By TIOL News Service

MUMBAI, MAR 14, 2013: THE appellant imported ‘Hydraulic Piling Rig B 170' and claimed benefit of Notification 21/2002-Cus dated 01/03/2002 (serial No. 230). The bill of entry dated 30/08/2011 was assessed without granting the benefit of exemption as the importer did not have a valid contract at the time of importation and he did not satisfy the condition 40(b) stipulated in the said Notification.

Resultantly, a duty demand of Rs.56,42,968/- was confirmed against the appellant.

The lower appellate authority held that the appellant did not satisfy condition No.40 which stipulates that only a person who has been awarded a contract for the construction of roads in India by or on behalf of the Ministry of Surface Transport, by the National Highway Authority of India, by the Public Works Department of a State Government or by a road construction corporation under the control of the Government of a State or Union Territory is eligible for the exemption. Inasmuch as the person who awarded the contract was Mumbai Metropolitan Regional Development Authority (MMRDA) which is a local authority and there is a separate Corporation for construction of roads in the State of Maharashtra, namely, Maharashtra State Road Development Corporation, hence the appellant is not eligible for the benefit of the exemption. Accordingly, the lower appellate authority dismissed the appeal.

The appellant is before the CESTAT and justifies their claim of exemption by inter alia submitting that Mumbai Metropolitan Regional Development Authority has been constituted under Act No. IV of 1975; that MMRDA is the authority for development of roads in the Mumbai metropolitan region; that they should be considered as a road development corporation specified in condition no. 40 as applicable to serial No. 230 of Notification No. 21/2002; that since they are under the control of the Government of Maharashtra from whom they receive funds, they are eligible for the benefit of Notification mentioned above. It was also pointed out that while in the case of other authorities mentioned in the condition no. 40, the article used is "the" whereas in respect of road construction corporation the article used is "a"; therefore any corporation which undertakes road construction would be covered by the entry ‘a road construction corporation'.

The Revenue representative submitted that MMRDA is a Metropolitan Regional Development authority and it is not a road construction corporation; that there is a separate corporation in Maharashtra under the name of Maharashtra State Road Development Corporation (MSRDC) entrusted with the task of construction or roads and, therefore, MMRDA cannot be considered as a road construction corporation for the purposes of Notification; that Metropolitan Regional authority has not been named as one of the authorities who can award the contract in the said Notification at the time of import of the goods. It is further pointed out that Notification 21/2002-Cus dated 01.03.2002 was re-issued in the budget 2012 and in the new notification No.12/2012-Cus dated 17.03.2012, in addition to the National Highway Authority of India, Public Works Department of a State Government, Metropolitan Development Authority or by a road construction corporation under the control of the Government of a State or Union Territory was also specifically included; that it is clear that the notification distinguishes between a Metropolitan Development Authority and a Road Construction Corporation otherwise, there was no need to use these two expressions specifically and separately and, therefore, prior to Budget 2012, when Notification No.21/2002-Cus was in force, benefit was not be available in case the contracts for road construction were awarded by MMRDA.

The Bench after reproducing the relevant entries of both the notifications 21/2002-Cus and 12/2012-Cus observed -

"5.2 A reading of the above two notifications makes it clear that prior to budget 2012 the notification specified only the following authorities, namely, National Highway Authority of India, Public Works Department of a State Government or a road construction corporation under the control of the State Government or Union Territory. However, after budget 2012, the authorities specified are: National Highway Authority of India, Public Works Department of a State Government, Metropolitan Development Authority or a road construction corporation under the control of State Government or Union Territory. From this it is clear that the Notification differentiates between a Metropolitan Development Authority and a Road construction corporation. Otherwise there was no need to specify both these agencies as the persons who can award the contract for the purpose of the Notification. If the intention was to consider Metropolitan Development Authority as a Road construction corporation, the language used would have been different - for e.g. a road construction corporation including a Metropolitan Development Authority or by way of an explanation. That has not been done in the instant case. Therefore, we are of the view that the notification considers a Metropolitan Development Authority and a Road development construction as distinct and different entities.

5.3 This view is further strengthened for the reason that in the State of Maharashtra there is a separate corporation, namely, the Maharashtra State Road Development Corporation. There are such corporations in other States also, for e.g. in Gujarat, Rajasthan and so on. If one carefully examines the creation of the road development corporations and their objectives, it can be seen that both legally and functionally, road development corporations and a metropolitan regional development authority are distinct entities. The major differences are summarized in the table below.

Note: As per information obtained from the web-sites of various road development Corporation and MMRDA

Thus both legally and functionally, road development corporation is distinct and different from a Metropolitan authority. Thus to equate MMRDA with a road construction corporation would be an insult both to the common sense and to the said organization, especially when one considers the vast and varied nature of the activities undertaken by the said authority."

On the English grammar usage argument made by the appellant, the Bench noted the following -

"5.4 Another argument has been made about the use of the indefinite article ‘a' before the State Road Development Corporation which indicates that the said expression includes all corporations which undertake road development. There is no warrant in law to take such a view. In English language, the definite article "THE" is used when both the writer/speaker and the reader/listener know what is being referred to. If neither of them knows or only one of them knows what is being referred to, then the indefinite articles "A" or "AN" are used. Since there are many States/UTs in India which have their own Road Development Corporations, instead of specifying all of them individually, the expression "a State Road Development Corporation" has been used prefixed by the indefinite article "A". That by no means expands the scope of the expression "road development corporation" to cover "regional development authority" as contended by the ld. Counsel for the appellant.

5.7 One of the cannons of statutory interpretation is "Expressio unius est exclusion alterius" - the express mention of one thing excludes all others. The express mentioned in the notification is "road construction corporation" which implies that others which are not road construction corporations stand excluded from the scope of the notification. Thus if one applies the above principle, it is evident that a Metropolitan Regional Development Authority does not come within the purview of the notification.

5.8 When the notification was re-issued in the budget 2012 to include ‘metropolitan development authority', the same was mentioned specifically in the Finance Minister's budget speech as also in the Explanatory Memorandum explaining the provisions of the Finance Bill. In para 187 of the Finance Minister's Budget Speech, it was stated as follows:-

Roads

187. Full exemption from import duty on specified equipment imported for road construction by contractors of Ministry of Road Transport and Highways. NHAI and State Government is being extended to contracts awarded by Metropolitan Development Authorities."

Similarly in the Explanatory Memorandum, in the portion relating to changes in Custom Duties, under Section V relating to CAPITAL GOODS/INFRASTRUCTURE, in serial no.6, it is explained as follows:-

"6) Full exemption from basic customs duty, CVD and SAD is being extended to equipment imported for road construction projects awarded by Metropolitan Development Authorities."

The expression used in both the Budget Speech and the Explanatory Memorandum is "exemption is being extended". The question of extension of exemption would arise, only when it is not available. If it is already available, there is no need for extending the exemption. Thus the legislative intention is very clear. Prior to budget 2012, customs duty exemption was not available on road construction equipment imported under a contract awarded by a Metropolitan Development Authority.

5.9 This statement given by the Government at the time of extending the benefit to the metropolitan development authority is very relevant for interpreting the notification and needs to be given due to weightage and consideration. In the case of K.P. Varghese vs. Income Tax Officer - (2002-TIOL-128-SC-IT), the supreme Court, based on the earlier judgment in the case of Baleshwar Bagarti vs. Bhagirathi Das [1908] ILR 35 Cal 701/703 expounded the principle of administrative construction, i.e. contemporaneous construction placed by administrative or executive officers charged with executing a statute, as follows:-

"x x x"

6. In the light of the foregoing, we hold that prior to budget 2012, benefit of customs duty exemption on road construction equipment was not available in cases where the contract for such construction was awarded by a Metropolitan Development Authority. Thus the appellant in the present case is not eligible for the benefit of duty exemption under notification No. 21/2002-Cus…."

In fine, the appeal was dismissed as being devoid of merits.

(See 2013-TIOL-441-CESTAT-MUM)