Exemption of Customs Duty allowable  as per Project Import Regulations when Application For Registration of Contract Prior to Import of Goods: CESTAT [Read Order]

The Chennai  bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the exemption of Customs Duty allowable  as per Project Import Regulations when application for registration of Contract Prior to import of goods.

The appellant namely M/S. RKM Powergen Pvt.Ltd requested the Assistant Commissioner of Customs (Project Import), Visakhapatnam Customs for registration of project under Project Import Regulations 1986. They obtained acknowledgement from the department for having received the application for registration of the project.

Meanwhile, they filed bill of entry dated 16/09/2010, in Chennai Customs House for the clearance of certain goods forming part of the contract. The goods were assessed by Customs department classifying them under CTH 73089090 and the appellant was directed to pay merit rate of duty. The contract was later registered by Visakhapatnam Customs on 6/12/2010.

The appellant was aggrieved that they were required to pay the duty on merit rate without considering that the import is under the project scheme. Though they had requested for registration of project on 23/08/2010 much before the clearance of the goods, the concession in payment of duty was not granted on the ground that the contract had not yet been registered.

After due process of law, the original authority held that as the contract was not registered at the time when the goods were imported, the benefit of concessional rate of duty cannot be extended to the goods. The appellant filed an appeal before the Commissioner (Appeals) who vide order impugned herein, upheld the view taken by the original authority. Hence this appeal.

 Shri Hari Radhakrishnan appeared and argued for the appellant. It is submitted that the appellant herein had set up a coal based thermal power plant in the State of Chattisgarh. The project being of more than 1000 mega watts is eligible for registration under Project Import Regulations 1986. The appellant submitted an application to the Asst. Commissioner of Customs (Project Import), Visakhapatnam for registration of their contract entered with M/s. MIPP International Ltd. under the provisions of Project Import Regulations 1986 along with all necessary documents.

The first consignment consisting of Boiler and accessories of the first phase of the thermal power plant was placed for assessment before the proper officer of customs, Chennai vide bill of entry dated 16/9/2010. The proper officer of customs at Chennai, assessed the goods at merit rate of duty without granting the benefit of exemption as per the project import scheme.

The exemption was denied on the ground that the contract is yet to be registered at Visakhapatnam Custom House.

On appeal, the Commissioner of Customs (Appeals), Chennai against the assessment of bill of entry dated 16/09/2010 without extending the benefit of the project import. The Commissioner (Appeals), also refused to extend the benefit for the reason that the goods were cleared before the said contract was registered.

Shri Harindra Singh Pal supported the findings in the impugned order. It is submitted that the contract was registered only on 6.12.2010 and the goods were imported on 16/9/2010 much before the registration of the contract. The appellant therefore cannot claim the benefit of project import. As the project is yet to be registered the authorities below have correctly denied the request for reassessment.

The appellants appeared to have complied with the provisions of the Project Import (Registration of Contract) Regulations, 1965. As there was no response from the Authorities and the goods had arrived and were running the risk of demurrage and as the demurrage charges were rising, the appellants had no other option but to clear the goods under protest on payment of the assessed duty.  

A two member bench comprising of Sulekha Beevi C.S., Member (J) and Vasa Seshagiri Rao ,Member (T) “ultimately, an appellate order was issued by the Assistant Collector on 23-4-1986 i.e. about 16 months after the application for Registration as Project Import. In these circumstances, the benefit of Project Import can not be denied to the appellants on the ground that the goods were cleared for home consumption before Registration of the Contract.”

The Directorate of Industries, West Bengal has certified that the system imported was for the substantial expansion of a specific unit. The activities to be carried on by the imported equipment are complex process somewhat akin to the activity of developing of colour films, printing, enlarging and processing of photo films as in the case of Das Colour Lab. and Saraswathi Stores.

The CESTAT held that “the benefit of Project Import Regulations, 1986 may be extended to goods imported by them through Chennai port, as all the essential documents were submitted prior to the date of filing of Bill of Entry at Chennai port. Further, the sponsoring authority had issued its recommendation for registration of the contract vide letter dated 25.08.2010 which is much before the import of goods at Chennai port.”

Further viewed that the appellant having made an application for the registration of the contract prior to import of goods and sponsorship letter having been issued, therfore the appellant is eligible for the exemption of duty as per the Project Import Regulations.

While allowing the appeal, the Tribunal set aside the impugned order.

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M/s RKM Powergen Pvt. Ltd. vs The Commissioner of Customs, (Import) , 2023 TAXSCAN (CESTAT) 1095 , Shri Hari Radhakrishnan , Shri Harendra Singh Pal