Case Law Details
Brief Facts
The appellant entered into a Joint Venture Agreement with M/s Shapoorji Pallonji & Company Limited for the purpose of construction of roads in the State of Andhra Pradesh. The Joint Venture was awarded a contract by the National Highways Authority of India for construction of roads as a part of the Golden Quadrilateral, Phase-2 Project in Andhra Pradesh. Vide a notification dated 1.3.2001, in exercise of powers under Section 25(1) of the Customs Act, certain items were exempted from payment of customs duty and additional duty leviable under the Customs Tariff Act. Serial No.217 of this notification reads as follows:
“217. 84 or any other Chapter – Goods specified in List 11 required for construction of roads.”
The condition by which the exemption is attracted is set out in item 38 as follows:
“38. If, –
a) the goods are imported by –
i) the Ministry of Surface Transport, or
ii) a person who has been awarded a contract for the construction of roads in India by or on behalf of the Ministry of Surface Transport, by the National Highway Authority of India, by the Public Works Department of a State Government or by a road construction corporation under the control of the Government of a State or Union Territory; or
iii) a person who has been named as a sub-contractor in the contract referred to in (ii) above for the construction of roads in India by or on behalf of the Ministry of Surface Transport, by the National Highway Authority of India, by Public Works Department of a State Government or by a road construction corporation under the control of the Government of a State or Union Territory;
b) the importer, at the time of importation, furnishes an undertaking to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, to the effect that he shall use the imported goods exclusively for the construction of roads and that he shall not sell or otherwise dispose of the said goods, in any manner, for a period of five years from the date of their importation; and
c) in case of goods of serial nos. 12 and 13 of List 11, the importer, at the time of importation of such goods, also produces to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, a certificate from an officer not below the rank of a Deputy Secretary to the Government of India in the Ministry of Surface Transport (Roads Wing), to the effect that the imported goods are required for construction of roads in India.”
Entry No. 1 to List 11 reads as follows:
“(1) hot mix plant batch type with electronic controls and bag type filter arrangements more than 120 T/hour capacity.”
A purchase order was placed by the appellant on M/s Lintec GmbH & Co.KG, Germany, for supply of a hot mix plant. Lintec and the appellant decided to split the purchase order between Lintec, Germany and M/s Marshalls, Chennai. Lintec was to supply the “critical items” required for the setting up of the said plant, whereas Marshalls was to supply various containers, frames, ducting, tanks and a thraw belt conveyer apart from agreeing to set up the plant after it is imported. The import of equipment from M/s Lintec was made by the appellants, who claimed that the said items fell within the scope of the exemption notification dated 1.3.2001 and, therefore, were exempt from payment of customs duty on the same. The Customs Authorities, however, maintained that what was imported was not a hot mix plant but only certain parts of such plant and, therefore, the exemption notification would not apply. The Commissioner of Customs held that the exemption notification did not apply in this case. The assessee preferred an appeal before CESTAT which upheld the Commissioner’s order.
Contentions of the Assessee
The assessee contented that as per Rule 2(a) of the general rules for the interpretation of the schedule to the Customs Tariff Act would make it clear that so long as essentially the plant in question had been imported, merely because all items that go into the making of such plant were not imported would not matter. Further, it is clear that such imports can also be made in unassembled form. Further, the plant as a whole had been imported and only structural work had to be done by Marshalls in India and, therefore, the benefit of the exemption notification would be available.
Contentions of the Revenue
The revenue contended that as per condition 38 of the said notification, imports have to be made by a Joint Venture Company and not by one of the partners of the said company. Secondly, the exemption applies to a complete plant that is imported and not to parts/components of such a plant.
Held by Hon’ble Supreme Court of India
The Hon’ble Supreme Court stated that by following the rules of interpretation, the fact that an unassembled plant which is incomplete but which has the essential character of complete plant is not the test to be applied in the present case. On the other hand, the applicable test would be what has been laid down in a catena of decisions. In Commissioner of Customs (Imports), Mumbai v. Tullow India Operations Ltd., (2005) 13 SCC 789, this Court held:
“The principles as regards construction of an exemption notification are no longer res integra; whereas the eligibility clause in relation to an exemption notification is given strict meaning where for the notification has to be interpreted in terms of its language, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed liberally. An eligibility criteria, therefore, deserves a strict construction, although construction of a condition thereof may be given a liberal meaning.”
Similarly in G.P. Ceramics Private Limited v. Commissioner, Trade Tax, Uttar Pradesh, (2009) 2 SCC 90, this Court held:-
“It is now a well-established principle of law that whereas eligibility criteria laid down in an exemption notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally.”
The Hon’ble Court stated that it is clear that a hot mix plant of the type mentioned alone is exempt from payment of customs duty. So the plant must be imported in its entirety to claim the exemption. The Hon’ble court further stated that both the oral evidence and the documentary evidence ultimately lead to the same conclusion that what was imported was not a hot mix plant that was complete in itself.
In view of the above, the appeal has been dismissed.
