CESTAT: Work Rolls are Capital Goods & Eligible for Full SHIS Scrip Utilization for Import [Read Order]

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that work rolls imported by the assessee qualify as capital goods and are eligible for full utilisation of Status Holder Incentive Scheme (SHIS) scrips for import purposes.

In this case, the appellant, Jindal Stainless Ltd, is involved in manufacturing stainless steel items such as slabs, hot rolled steel coils, cold rolled steel coils, etc. falling under Chapter 84 of the Central Excise Tariff Act, 1985. It is to be noted that the appellant uses work rolls to ensure the movement and processing of products such as slabs into plates, HR Coils/Sheets, CR Coils/Sheets, etc

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The investigation taken up by the department concluded that the work rolls imported by the appellant should be treated as spare parts of capital goods and that the appellant was ineligible to utilize only 10% of the scrip amount to discharge the customs duty and the balance 90% is required to be paid by way of cash.

It was contended by the assessee’s counsel that work rolls are essential components of rolling mills, without which the machinery cannot function. The counsel submitted that the work rolls are not mere spare parts but are integral to the manufacturing process, ensuring the movement and processing of products such as slabs into plates, hot-rolled coils, and cold-rolled coils. The company also pointed out that prior to 2011, it had operated under the Special Economic Zone (SEZ) Scheme, where work Rolls were imported duty-free.

The bench observed that the goods in question are capital goods and are not mere spare parts, and thus the assessee is eligible to claim for full utilization of SHIS Scrip.

Thus, the CESTAT referred to the judgement in Commissioner of Customs (Port), Kolkata vs. M/s. Cosmic Ferro Alloys Limited, in which the tribunal had held that items such as "Roller Sets," "Blades for Slitting Machines," and "Spares for Cold Rolling Mills"  qualify as capital goods under the SHIS Scheme.

The CESTAT noted that the Revenue cannot take a different stance under the SHIS Scheme when the same goods were treated as capital goods under the EPCG Scheme.

The CESTAT bench, comprising Judicial Member R. Muralidhar and Technical Member K. Anpazhakan, allowed the assessee’s appeal.

To Read the full text of the Order CLICK HERE

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