2000(01)LCX0174

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri S.S. Kang, Member (J) and V.K. Agrawal, Member (T)

K.M. SUGAR MILLS

Versus

COMMISSIONER OF CUSTOMS, ALLAHABAD

Final Order No. 128/2000-B, dated 24-1-2000 in Appeal No. C/695/94-B

CASE CITED

Collector v. West Coast Indl. Gases Ltd. — 1989 (025) ECR 0225 (Tribunal) — Relied on [Paras 4, 9]

Advocated By : Shri Bipin Garg, Advocate, for the Appellant.

Shri Jagdish Singh, JDR, for the Respondents.

[Order per : S.S. Kang, Member (J)]. - Appellant filed this appeal against the order-in-original dated 20-7-1994 passed by the Commissioner of Customs. In the impugned order the benefit of project import was denied to the empty Oxygen Gas Cylinders imported by the appellants.

2. The brief facts of the case are that appellant made import of 2520 numbers of empty Oxygen Gas Cylinders of 47 Ltrs, water capacity for initially setting up of their plant for production of gas. The appellant after registration of the contract under the Project Imports Regulations, 1986 for import of Gas Cylinder filed Bill of Entry and claimed the assessment under Sub-heading 9801.00 of the Customs Tariff.

3. The goods were cleared after grant of the benefit of project import. Thereafter a show cause notice was issued to the appellant denying the benefit of project import and classifying Gas Cylinders on merit. Thereafter, the impugned order was passed denying the benefit of project import and confirming the demand of differential customs duty.

4. Learned Counsel appearing on behalf of the appellant submits that the Gas Cylinders were imported for initial setting up of plant for production of gas. He submits that this factual aspect was not disputed by the Revenue. He submits that the Tariff Heading 98.01 of the Central Excise Tariff includes all items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipment, auxiliary equipment for the initial setting up of a Unit. He submits that the Gas Cylinders are essential for the manufacture of the Oxygen Gas as the gas cannot be transported without the aid of these cylinders. He submits that the appellants were setting up an Industrial Plant for the manufacture of Oxygen Gas and these cylinders are auxiliary equipment used in the manufacture of Oxygen Gas. He relies upon the decision of the Tribunal in the case of Collector of Customs, Cochin v. West Coast Indl. Gases Ltd., reported in 1989 (025) ECR 0225 (CEGAT SB-B2). He submits that in this case the benefit of project import to the cylinders was allowed treating Gas Cylinders as auxiliary equipment. He, therefore, prays that the appeal be allowed.

5. Learned JDR, appearing on behalf of the Revenue, submits that the reliance of the appellant on the decision in the case of Collector of Customs, Cochin v. West Coast Indl. Gases Ltd. (Supra) will not help them as the definition of Industrial Plant and Tariff Entry had undergone a change. He submits that the Gas Cylinders cannot be treated as the part of Industrial Plant. He submits that as per the definition of Industrial Plant under Project Imports Regulations, 1986 means a Industrial system designed to be employed directly in the performance of any process or series of processes necessary for manufacture, production or extraction of a commodity. He submits that as Gas Cylinders are not used for manufacture of production or extraction of commodity, therefore, they cannot be covered under the definition of Industrial Plant. He, therefore, prays that the appeal be dismissed.

6. Heard both sides.

7. In this case the benefit of Project Import was denied to the empty Gas Cylinders imported by the appellant. The appellants were setting up a Gas Plant and this fact was not disputed by the Revenue. The Tariff Heading 98.01 of the Customs Tariff provides as under :

“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) 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 the 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 materials, and (6) other such projects.”

8. The reading of the Tariff Heading shows that it covers all items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipment and auxiliary equipment for initial setting of a Unit or substantial expansion of the existing Unit of a industrial plant. Industrial plant is defined in the Project Imports Regulations, 1986 which provides as under :

“Industrial Plant means an industrial system designed to be employed directly in the performance of any process or series of processes necessary for manufacture, production or extraction of a commodity.”

9. The appellants were setting up a Plant for the manufacture of Oxygen Gas which definitely is an Industrial Plant as defined under the Project Imports Regulations, 1986. The Tariff Heading 98.01 of the Customs Tariff provides uniform rate of duty to the auxiliary equipment required for the initial setting up of the Industrial plant. The Tribunal in the case of Collector of Customs, Cochin v. West Coast Indl. Gases Ltd., reported in 1989 (025) ECR 0225 (CEGAT SB-B2) held that the Gas Cylinder is the auxiliary equipment in the manufacture of Gas. The Tribunal held as under :

‘The next question is if they are not plant, can they be considered as “auxiliary equipment” under T.I. 84.66. Admittedly the gas manufactured has to be stored in containers and the containers can be either a storage tank or cylinders and by means of containers or by means of a pipeline it can be supplied to consumers. The pipeline can be constructed either by the supplier of gas or by the consumer of gas. Without a pipeline or cylinder, neither the storage of gas produced nor the supply is feasible. Therefore, it is directly connected with the production of the gas. In the absence of these cylinders the plant set up remains idle. Therefore, to allow the plant to produce, the cylinders are absolutely essential. In our view they are directly connected with the setting up of the plant and fall within the meaning of auxiliary equipment. Since they are auxiliary equipment they are entitled for assessment under project import regulations.’

10. Though, the Tribunal while holding that the Gas Cylinders were auxiliary equipment interpretated the Tariff Entry 84.66 which covers the goods which are imported under that Project Imports Regulations at the relevant time. As the Tribunal held that the empty Gas Cylinders are auxiliary equipment for the manufacture of gas and the present Tariff Entry i.e. 98.01 of the Tariff also covers the auxiliary equipment for initial setting up of Industrial Plant, therefore, in our view, the ratio of the above said decision is fully applicable in the present case. In view of the above decision of the Tribunal, the impugned order is set aside, and the appeal is allowed.

Equivalent 2000 (119) ELT 170 (Tribunal)

Equivalent 2000 (039) RLT 0930