By TIOL News Service

MUMBAI, NOV 08, 2016: THE appellant (FIL) had sought permission of the authorities for fabrication of storage tanks for storing ethylene for utilizing the same in their plant at Ratnagiri and the tanks were to be erected close to jetty. They had given contract of fabrication of these tanks to L&T Ltd. who sought the import of raw materials under the Project Import Scheme. The said project was registered with the authorities and the nickel steel sheets were imported for fabrication of storage tanks. Bill of entry was provisionally assessed. Subsequently, on execution of the said project, L&T Ltd. filed various documents with the adjudicating authority for finalization of the assessment.

The adjudicating authority caused plant site verification of the usage of the raw materials and components imported under Project Import. It was reported by the central excise authorities from Ratnagiri that the capital goods manufactured out of raw materials and components imported under Project Import have not been utilized by appellant but were leased out to BPCL for storage of LPG.

Resultantly, a demand notice was issued to the importer, L&T Ltd., directing them to show cause why the project import concessional rate of duty be not denied to all the consignments cleared under project import, copy of show cause notice was endorsed to appellant.

L&T Ltd. and appellant submitted that the fact that nickel steel plates were used for fabrication of storage tanks is not in dispute but currently the said storage tanks are not in use due to some problems; obligations under contract were for the manufacturing of storage tanks from the imported goods and the same has been complied.

The adjudicating authority did not agree and held that the goods were not eligible for concessional rate of duty.The duty demand was confirmed against L&T. Copy of the said order was endorsed to appellant.

The appeals filed by appellant as well as L&T Ltd. were dismissed by Commissioner(A); that of L&T as being hit by limitation and that of appellant on the ground that they have not utilised the goods for the purpose for which the nickel steel plates were imported i.e. substantial expansion of installed capacity.

Before the CESTAT the appellant inter alia submitted –

+ that actual use is not necessary to qualify for the concessional rate of duty under the project import, which mandates for import of items required for substantial expansion of existing unit; the expression 'required for' would mean intended for substantial expansion and not actual use for substantial expansion ( DalmiaDadri Cement Ltd. – 2002-TIOL-262-SC-CT refers).

+ that there is no time limit specified for achieving substantial expansion and the appellant has already achieved substantial expansion.

+ that the storage tank itself is a unit and the raw materials imported for fabrication of such storage tanks will also be eligible for the project import benefit de-hors the installed capacity.

The AR submitted that the appeal filed by appellant needs to be dismissed as there is no demand raised on them; that the appeal is infructuous; that the first appellate authority has dismissed the appeal of L&T Ltd. as hit by limitation, which would mean that all the connected appeals do not survive. On merits, it is his submission that the goods which were imported were not required for substantial expansion of installed capacity inasmuch as the said goods were for fabrication of storage tanks and various statements recorded of the officials of appellant clearly brings out that enhancement of installed capacity to 1,30,000 MT was possible even without the fabrication of storage tanks.

The Bench observed –

+ It is on record that L&T Ltd. filed the reconciliation statements with the authorities on completion of the said project and which on verification found that the imported goods were not used for the project which was registered, as the said tanks were leased out by FIL to BPCL. The adjudicating authority confirmed the demands raised on L&T Ltd.

+ We find that L&T Ltd had preferred an appeal against the confirmation of less charge demand before the first appellate authority beyond the period of 90 days from the date of receipt of the order-in-original by them. As per Section 128 of the Customs Act, the first appellate authority has no power to condone the delay beyond the period of 30 days, on expiry of 60 days time granted for filing the appeal. In the case in hand, the appeal which has been rejected by the first appellate authority of L&T Ltd., is correct as the appeal has been filed beyond 90 days and there are no provisions to condone such delay beyond 90 days. Consequently, the appeal of L&T Ltd. before the Tribunal needs to be rejected and we do so.

+ As regards the appeal filed by FIL, we find that they are contesting the issue on merits before us. In our considered view, FIL was never an aggrieved party before the authorities as the project was registered with the authorities by L&T Ltd. under the Project Regulations and L&T Ltd. gave an undertaking to file all the reconciliation of material consequent to execution of the project. At no stage of the entire proceedings, FIL was a party to the proceedings nor any demands were raised against them, nor any explanation was called from them in order to contest the issue on merits. By virtue of being the beneficiary of the project which was executed by L&T., FIL cannot walk into the shoes of L&T Ltd. as an appellant and contest the issue on merits. In our view, the appeal filed by FIL is liable to be dismissed summarily and we do so.

Both the appeals were rejected.

(See 2016-TIOL-2898-CESTAT-MUM)