BHARAT BIJLEE LTD. Vs. COMMISSIONER OF CUSTOMS (IMPORT)

JUDGEMENT

(1.) THE appellants are engaged in the manufacture of Electrical Transformers as per customer specification, the raw material for which were imported at concessional rate of duty under Project Import Regulation, 1986. The appellants have entered into 16 such contract in respect of various projects and imported raw material for use in such projects. However, due to urgency in some cases the raw material was cleared on full payment of duty and utilized in the project for which there was no longer requirement of the same but the very same parts were used in a different project. Thus in many cases the raw materials had been utilized in carrying out their project even before they could be imported. Since under the Project Import Regulation the goods are required to be imported for the purpose of initial set up or substantial expansion of the existing unit the parts which were not used in these projects could not have been cleared at concessional rate. The appellants were accordingly issued show cause notices demanding duty amounting to Rs. 98,57,918/ - in respect of 12 contracts where the assessments were provisional and Rs. 16,12,401/ - in respect of 4 contracts which were finalized. The demands were confirmed by the Commissioner who also confiscated the goods and imposed redemption fine of Rs. 25 Lakhs respectively and imposed a penalty of Rs. 50 Lakhs and Rs. 16, 12,401/ - respectively.

(2.) THE learned advocate Shri Atul Setalvad for the appellants submits that the contracts entered into by them have a delivery schedule with heavy penalty for non adhering to the schedule and since the time lag between registration of contract and date of import and manufacture nearly takes 15 months, they utilized the material which were available with them and were cleared on payment of full duty or under advance licence and do not wait for similar raw materials that are going to be imported under that very registered contract itself. It was submitted that under Regulation 4, the goods can be imported against one or more specified contracts. The world "against" means "in relation to" and therefore the aforesaid phrase cannot be restricted to mean to only the goods required for a particular contract. Regulation 4 also uses the words "raw materials for the manufacture of". This must mean intended for the manufacture and actual use is not necessary as is the goods in DEEC scheme where the raw materials can be imported after fulfilling the export obligation, the imported goods can be used specifically for manufacture and clearance in domestic area. It was submitted that all the raw material imported were actually used in the contracts registered under the Project Regulation Act and it was only that raw material imported for one project was utilized for completion of another project but in all these cases the element of concessional duty was invariably passed on to the customers. It was submitted that the Tribunal Orders cited by the Commissioner are distinguishable as in that case the project was shifted from one place to another.

(3.) ON limitation it was submitted that there have been no suppression of facts on their part and therefore the extended period cannot be invoked. As regards provisional assessment since the assessments were provisional show cause notices cannot be issued demanding differential duty.