COMMISSIONER OF CUSTOMS Vs. IND BHARATH ENERGIES LTD.

JUDGEMENT

(1.) THE respondents had, under a contract entered into between them and a foreign supplier, imported goods namely 20 MW steam turbine falling under Customs Tariff Act Heading 98.01 (Project Import) for setting up a power project in Tamilnadu. The Bill of Entry filed for its clearance claimed the benefit of Customs Notification No. 21/2002 dated 1.3.2002 (as amended) in respect of Basic Customs Duty (BCD) and the benefit of Central Excise Notification No. 6/2002 dated 1.3.2002 (as amended) in respect of Additional Customs Duty (CVD). The Customs Notification prescribed effective rates of 5% and 16% for BCD and CVD respectively, while the Central Excise Notification prescribed nil rate of duty for "non -conventional energy devices/systems specified in List 9". The said List 9, at Sl. No. 16, mentioned agricultural, forestry and agro -industrial, industrial, municipal and urban waste conversion device producing energy. The goods were cleared in terms of the Customs notification. However, a dispute subsisted between the importer and the department as to whether the importer was entitled to claim the benefit of the Excise notification in respect of CVD while claiming the benefit of Customs notification in respect of BCD. The original authority decided this issue against the assessee and finalized the assessments by granting the benefit of Customs notification in respect of both BCD and CVD. The first appellate authority, however, took the view that it was open to the assessee to claim the benefit of the notification of their choice insofar as CVD was concerned. In this connection, the decision of the apex Court in the case of Tamilnadu Newsprint and Papers Ltd. 2000 (116) ELT 3 (SC), which had been relied on by the original authority, was distinguished by learned Commissioner (Appeals). The appellate authority took the view that whereas the description of the goods given in the Customs notification was a generic one, the goods were more specifically described in the Central Excise notification and, therefore, in terms of Section 3(1) of the Customs Tariff Act, the assessee was entitled to claim under the latter notification. In the result, learned Commissioner (Appeals) allowed the benefit of nil rate to the assessee in respect of CVD on the goods imported by them as part of project imports. The Department is aggrieved by this decision of the lower appellate authority.

(2.) LEARNED SDR submits that, admittedly, the goods covered by the Bill of Entry did not, by itself, constitute project import. The project import under CTA Heading 98.01 became complete with the import under consideration, a few parts of the project import having been made earlier. The Customs notification specifically covered the entire project import classified under CTA Heading 98.01, whereas the Central Excise notification granted exemption from payment of duty of excise on any non -conventional energy device/system falling within any Chapter of the CETA Schedule. It is also submitted that the item imported by the respondents was not shown, by them, to constitute, by itself, a non -conventional energy device or system. In the circumstances, the benefit of the Excise notification cannot be claimed by the assessee.

(3.) LEARNED Counsel for the respondents submits that it is open to an assessee to claim the benefit of the exemption notification of his choice. It has never been the case of the department that the imported item per se did not constitute a non -conventional energy device or system and therefore it is not open to the department to deny the assessee the benefit of the Excise notification in respect of the goods imported by them. According to learned counsel, the provisions of Section 3(1) of the Customs Tariff Act had an overriding effect and hence the CVD leviable on the goods imported should be assessed in terms of the duty of excise leviable on like goods manufactured/produced in India, read with any exemption notification. In the present case, Notification No. 6/2002 ibid is the relevant notification and the same is applicable to the imported item by the operation of Section 3(1) of the Customs Tariff Act. Reliance has been placed on the Supreme Court's judgement in Collector of Customs v. Mahavir Aluminium Ltd. , wherein the benefit of lower rate of Customs duty under Notification No. 40/78 -Cus. was allowed to an extrusion press imported by the company as part of a project import. In her rejoinder, learned SDR has endeavoured to distinguish the case of Mahavir Aluminium Ltd. (supra) by submitting that the Customs notification granting exemption to the project import in. that case contained a specific provision enabling the importer to claim the benefit of any other notification. Learned SDR also refers to the apex Court's decision in Tamilnadu Newsprint & Papers (supra), in support of her argument that, where exemption is available to an item imported under project import scheme, exemption from payment of customs duty or additional duty of customs could be claimed only under the relevant Customs notification. It is submitted that, in the event of any conflict between the apex Court's decisions in the cases of Mahavir Aluminium Ltd. (supra) and Tamilnadu Newsprint & Papers (supra), the latter being the later one would prevail.