ORDER
S.K. Bhatnagar, Vice President
1. This is an appeal filed with reference to the order-in-appeal No. 127/85, dated 16th October, 1985 passed by Collector, Customs (Appeals), Madras.
2. Ld. Counsel stated that Karnataka Dairy Development Corporation has imported the items in question and filed an application for assessment under Heading 84.66 and claimed benefit of project import procedure. The application is dated 10-5-1985. They had also produced ITC Licence dated 19-9-1984 duly endorsed for project import under Heading 84.66. They had also produced a letter of the Ministry of Industry dated 30-11-1977.
3. The Assistant Collector however, rejected their application for registration as project import under 84.66 and assessed the goods on merits. They accordingly cleared the goods under protest after paying the duty assessed by the Assistant Collector. Subsequently, they filed an appeal before Collector (Appeals) which was also rejected. Hence, the present appeal before the Tribunal.
4. It was his submission that the Karnataka Dairy Development Corpn. had undertaken a project with the help of World Bank under agreement with Industrial Development Association. The project agreement had been signed by both Govt. of India and Govt. of Karnataka and based on this the Govt. of India, Ministry of Finance, Deptt. of Economic Affairs had released the necessary foreign exchange and the Ministry of Agriculture and Cooperation had recommended the JCCI to fix the seal of project import on the import licence and list of goods for availing the benefit of concessional rate of duty.
5. It was therefore, his submission that the items imported could be treated as auxiliary equipment required for initial setting up of the plant under the above programme.
6. The items imported from France under contract were actually required for extraction and preservation of the semen obtained from the Bulls earlier imported from Denmark
7. For this purpose the semen is stored in poly vinyl straws and sealed and kept in deep freeze in liquid nitrogen banks so that temperature remains so low that the semen remains preserved and usable for several years. These straws can be taken out whenever required and used for artificial insemination of cows.
8. All the items which have been imported are required for this purpose.
9. The Nitrogen for the purpose of preservation is obtained from a Nitrogen plant which has also been set up under this programme.
10. It was therefore, their main submission that it should be considered as an auxiliary equipment imported as a part of this project for the initial setting up of the plant. It was their alternative prayer that the items should be deemed to be covered under 84.66 (sic.).
11. It was their submission that the Asstt. Collector had erred in rejecting their application and not registering their contract and not extending the project import benefit.
12. Ld. Collector (Appeals) has also not considered all the grounds urged before him.
13. In response to queries from the Bench, the Ld. Counsel accepted that actually importation is for their Bull Breeding Farm and Frozen Semen Bank established in connection with their Dairy Development Project.
14. In response to further queries from the Bench, the Ld. Counsel stated that they had not filed any project report. He, however, added that copies of the drawings of the Master Plan and Ground Floor Plan of the complete lay out of their establishment had been filed.
15. In response to further queries he stated that they had got their Nitrogen Plant registered earlier and the same had also been imported slightly before the arrival of these goods in question and granted the benefit under Project Imports. However, he was not in a position to show the relevant Bill of Entry.
16. Further, the importation of these goods was not connected by the Department with the importation of the Nitrogen Plant.
17. The Ld. D.R. stated that the order of the Asstt. Collector was correct in as much as the appellants have not been able to substantiate either before the Asstt. Collector or before the Collector (Appeals) that the goods in question were meant for a type of project covered by 84.66 or that the conditions of the Heading 84.66 were in any way satisfied.
18. In this connection he would draw attention towards their own application which shows in col. 4 meant for indicating location of the plant and project as “Bull Breeding Farm and Frozen Semen Bank”.
19. Obviously it could not qualify either as Industrial Plant or as any of the project specified or notified under 84.66.
20. They have also shown under the col. 5 meant for description of articles to be manufactured, produced, mined or explored as “Processing of Frozen Semen” but has not shown as to how it amounts to any of the activities covered by col. 5
21. In col. 6 they have mentioned that the items were for ‘initial setting up of the plant’ but a plain reading of the items as mentioned in the Bills of Entry shows that none of them could possibly be for initial setting up of any plant. These item includes even such things as date stamps etc.
22. Furthermore, admittedly the items imported are required for extraction and preservation of bull’s semen and not for the manufacture of any of the items mentioned in Heading 84.66.
23. Moreover, they had shown their production as Five Lac ‘Straws’ per annum whereas both their technical write-up and the Ld. Counsel’s submissions in the court show that the imported items are meant for extracting and preserving semen under deep freeze conditions in the straws used for this purpose and not for manufacture of straws. Therefore, it is apparent that the application was liable to be rejected at the very face of it and has been correctly so rejected.
24. Consequently, the goods were required to be assessed on merits and there is no dispute on this merit assessment. Hence, the appeal was required to be rejected.
25. Ld. Counsel reiterated his submissions and emphasised the fact that the licence bears endorsement of project import for assessment under Heading 84.66. He requested that the letters to which he has drawn attention may be kept in view as also the fact that the equipment is required in connection with a large project.
26. Ld. D.R. sought leave to mention that AC’s order itself points out that actually their Dairy Development Programme is ultimately for manufacture and sale of pasteurised milk and it is apparent from the fact that the equipment has been imported for preserving semen; that semen will be required for artificial insemination for improvement of the breed for obtaining the milk which is to be pasteurised..
27. Ld. Counsel agreed that this was the ultimate object but draws attention to the immediate purpose for which the importation has been made. He would like to re-emphasise that the straws in which the semen is stored have been described in the appeal memorandum itself as necessary adjunct for the Nitrogen Plant which manufactures liquid nitrogen in which the straws are kept at very low temperature so that the semen could be preserved for years in deep freeze condition.
28. We have considered the above submissions. We find, that the Ld. Counsel has not been able to show before us that the conditions of Heading 84.66 as it stood at the relevant time were satisfied in any manner. Even otherwise he has not been able to show that their so-called project is one of the projects of the type mentioned or notified under 84.66 and that the imported items could be considered as equipment meant for initial setting up of a specified or notified plant for the purposes of 84.66. In fact their declarations in their application filed before the A.C. appear to be at variance with their own submissions made during the course of this hearing.
29. Admittedly their unit for which the importation has been made is a Frozen Semen Bank set up in a Bull Breeding Farm and the imported equip- merit is required for the purposes of such bank (as described in col. 4 of their application and admitted before us).
30. Furthermore, admittedly they are not manufacturing the straws in which the semen is to be stored and kept in deep freeze.
31. It also appears that in various documents the words ‘programmes’ and ‘project’ have been inter-changeably used and in a sense different from that in the Customs Tariff and the communications of the various Ministries are with reference to their respective functional areas which fall within their authority. Whereas what we are concerned is the interpretation and application of the customs tariff and the Heading 84.66 thereof and unless the conditions mentioned therein are satisfied, its benefit cannot be extended. It is also noteworthy that in view of the ITC licence no action has been taken on that score and the goods have been treated as covered by licence and allowed as such but the customs assessment is a different matter and has to be with reference to the Customs Act and the Tariff.
32. It is also noted that admittedly there is no dispute regarding assessment on merits once it was shown that the goods were not entitled to project import benefit.
33. In view of the above position, we see no reason to interfere with the orders passed by the lower authorities. The appeal is, therefore, rejected.