ENJAY HOTELS P. LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THESE two appeals are against the orders, dated 28 -2 -1997 and 28 -5 -1997 passed by Commissioner of Customs, JCH, Nhava Sheva made in Orders No. S/40 -EPCG -161/96 & S/10 -16/97 VA respectively. By the said order he had denied exemption claimed by the appellants under Notification 110/95 -Cus. in respect of marbles imported by them on the ground that the imported items do not come within the definition of the capital goods as defined under the said notification.

(2.) APPELLANTS are carrying on the business under the name and style of M/s. Enjay Hotels Pvt. Ltd. They proposed by their letter dated 15 -2 -1996, to build a 5 star hotel at Sandra (W), Mumbai. For the said project they made an application for import of marble slabs under Export Promotion Capital Goods Scheme to DGFT. The said application of the appellants was for 3 kinds of marble slabs viz. SERPEGGIANTE, GREEL THASSOS, RPSA PASTELLO of the Italian made. For their project they wanted to import the above types of marbles. The appellants stated that the proposed hotel under construction is a 5 star deluxe hotel with a vast lobby and deluxe guest rooms. The floorings and claddings of these areas with marble gives beauty and sense of opulence to the guests especially international visitors. The above Italian marble viz. SERPEGGIANTE (2) GREEL THASSOS (3) RPSA PSTELLO selected by their designers and foreign franchisers reflect their superior taste and style which are not available in the local market. Also the polishing of these marbles are to international standard. The prime areas are therefore, being decorated with these marbles and the remaining areas will have local materials. On the basis of the application, appellants were given EPCG Licence dated 23rd May, 1996 (Page 36 of the Paper book). The Licence provides that they have permission for importation of the marbles slabs of 2 cms thick Random size polished one face. However, they have to export Tourism Related Activity (Hospitality Industry) worth US $ 25,86,080/ - in four times cif value of the capital goods of fob prices within a period of 5 years from the date of issue of licence.

(3.) IT is contended by the ld. Counsel Shri Patil, that under paragraph 38 of the EXIM Policy 1992 -97 goods under consideration viz. marbles can be imported inter alia with the concessional customs duties at the rate of 15% subject to the export obligations of four times of value within the period of 5 years from the date of issue of EPCG Licence. He stated that the import licence issued by the DGFT, was issued under paragraph 38 of the EXIM Policy and carried with it an obligation to export to GCA countries four times the value of the CIF value of the imported goods worth fob value within 5 years from the issue of licence. The export of these things should be within freely convertible currency area. He further argued that the definition capital goods provided in Chapter III Paragraph 7 (7) of the EXIM Policy that the item in question came within the said definition and that is required for the services sector, which enabled him to render services as provided in terms of Explanation (1)(c) of the notification. The instant one in any event is included in the term component as provided in the Policy, as indicated in para 7 (10) of the policy as well as under item (1)(c) the Explanation contained in the Notification 110 of 95. He specifically made special emphasis on the fact that the definition of the capital goods contained in the EXIM Policy as well as import policy as well as in the Notification 110/95 are in pari materia and identical with each other. Therefore, when the licence has been issued by the licensing authorities by the DGFT, the Custom authorities cannot deny granting exemption under Notification 110 of 95. He further stated that paragraph 38 of the Policy refers to concessional rate of Customs duty which is contained in Notification 110/95 and binding on the Customs authorities inasmuch as it states that the capital goods (including) 10% of the of value capital goods may be imported at a concessional rate of customs duty according to the conditions given in the table in the said paragraph subject to an export obligation to be fulfilled over a period of time. He further stresses that when the Govt. of India has made reference to the concessional rate of Customs Duty in para 38 of the Policy it is binding on the Customs Department to give exemptions and to give the concessional rate of duty in terms of Notification 110 of 95. He relied on the judgment of Bombay High Court in the case of Shivshankar Tilakraj v. U.O.I. and Ors. reported in : 1987 (28) E.L.T. 342 (Bom.) for the proposition that customs authorities are not empowered to sit in judgments over the power exercised by the office of the Controller of Imports and Exports and also judgment of Tribunal in Vimpex Dyechem v. C.C. - : 1992 (62) E.L.T. 741. He further argued that the trade notices or other forms of communication given by the DGFT contained ALC Circular 24/95, dated 18th Oct 1995 is binding on the customs authority inasmuch as in the said circular states that item mentioned in the customs notification for example, 122 of 93 which itemizes various items. They only act as a guide and the ALC circular specifically allows to import the same. He even relied on the judgment of the Tribunal in Universal Surgical Traders v. Collector of Customs -1988 (37) E.L.T. page 58 for the preposition that even if an item may not be mentioned specifically in the exemption notification when import takes place such items are entitled to be given benefit of exemption notification. He relied on the observations of the Tribunal on para 5 thereof. Mr. Patil finally stated that as far as import of marbles is concerned recently the SRB of the Tribunal in the case of R.N Rajan & Co. v. CC, Madras - : 1995 (77) E.L.T. 600 had held that interpretation of DGFT is final in terms of para 20 of the import policy and therefore, it is binding. He, therefore, argues that the grant of licence by the DGFT as well as the clarifications given by the DGFT and this Circular No. 27/C, dated 18 October, 1995 will clearly be binding on the Customs authorities so that the import of the materials in this case would definitely entitled for exemption under Notification 110 of 95.