The Supreme Court dismissed the civil appeal filed by the customs department, affirming that the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) did not commit any error in law or fact regarding the demand of differential customs duty.
The division bench of Justice Kapil Tandon and Justice Nidhi Wason noted that the CESTAT has not committed any error in law or fact.
According to the Chennai CESTAT order of this case, the facts states that the company (appellant in CESTAT order and respondent in this Supreme Court order) M/s. PPN Power Generating Co. Pvt. Ltd. (hereinafter referred to M/s.PPN or the importer) have registered themselves under the Project Import Regulations, 1986 to set up a power plant at Pillaiperumalnallur, Thirukadaiyur Post, Nagapattinam District on the recommendation of “Tamil Nadu Electricity Board”.
The project was approved and the Essentiality Certificate was issued by the Sponsoring Authority viz., Energy Department, Government of Tamil Nadu vide letter dt. 16.03.1999. M/s.PPN submitted a proposal to the Energy Department, Government of Tamil Nadu for their power plant and the Energy Department vide their letter dated 16.03.1999 have certified the details of items of import and prescribed certain value limit against the relevant items
Thus, the concessional benefits of customs duty for the import of such items were allowed. In this regard, the Energy Department’s letter is addressed to the Commissioner of Customs, detailing the value limit. As per the said certificate, the Sponsoring Authority has recommended 9 segments of the project totalling to JPY 8,86,24,43,836 and USD 6, 41, 13,986. Based on the Sponsoring Authority’s approval, the project contract of M/s.PPN was registered by Custom house, Chennai on 30.03.1999.
As per the norms stipulated in the Project Import Regulations, 1986, M/s.PPN had submitted a Bond for Rs.638 Crores and a Bank Guarantee for Rs.13.77 crores in favour of the Commissioner of Customs, Seaport Chennai and a cash security deposit of Rs.84 lakhs. The Project was registered under Project Import for concessional rate of duty of goods falling under CTH 9801.
The Chennai bench of the CESTAT noted an extremely inordinate delay, and also against the instructions issued by CBIC as to finalization of project import assessments the department has not been able to put forward cogent evidence to reject the transaction value, further find that the demand of differential duty the order for confiscation of goods, imposition of Redemption Fine and penalties imposed on M/s.PPN cannot sustain and requires to be set aside. Accordingly, the impugned orders are set aside. Appeals are allowed.
Thus, the apex court concluded that the CESTAT has not committed any error in law or fact. The Civil Appeals were dismissed accordingly with the disposal of the pending applications.
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