M. Ajit Kumar, Member (T)
1. This appeal is filed by the Revenue against Order in Appeal No. 836/2013 dated 20.6.2013 passed by the Commissioner of Customs (Appeals), Chennai.
2. Brief facts of the case are that the respondents herein filed a Bill of Entry (BE) dated 11.2.2013 for the clearance of the goods declared as ‘New Python 5000 Pothole Patchers Machine’ with a total value of USD 495,000 (CIF) classified under CTH 84305090 and claimed the benefit of nil duty exemption vide Customs Notification No. 12/2012 (Sl. No. 368, list 16). List 16 contains a list of 21 goods. The Appellant sought the benefit of sl no 4 of the said list. The adjudicating authority denied the benefit of notification to the importer on the ground that the imported machines being used to patch-up or repair minor cracks / potholes which develop on the existing road surface were not found specified under List 16 and further held that the respondent did not have a valid contract with NHAI etc. for the construction of roads in India. After due process of law, the learned Adjudicating Authority held that the respondent is not eligible to claim and avail the benefit of Notification No. 21/2012 Sl. No. 368 List 16. In appeal, the Commissioner (Appeals) set aside the adjudication order and allowed the appeal filed by the respondent by extending the benefit of the exemption notification. Hence Revenue has filed this present appeal.
3. Shri R. Rajaraman, learned Assistant Commissioner (AR) appeared for Revenue and Dr. S. Krishnanandh, learned Advocate appeared for the respondent.
3.1 The learned AR representing Revenue stated that the Order of the Commissioner (Appeals) is not legal and proper for the following reasons. One of the conditions, of the notification is that the importer should possess a contract for construction of roads. The contract/ agreement dated 20/03/2013 was not available with the Appellant when he filed the BE on 11/02/2013. Further the contract submitted by the importers is found to be only for Pothole filling on arterial and sub arterial roads. The circular dated 23/02/2009 issued by the Central Board of Excise & Customs in F No 345/17/2008-TRU distinguishing between road construction activities and repair / maintenance activities. 'Filling of potholes' is categorized as a repair/maintenance activity and is not covered as a road construction activity. Even though the Commissioner (Appeals) had clearly accepted that "the impugned goods are not covered under the benefit of exemption" he permitted the benefit of machines mentioned at Sl. No. 4 & 5 of List 16 appended to the said notification, when he should have concluded that the same are not eligible to claim the said notification benefit. Commissioner (Appeals) had totally disregarded the Hon'ble Mumbai Tribunal's order in an identical issue in the case of M/s. Gammon India Ltd Vs Commissioner of Customs (Import), Nhava Sheva as reported in (2013) TIOL 471 CESTAT (Mumbai) which formed the basis for the Lower Adjudicating Authority's Order dated 24.05.2013. In the said order the Hon'ble Tribunal had denied the benefit of Notfn 12/2012 claimed in respect of the imported 'Electronic Paver finisher’ on the grounds that the specifications of the imported equipment did not exactly match the specifications of "Electronic paver finisher (with sensor device) for laying bituminous pavement 7m size and above" figuring at Sl No.2 of List 16 annexed to the CN. 12/2012 (SI.No.368). He hence prayed that the appeal may be allowed.
3.2 The learned Advocate on behalf of the respondent took us through the impugned order in detail along with the work order and contract form and has stated that the Commissioner (Appeals) has passed a very reasoned order. He prayed that the order may be upheld and the appeal dismissed.
4. We have carefully gone through the appeal and the points stated by the rival parties before us. The issue relates to the exemption claimed on the import of “New Python 5000 Pothole Patchers Machine”. Customs Notification No. 12/2012, Sl. No. 368, list 16 specified the following 21 types of goods, which are eligible for exemption:-
(1) Hot mix plant batch type with electronic controls and bag type filter arrangements more than 120T/hour capacity.
(2) Electronic paver finisher (with sensor device) for laying bituminous pavement of 7m size and above
(3) Slip form/fixed form paver finisher for laying concrete pavement
(4) Surface dressing equipment (self propelled) (chips spreader)
(5) Slurry seal machine for filling up cracks in roads
(6) Kerb laying machine
(7) Mobile bridge inspection unit
(8) Mechanical broom with blower
(9) Toll collection and traffic control equipment
(10) Electronic Total station instrument for topographic survey
(11) Global Positioning System (GPS) Instrument
(12) Stone crushing (cone type) plants
(13) Hydraulically operated self-propelled piling rig with accessories
(14) Hydraulically operated rough terrain self-propelled 100 tons crane with telescopic boom
(15) Hydraulically operated self-propelled soil boring equipment with casing pipes for deep earth anchor
(16) Mobile concrete pump placer of 90/120 cu m/hr capacity
(17) Automatic asphalt extraction equipment
(18) Fully automatic, hydraulically operated, pre-cast segment moulds
(19) Hydraulic gantry crane of 100 tonnes capacity for launching truss
(20) Skid steer loaders
(21) Tunnel Excavation & Lining Equipment’s consisting of Drilling jumbos, Loaders, Excavators, Shotcrete machine and 3 stage crushers 4.1 The respondent claims that the impugned goods though mainly used for pothole patching purposes, can also function as small scale surface dresser (Chip spreader) and Crack filling equipment mentioned at Sl.No.4 & 5 of the list 16 appended to the said notification. As per the work order dated 20/03/2013 issued by the Bruhat Bangalore Mahanagar Palike, the ‘Annual Contract’ was issued for pothole filling including sealing of cracks on arterial roads in West Zone – Package – C’. The learned Commissioner (Appeals) after examining the supplier’s technical write-up felt that the impugned goods are akin to the machines mentioned at Sl. No. 4 & 5 of the list 16 appended to the notification. This has been found fault with by Revenue for reasons cited above.
4.2 We find that Boards Circular F No 345/17/2008-TRU, dated 23/02/2009 has not been issued in connection with Customs Notification No. 12/2012 but is pertaining to Service Tax levy. Interpreting a notification benefit with a Circular issued for another enactment is always fraught with danger of misinterpretation. There is nothing in the exemption notification to show that only machines used for construction activities should be given its benefit and not extended to machines for maintenance and repair activities. The machines listed in list 16 cover a whole gamut of road construction activity like, paver finisher, surface dressing eqp., kerb laying, bridge inspection unit, stone crushing plant, tunnel excavators etc and not to road laying equipment/ machines alone. The matter has been discussed elaborately at para 7 of the impugned order. Further machines at Sl. Nos.4 and 5 can also be used for repair and maintenance activities of roads. We hence do not find the impugned order to be erroneous on this ground.
4.3 Secondly it is the view of revenue that one of the conditions for claiming the notification benefit mandates that the importers possess a road construction agreement/contract at the time the goods are imported, which was not complied with by the importers at the time of filing the BE. It is true that on the date of filing the BE i.e. on 11.2.2013 the respondents did not have a valid contract which was signed only on 20/03/2013. It is not Revenue’s case that the said contract was not entered into with this authorized agency. The Respondent has explained that one of the conditions for bidding for the contract was that they should be in possession of a machine for carrying out the contracted work. Hence the contract could only have been applied for while possessing a machine, necessitating its prior import. We feel that it is impossible for every notification to perceive exhaustively situations and circumstances that may emerge after its issue and where its application may be called for. Hence the process of interpretation combines both a literal and a purposive approach. The purpose of the concession is to ensure that the machine is used for the purpose specified in the notification. In exceptional cases the exemption could have been extended provisionally with a bond and finalised after a reasonable opportunity was given to the importer to produce the contract.
4.4 Further Revenue is of the opinion that the learned Commissioner (Appeals) did not take into consideration the Hon'ble Mumbai Tribunal's order in an identical issue in the case of M/s. Gammon India Ltd Vs Commissioner of Customs (Import), Nhava Sheva as reported in (2013) TIOL 471 CESTAT (Mumbai). We must state at the outset, it is well settled that a decision is only an authority for what it decides and not what may logically follow from it (State of Orissa v. Sudhansu Sekhar Misra - (1968) 2 SCR 154 / CCE v. Alnoori Tobacco Products - 2004 (170) E.L.T. 135 (S.C.)). In the case of M/s. Gammon India Ltd., Mumbai, a consignment of “Electronic Sensor Paver Vogetel model super 1800-2 with AB 600-2 TV screen for laying bituminous pavement up to 9 M width along with accessories’ was imported and duty exemption claimed under Notification No. 21/2002-Cus., dated 1.3.2002 vide Sl. No. 230 of the Table annexed to the said notification. The said notification vide List 18 (Sl. No. 2) granted duty exemption to “Electronic paver finisher (with sensor device) for laying bituminous pavement 7 meter size and above” subject to Condition No. 40. The said condition stipulated that the goods shall be imported by a person who has been awarded a contract for the construction of roads in India by the National Highways Authority of India among others or by a person who has been named as a sub-contractor in the contract referred to above. The assessing officer passed a speaking order dated 11-5-2010 denying the benefit of exemption. He observed that the equipment imported by the appellant has a base width of 3 meters only with hydraulic extension up to 6 meters and mechanical expansion up to 9 meters. Since the notification specified that the device should have width of 7 meters and above, the assessing officer held that the equipment under importation did not satisfy the description specified in the notification. He further observed that in the instant case the contract was awarded by M/s. NHAI to M/s. Gorakhpur Infrastructure Company Ltd. (GICL in short) and the contract did not mention M/s. Gammon as a sub-contractor as envisaged in the said notification. Accordingly, he denied the benefit of duty exemption. A Coordinate Bench of the Tribunal rejected the appeal filed by M/s. Gammon India. The case is distinguished in as much as the goods were not eligible because of the violation of two specific conditions i.e. base width and of the importer not being a subcontractor. No such specific condition is seen violated in this case other than the importer not possessing a contract at the time of import which has been explained satisfactorily by the Appellant and hence the impugned order cannot be faulted.
5. In the circumstances, we find that the learned Commissioner (Appeals) has used his discretion fairly and judicially in interpreting the notification and his order does not merit interference. The appeal is hence rejected and the matter disposed of accordingly.
