the capacity of its blast furnace upto 10 million MPTA and thus conceived the plan to install “H” blast furnace 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.
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.
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. After due process, the demands were confirmed. Being aggrieved, the present appeal is filed.
Conclusion-
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.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The appellants Tata Steel Ltd. are engaged in manufacture of iron and steel having its largest production facility in Jamshedpur, wherein the Appellant had commissioned seven blast furnaces referred to as “A” to “G” having aggregate capacity of 5 million MPTA. Subsequently, the Appellant sought to enhance the capacity of its blast furnace upto 10 million MPTA and thus conceived the plan to install “H” blast furnace 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; and
– Items imported under EPCG Authorization are not spares but goods for setting and commissioning of new plant and machinery.
4. After due process the following demands were confirmed :
