Bumi Hiway (India) Private Ltd vs Commissioner Of Customs

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI

Appeal No.C/348/2003

[Arising out of Order-in-Appeal No.C.Cus.367/2003 dt. 25.7.2003 passed by the Commissioner of Customs (Appeals), Chennai]

Bumi Hiway (India) Private Ltd. Appellant

Versus

Commissioner of Customs, Chennai Respondent

Appearance:

Shri A.K.Jayaraj, Advocate For the Appellant

Ms. Indira Sisupal, AC (AR) For the Respondent

CORAM :

Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member

Date of Hearing/Decision : 23.6.2015

FINAL ORDER No.40713/2015

Per R. Periasami

1. Appellant filed appeal against the impugned order dt. 25.7.2003 passed by Commissioner of Customs (Appeals), Chennai.

2. The brief facts of the case are that appellant filed warehouse Bill of Entry for import of "Asphalt Mixing Plant Model Speco TSAP-1550FFW and subsequently filed Exbond Bill of Entry B/E No.12732 dt. 12.7.2000 and claimed the benefit of Exemption at Sl.No.230 of Notification No.21/2002-Cus. dt.1.3.2002. The Adjudicating authority in his order dt. 6.8.2002 denied the exemption and assessed the Bill of Entry on merit and confirmed the demand. On appeal, Commissioner (Appeals) upheld the order. Hence the present appeal.

3. Heard Both sides. Ld. Advocate appearing on behalf of the appellants submitted that they are eligible for the exemption notification No.21/02-Cus. for import of said machines which are used in construction of national highway. He explained the Sl.No.230 of Notification covers goods falling under Chapter 84 or any other chapter and the machines are covered in Sl.No.18 of the list, and they complied with condition No.40 of the said notification.

3.1 He drew our attention to para-5 of the order-in-original where the adjudicating authority clearly came to the conclusion that importer is a sub-contractor of STPL (Special Purpose Vehicle-SPV) /Concessionaire and hence eligible for duty exemption. At para-9 of OIO also the adjudicating authority clearly held that appellants can be treated as a contractor appointed by a special purpose vehicle/concessionaire. Contrary to the above findings, at para-11 he has held that appellant cannot be treated as contractor or sub-contractor.

3.2 He invited our attention to relevant copies of concession agreement appended to the appeal paper book. The first agreement is dt. 27.3.2001 viz. Concession Agreement entered into between National Highways Authority of India (NHAI) and CIDB Inventures SDN BHD (Malaysia) [CIDBI, for short]. He relied clause (D) of the agreement that the SPV as the entity which shall undertake, fulfil and perform the obligations and exercise the rights of as per this agreement. The definition of "Concessionaire", "Contractor", "EPC Contract" are set out in the said agreement relevant pages 5 to 15.

3.3 Ld. counsel also relied on Assignment Agreement dt. 29.6.2001 entered between NHAI and CIDBI (Malaysia) and M/s.Swarna Tollway Private Ltd. (STPL) and relied clauses (E), (F) & (G). The clause (E) obligates constitution of Special Purpose Vehicle (SPV) for the purpose of implementing the Project. M/s.STPL was created, incorporated under the Indian Companies Act to act as SPV. As per Clause (2) of the Assignment/Transfer of the Concession Agreement at 2.1 2.3, 2.4 and 2.5, STPL (SPV) has been assigned full rights, duties and obligations under the concession agreement entered on 27.3.2001 between NHAI and CIDBI. He further submits that this assignment agreement shall form an integral part of the concession agreement dt.27.3.2001. He submits that based on this, the appellant entered into an agreement viz. EPC Contract dt. 20.9.2001 with STPL. The appellants have been conferred as a contractor appointed as per Concession Agreement of NHAI for undertaking the work of widening and rehabilitation of (a) existing 2-Lane Highway from Km 52.8 to 168.6 on the Tada-Nellore Section of National Highway No.5 (NH-5) in Andhra Pradesh and (b) the existing 2-Lane Highway from Km 217 to Km 252 on the Nandigama  Ibrahimpatnam Section of the NH-9 in A.P. He relied clauses (A), (B) (C) of EPC contract and submits that STPL by virtue of the rights assigned as per the concession agreement, STPL(SPV) is the Concessionaire and awarded contract to the appellant on 30.7.2001 and relied relevant clauses at page 176 of Paper Book.

3.4 He submits that NHAI issued a letter dt. 18.2.2002 addressed to Deputy Commissioner of Customs and specifically recommended for exemption on the import of Asphalt Mixing Plant model Speco TSAP -1550FFW including accessories for the above work as per Govt of India, Ministry of Finance Notification No.16/2000 dt. 1.3.2000. Therefore, the appellants have rightly claimed the benefit of exemption notification under Sl.No.230 of Notification No.21/2002-Cus.

3.5 He further submitted that on identical import pertaining to another importer viz. M/s.Punj Lloyd Ltd., New Delhi during the same period the exemption benefit under Sl.No.230 of notification was denied vide OIO dt.16.7.2002. On appeal, Commissioner (Appeals) had allowed the benefit of Exemption Notification No.21/2002 and set aside the adjudication order. Revenue preferred an appeal against the said order and this Tribunal Bench dismissed the Revenue's appeal as reported in 2009 (247) ELT 776 (Tri.-Chennai). He submits that both are identical imports and covered under the NHAI authority for execution of project of widening of National Highway and therefore pleaded that they are eligible for the exemption benefit.

4. On the other hand, Ld.A.R for Revenue reiterates the findings of adjudication order. She submits that adjudicating authority has rightly denied the benefit of exemption as Sl.No.(iii) of Condition No.40 of the notification has not been fulfilled. She further submits that condition (iii) stipulates a person who has been named, as a sub-contractor in the contract referred to in (ii) of the notification for construction of roads. The notification also stipulates other conditions that an undertaking that the goods are required for construction of roads in India. Importers are also required to produce a certificate from the authority that he shall not sell or otherwise dispose of the said goods in any manner for a period of five years from the date of their importation. She further submits that as per clause (iii) of the notification benefit is admissible only to a person who is part of the contract. In this case, appellant is not mentioned as a contractor in the agreement entered between NHAI & CIDBI. She submits that appellant-importer is a sub-contractor of the contractor. She relied on the Supreme Court judgement rendered in the case of Gammon India Ltd. Vs CC Mumbai 2011 (269) ELT 289 (SC) where the Supreme Court discussed the definition of "person" as given in the exemption notification and held that 'person' mentioned in the notification refers to "who has been awarded the contract". She also relied on Supreme Court's decision in the case of Bharat Diagnostic Centre Vs CC - 2014 (307) ELT 632 (SC).

5. We have carefully considered the submissions of both sides and examined the copies of various agreements relied by appellant. We find that appellant imported "Asphalt Mixing Plant Model Speco TSAP-1550FFW" and claimed the benefit of Exemption Notification No.21/2002 under Sl.No.230. The benefit of notification was rejected both by the adjudicating authority as well as by the LAA on the ground that appellant cannot be considered as a person who has been awarded the contract by NHAI and they are the only the contractor or sub-contractor appointed by STPL(SPV/Concessionaire). Appellants contended that they are contractors of STPL created as Special Purpose Vehicle (SPV) as per the Concession Agreement entered between NHAI and CIDBI. On perusal of various agreements relied upon by appellant, we find that there is no dispute on the fact that Govt of India through NHAI entered into an Concession Agreement with Govt of Malaysia through CIDBI Inventures SDN BHD (Malaysia) for widening and strengthening National Highway-NH5 and NH9 between sections of Tada-Nellore Section and Nandigama  Ibrahimpatnam Section (Vizag Section) in the State of Andhra Pradesh and its operation and maintenance on Build-Operator-Transfer(BOT) basis. For the sake of easy understanding, the relevant para 3 and 3.1 of the OIO is reproduced below :-

"3. The letter No.15021/2001/Tech/GM(E)/90 dated 18.2.2002, issued by NHAI stated that the importer M/s.Bumi Hiway (India) Pvt. Ltd. are required to import necessary machineries and construction equipment for execution of the contract for Tada-Nellore-BOT PROJECT. Currently, they intend to import an Asphalt Mixing plant model Speco TSAP-1550FFW including accessories for the above work. Accordingly, they are recommending to exempt customs duty in respect of the same as per notification No.16/2000 dated 1.3.2000. In view of the above, the party submitted that their claim for duty exemption be considered.

3.1 From the Bill of Entry No.12732 dated 12.7.2002 filed by the importer and the exemption letter No.15021/2001/Tech/GM(E)/90 dated 18.2.2002, supporting their claim for exemption produced by the importer it appears that,

(i) M/s.Speco Limited, Seoul, Korea have sold one unit of Speco Asphalt mixing Plant (model No.TSAP-1550FFW of 124 tons per hour capacity to BHL vide invoice No.01-A-6029 dt. 21.2.2002 for USD 281,031.75 CIF.

(ii) The goods under import are one unit of Speco Asphalt mixing Plant with capacity upto 124 TPH.

(iii) Based on a Memorandum of Agreement (MOA) entered between the National highway Authority of India (NHAI) representing the Government of India and CIDB Inventures SDn Bhd representing Government of Malaysia, a Concession Agreement between NHAI and CIDB Inventures Sdn Bhd., Kula Lumpur, (CIDBI) for specified widening and rehabilitation of the existing 2-lane highway from km. 52.8 to 163.8 on the Tada-Nellore section of NH-5 and the existing 2-lane highway from km 217 to km 252 on the Nandigama-Ibrahimpatnam section of NH-9 in the State of Andhra Pradesh through private sector participation on Build-Operator-Transfer (BOT) basis. Pursuant to this agreement, CIDBI was required to constitute special purpose vehicle (SPV) either by itself or jointly with other parties for the purpose of implementing, the project. They have formed M/s.Swarna Tollway Ltd. (STL) and incorporated it as a special purpose vehicle (SPV) for implementing the project on BOT basis. They have further appointed BIL as sub-contractors to the above work. Accordingly, the importer BHL is claiming the benefit of import duty exemption benefits under serial No.230 of Notification No.21/2002-Cutoms notification as a sub-contractor for the said project."

6. As per the above Concession Agreements dt. 27.3.2001, SPV was constituted and M/s.STPL was created as an entity as per the Companies Act to execute the MOA. On perusal of the Assignment Agreement dt. 29.6.2001, we find that the entire rights, duties and obligations are vested with SPV and the said agreement forms part of the main (MOA) Concession Agreement dt.27.3.2001. By virtue of this assignment agreement, STPL (SPV) becomes part of the MOA and acquires the right, duties and liabilities of the Concession Agreement between NHAI and CIDBI. As per clause 2.5 of the assignment agreement, STPL can further assign the concession in favour of its lenders and/or any other party, selected in consultation with NHAI and in accordance with the provisions of the Concession Agreement. Therefore, it is evident that STPL entered into EPC contract with the appellant for execution of the project. On a perusal of EPC Contract dt. 20.9.2001, entered by the appellant the clause (B) & (C) clearly stipulates the nature and scope of the work and the terms of the contract. Clause (B) stipulates that SPV shall perform the Concession Agreement as if it was entered between NHAI and the Employer (SPV) and the Employer shall be deemed to the Concessionaire under the Concession Agreement. Therefore, by virtue of this clause the STPL is the Concessionaire.

7. In this regard, we find that NHAI in their letter dt. 18.2.2002 has clearly brought out various clauses of the agreement and the MOA signed between Govt of India and Govt of Malaysia and also setting up of SPV and recommended for exemption of duty for import of "Asphalt Mixing Plant Model Speco TSAP-1550FFW" imported by the appellant for executing the project under the Notfn 21/02. At para-4 of the above letter, it is clearly stated that pursuant to the Assignment Agreement, M/s.Swarna Tollway Pvt. Ltd. has awarded the contract to appellant for roadwork. From the above, it is established that STPL (SPV) has awarded the contract to the appellant and it cannot be said that appellant is a sub-contractor of a contractor.

8. Revenue relied on Supreme Courts decision in the case of Gammon India Ltd. Vs CC Mumbai (supra). The above case relates to exemption notification No.17/2001-Cus. relating to a person who has been awarded for contract by NHAI. The contract has been awarded by NHAI to "Gammon Atlanta JV" (Joint Venture) whereas the Apex Court held that Joint Venture could be treated as a legal entity with Gammon as constituent and imports were not made by JV and Gammon India is not a person who has been awarded by NHAI and benefit of notification is not available to M/s.Gammon India Ltd. In the present case STPL has been created as Special Purpose Vehicle (SPV) as per the Concession Agreement between Govt of India (NHAI) and the Govt of Malaysia by virtue of Assignment Agreement dt. 29.6.2001 and therefore the Concession Agreement of NHAI is deemed to be an agreement of SPV. As SPV contract was awarded to importer by entering into EPC agreement which is clearly explained in NHAIs letter dt. 18.2.2002. Therefore departments reliance on Supreme Courts decision in the case of Gammon (supra) is not applicable to the present case. Whereas we find that on an identical issue of import of Alphalt machines by another importer M/s.Punj Lloyd Ltd. this Tribunal Bench upheld the Commissioner (Appeals) order and dismissed the Revenue appeal in the case of CC Chennai Vs Punj Lloyd Ltd. (supra). The relevant para 2 & 3 are reproduced as under :-

"2.?We have heard both sides. We find that what is to be ascertained is whether the goods have been imported either by the NHAI or a person named as sub-contractor in the contract between the NHAI and the contractor (the contractor is the person to whom the contract has been awarded NHAI). As per the agreement entered into between NHAI and NKEL on 20-11-2001 agreement means this agreement including schedule hereto as of the date hereof and includes any amendment hereto needed in accordance with the provisions hereof. The agreement was amended by concession agreement dated 14-3-2002 as follows:-

EPC contract means the sub-contract for the purpose of design, engineering, procurement of equipment, materials and construction of the project in accordance with the provisions of this agreement entered into by the concessionaire with M/s. PLL. The amendment has been signed by the General Manager, NHAI and the Director, both parties to the original concession agreement. Therefore, the Commissioner (Appeals) has rightly held that in terms of Article 19.7 of the concession agreement, the amended agreement dated 14-3-2002 is valid and effective. In other words M/s. PLL is specified in the agreement between NHAI and NKEL as the person named as sub-contractor for implementing the project. In this view of the matter, there is no legal infirmity in the order passed by the Commissioner (Appeals).

3.?The appeal is therefore dismissed."

9. In view of forgoing discussions and by following this Tribunals decision (supra), we hold that the machines imported by the appellants are eligible for exemption under sl.No.230 of Notification No.21/2003- dt. 1.3.2001 The impugned order is set aside and the appeal is allowed.

(Dictated and pronounced in open court)

(P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER

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