JUDGMENT
K.K. Usha, J. (President)
1. The issue raised in this appeal at the instance of the importer is whether they are entitled to claim exemption from Customs duty under Notification No. 11/97 dated 1.3.97 in respect of 120 MT AC-395 Demag Crane imported under Bill of Entry dated 13.8.98 under the provisions of the Project Import Regulations, 1986.
2. The appellant was granted a letter of Intent by the Government of India on 16.1.84 to put up a natural gas based fertilizer plant. In order to erect the manufacturing unit, the appellant had to import plant and machinery from abroad. Import of such items of machinery was covered by Chapter 98, Heading 98.01 of the First Schedule to the Customs Tariff Act, 1975. The assessment and clearance of the items of machinery were governed by the Project Imports Regulations, 1986 framed under Section 157 of the Customs Act, 1962.
3. After commissioning of the first plant the appellant undertook an expansion project titled as Gadepan-II Fertilizer Plant. One of the equipments required for Gadepan-II Project was 120-AC 395 Demag Crane which was imported against invoice dated 30.6.98 and cleared under Bill of Entry dated 13.8.98. The appellant took the stand that the said crane would also enjoy zero duty benefit under Heading 98.01 which reads as follows:
“98.01-All items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipment, auxiliary equipment (including those required for research and development purposes, testing and quality control), as well as all components (whether finished or not) or raw materials for the manufacture of the aforesaid items and their components, required for the initial setting up of a unit, or the substantial expansion of an existing unit, of a specified:
(1) industrial plant, (2) irrigation project, (3) power project, (4) mining project, (5) project for the exploration for oil or other minerals, and (6) such other projects as the Central Government may, having regard to the economic development of the country notify in the Official Gazette in this behalf;
and spare parts, other raw materials (including semi-finished material) or consumable stores not exceeding 10% of the value of the goods specified above provided that such spare parts, raw materials or consumable stores are essential for the maintenance of the plant or project mentioned in 1 to 6 above.”
4. But the Customs authorities required the appellant to pay provisional duty of a sum of Rs. 1,00,000 which was paid under protest under cover of three challans dated 2.2.99, 4.3.99 and 31.3.99. The Assistant Commissioner of Customs issued show cause notice on 28.9.99 requiring the appellant to show cause as to why the subject crane be not classified under Customs Tariff Heading 8426.41 and further amount 63,69,482 be not recovered from the appellant. Appellant replied putting forth his case that crane would come under Chapter Heading 98.01 and be entitled to duty exemption. Reliance was also placed on the letter dated 21.4.98 issued by the Ministry of Chemicals & Fertilizers addressed to the Collector of Customs, Group-V Mumbai referring to list of goods required for the appellant’s Gadepan-II Project and directing that the goods covered by the same list be exempt from Customs duty on import. One of the items was the subject crane in question. After personal hearing on 10.2.2000 the original authority passed an order dated 24.4.2000 rejecting the contentions raised by the appellant.
5. Aggrieved by the above order the appellant preferred an appeal before the Commissioner (Appeals) who by order dated 15.9.2000 remanded the matter for fresh consideration by the original authority. Reference was made in the above order to the circular issued by the Board dated 15.11.65 exempting Customs duty on material handling equipment imported under Project Import Regulations and the contention of the appellant that the circular is applicable to its import. It was also held that the appellant’s case is covered by the decision of the Tribunal in Toyo Engineering India Ltd. v. CC Bombay, 1994(70) ELT 769. The appellant challenged the above order before this Tribunal. By this time the decision of this Tribunal in Toyo Engineering India Ltd. had been taken in appeal to Supreme Court and after remand a Larger Bench had decided the case reported as Toyo Engineering Ltd., 2000 (72) ECC 755 (LB) : 2000 (122) ELT 315. This Tribunal by order dated 18.4.2001 disposed of the appeal directing the Deputy Commissioner to decide the matter afresh after considering the Board’s circular dated 15.11.65 and the Larger Bench decision in the case of Toyo Engineering Ltd.
6. Pursuant to the remand the Deputy Commissioner passed order dated 3.12.2001 rejecting the claim of the appellant. The above order was affirmed by the Commissioner (Appeals) under order dated 11.6.2002 which is being challenged in the present appeal before us.
7. It is contended on behalf of the appellant that the original authority as well as the appellate authority have committed grave error in not considering the appellant’s case in the light of the direction given by this Tribunal in its order dated 18.4.2001. The learned counsel for the appellant would contend that instead of considering the appellant’s case in the light of Toyo Engineering Ltd., 2000 (72) ECC 755 (LB): 2000 (122) ELT 315 the original authority has proceeded on the basis that Toyo Engineering Ltd. has been wrongly decided by the Tribunal in the light of the decision of the Supreme Court in Punjab Electricity Board v. CC, Bombay, 1997 (91) ELT 247 and that benefit of exemption notification is not to be extended to someone on the ground that such benefit has been wrongly extended to others. The learned counsel also submits that the reason given by the original authority in holding that circular dated 15.11.65 is not applicable in the appellant’s case is totally erroneous. The Deputy Commissioner has proceeded on the basis that the appellant has claimed exemption from duty in respect of the crane as a part of an industrial project. On the other hand, the definite contention raised by the appellant was that a crane is a machinery required for initial setting up of a unit of a specific industrial plant which would come under Heading 98.01. The order of the Commissioner (Appeals), it is alleged, is vitiated by total misapplication of mind. He has affirmed the order impugned without appreciating the contentions raised by the appellant.
8. The learned DR reiterated the reasoning given in the orders impugned.
9. We will first examine the decision of the Larger Bench of this Tribunal in Toyo Engineering Ltd., 2000 (72) ECC 755 (LB) : 2000 (122) ELT 315 since the direction given in the order of the Tribunal dated 18.4.2001 to the Deputy Commissioner was to consider the appellant’s case in the light of the above decision. In the above decision the Tribunal took the view that the fertilizer plant for the initial setting up of which impugned goods were imported by the appellants is covered by the expression ‘industrial plant’ as it is designed to be employed directly in the performance of processes necessary for manufacture of fertilizer. Once the fertilizer plant is covered by the term ‘Industrial plants’ specified in Heading 98.01 of Customs Tariff Act, 1975 all auxiliary equipments which are required for the initial setting up of the unit can be imported under the Project Import Scheme. While coming to the above conclusion the Tribunal observed as follows:
“Auxiliary means giving additional help; supplemental or subsidiary; an item not directly a part of a specific component or system but required for its functional operation (Words and Phrases of Excise and Customs by S.B. Sarkar). According to the World Book Dictionary, ‘auxiliary’ means, ‘a person or thing that helps; aid, syn; accessory.”
10. The authorities below have wrongly applied the decision of the Supreme Court in Punjab Electricity Board v. CC, Bombay, 1997 (91) ELT 247 to the facts of the present case. The question that came up for consideration in the above case was whether vehicles used for shifting of transformers would constitute an integral part of the power projects and therefore, eligible for benefit of Project Import under Heading 84.66 of the erstwhile Customs Tariff (at present Heading 98.01). The Supreme Court took the view that language of the entry would indicate that the vehicles which are used for shifting of transformers would not constitute an integral part of the power project. While dismissing the Punjab State Electricity Board, the Supreme Court affirmed the view taken by the Tribunal in Punjab State Electricity Board v. CC, Bombay, 1987 (27) ELT 432. It is relevant to note that in Toyo Engineering Ltd. the Larger Bench referred to the decision of the Tribunal in Punjab State Electricity Board and observed as follows:
“We also observe that even the Tribunal in PSEB case, after, referring to the definition of the word ‘auxiliary’ in Concise Oxford Dictionary observed that equipment which is directly used in the setting up of the project would be an auxiliary equipment. The Tribunal, in that case, did not treat the vehicle as an auxiliary equipment as it was to be used for transport of the transformer to the project site and restricted the term to those equipments which have direct use in the setting up of the project.”
11. In National Aluminium Company v. CC, 1997 (94) ELT 409 the ratio of the decision of the Supreme Court in Punjab State Electricity Board case was discussed and it was observed that the Supreme Court took the view that those vehicles would not be eligible for the benefit of Project Import as they were not considered to be an item of auxiliary equipment’ required for initial setting up of a unit in a specified power project for the reason that it was used for shifting transformer which would not constitute an integral part of the Power Project. This observation in the case of National Aluminium Company v. CC is also referred and quoted in the Larger Bench decision of the Tribunal in Toyo Engineering Ltd. In spite of the above, the authorities below were inclined to take a view that the import of the crane by the appellant will not come under the Heading 98.01 by applying the ratio of Punjab State Electricity Board case. We have no hesitation to hold that the authorities have committed a grave error in coming to the above conclusion.
12. The reason given by the original authority which was affirmed by the appellate authority to come to the conclusion that circular dated 1.5.65 is not applicable in the appellant’s case, is also unacceptable. The appellant has not contended at any time that subject crane has to be considered as part of industrial project. Its contention, always, was that it is a machinery coming under Heading 98.01. For being a machinery coming under 98.01 it is enough if it is an ‘auxiliary equipment’
13. In the light of the above discussion, we set aide the impugned order and allow the appeal. The appellant will be entitled to all consequential relief including refund of the amount paid as duty towards the demand which is the subject of this appeal. Operative part of the order already pronounced in the open Court.