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Cus - Status Holder Incentive Scrip - Exemption under Notification 104/2009 is not admissible for import of accessories for Steam Turbine Generator set: CESTAT

By TIOL News Service

CHENNAI, SEPT 18, 2015: THE appellants have imported accessories for 10 MW Steam Turbine Generator Set under Status Holders Incentive Scrip (SHIS) scheme and claimed benefit of Notification No.104/09 dt. 14.9.2009. The adjudicating authority denied the benefit of notification as the goods were not covered under SHIS scheme as the goods are not related to chemical industry and it is only for generation of electricity. The Commissioner (Appeals) has upheld the impugned order and rejected their appeal. Hence the assessee is before the Tribunal.

The appellant submitted that the goods imported are accessories of steam turbine generator and that import of parts and accessories are covered under SHIS scheme. The definition of capital goods, Explanation to the notification is inclusive definition and the definition is wide and covers Refractory Lining materials etc. The definition in the notification for capital goods allows goods which are directly and indirectly used in the manufacture of the goods. Since generation of electricity is essential and the turbine is used for generation of steam which in turn used for generation of electricity and the electricity so generated is consumed in their factory. Therefore, the accessories of steam turbine are covered under the definition of capital goods.

However, the Tribunal held:

It is evident from para 3.16 of the FTP, the SHIS Scrip is issued to the manufacturer of specific sector for import of capital goods for upgradation of technology. Para 3.16.4 at Sl.No.6 Basic chemical industry (excluding pharmaceutical industry) is listed as specified sector. It is evident that the import of capital goods under SHIS scrip, under Notfn 104/09 dt. 14.9.2009 is for the purpose for upgradation of technology and also it is sector specific. In the present case, what is imported by the appellants are accessories of Steam Turbine Generator used in generation of steam which in turn used for generating electricity whereas the SHIS is applicable only for import of capital goods for Basic Chemical Industry. Both the adjudicating authority as well as the L.A.A. has dealt the issue in detail. The appellant's plea that the definition of the capital goods as per the notification covers capital goods which are used directly or indirectly in the chemical factory is beyond justifiable for the reasons that SHIS scrip not admissible for capital goods which are not related chemical industry. It is clearly stipulated in para 3.16.4 of FTP the sectors to which SHIS is extended and the main objective of the scheme is to upgrade the technology of chemical industry. In the present case, the SHIS scheme is eligible for import of any parts and accessories or capital goods or upgradation of their technology in so far as it relates to plant and machinery pertaining to chemical plant. Import of accessories for Steam Turbine Generator cannot be considered as upgradation of technology of capital goods of chemical industry. Therefore, the appellants are not eligible for the benefit of SHIS scrip under Notfn 104/09 on the impugned goods. We uphold the impugned order and reject the appeal.

(See 2015-TIOL-1970-CESTAT-MAD)


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