ORDER
Lajja Ram, Member (T)
1. This is an appeal filed by M/s. Hindustan Petroleum Corpn. Ltd., Visakhapatnam, a Public Sector undertaking, against the order-in-appeal dated 20-8-1987 passed by the Collector of Customs (Appeals), Madras.
2. The matter relates to the refund claim filed by the appellants in respect of the refractory material received by them free of cost as replacement of damaged refractory material which had earlier been imported under project import. M/s. Hindustan Petroleum Corpn. Ltd. had got the contract registered with the customs and imported different equipment from time to time. At the time.of the commissioning of the project, it was found that certain refractory materials had got broken and that for the proper functioning of the boiler, fresh refractory material was required. Correspondence was exchanged with the suppliers, and the suppliers agreed to supply the requisite refractory material free of cost. At the time of the clearance free of cost, the appellants had paid duty on full rate without availing of the benefit of project import and subsequently filed the refund claim. The refund claim was rejected on the ground that for the supply of refractory material, no contract had been got registered with the customs.
3. Shri R. Shankaran, Sr. Manager (Tax), appearing for the appellants submitted that as the free replacement was in respect of the items which were covered by the project import, it was not necessary to register contract for free supply separately. He referred to the invoice by the suppliers and submitted that the free supply was in lieu of the refractory material earlier received on which the appropriate duty had already been paid. He further submitted that what the appellants were praying for was to apply the rate applicable to project import and that they had not prayed for full exemption on this free supply of refractory material.
4. Shri R.S. Sangia, JDR, reiterated the grounds taken by the Collector (Appeals) in rejecting the refund claim of the appellants.
5. We have carefully considered the matter. There is no dispute that the appellants had got the contract registered for the import of the plant, machinery and other materials. It is also not disputed that the refractory material, which is the subject matter of the present proceedings, was received free of cost and was by way of replacement of the refractory material which had got damaged. Under invoice dated 8-4-1986, the suppliers had noted that the materials were being supplied against warranty specified in P.O. 1167/5030 under a modified design as Free Replacements. The suppliers, M/s. Heat Research Corporation, certified that the refractory and anchors removed were shipped out in pieces and were of no commercial value and had been scrapped. The original invoice under which these materials were supplied were dated 6-7-1983,19-7-1983,6-9-1983 and 13-9-1983.
6. The learned Collector of Customs (Appeals) had observed that the contract relating to the impugned goods were not registered under Clause 5 of the Project Import Regulations. We consider that as the free replacement was part of the original contract under which the warranty clause was inserted, it was not necessary for separate registration of the supply of free goods. He had also observed that a contract purchase order covered only goods specifically mentioned in the contract and could not cover warranty replacement. We consider that as the goods were supplied under a warranty clause and no charge for them had been made, the appellants were entitled for the benefit of project import in respect of the free supplies also. Shri R. Shankaran, Sr. Manager (Tax), appearing for the appellants had submitted that what the appellants were praying for was the assessment at the concessional rate of duty applicable to project import and that the refund claim had been filed only for that differential duty.
7. Taking all the relevant facts and circumstances of the case into account, we consider that the appellants were eligible for refund, if otherwise admissible under the law.
8. The appeal is accordingly allowed.