Customs, Excise & Service Tax Appellate ... vs Commissioner Of Customs (Exports)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI Appeal No.C/40822/2014 [Arising out of Order-in-Appeal No.C.Cus.No.75/2014 dt.24.1.2014 passed by the Commissioner of Customs (Appeals), Chennai] Sree Rayalaseema Hi-Strength Hypo Ltd. Appellant Versus Commissioner of Customs (Exports), Chennai Respondent

Appearance:

Shri Hari Radhakrishnan, Advocate For the Appellant Shri M.Rammohan Rao, DC (AR) For the Respondent CORAM : Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member Date of Hearing/Decision : 12.6.2015 FINAL ORDER No.40667/2015 Per R. Periasami

The appellants filed appeal against the impugned order dt. 24.1.2014 passed by Commissioner (Appeals).

2. The brief facts of the case are that appellants have imported accessories for 10 MW Steam Turbine Generator Set under Bill of Entry No.8250437 dt. 18.10.2012. The goods were imported 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 present appeal.

2. Ld. Advocate on behalf of the appellant submits that the goods imported are accessories of steam turbine generator. He submits 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. He also submits that 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 steam 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.

3. On the other hand, Ld. AR submits that objective of the scheme as per para 3.16.1 is to promote investment in upgradation of technology to a specified sector as listed in para 3.16.4 of FTP Policy. Import of capital goods under SHIS scheme is sector specific and on actual user condition. By going by object of the scheme specified under para 3.16.3 and 3.16.4 the imported goods is not related to chemical industry. As per para 3.16.4 import of capital goods are permissible under SHIS scheme or basic chemical industry as per Sl.no.6 of para 3.16.4 of FTP. Further he submits that goods imported are accessories of steam turbine not capital goods, generator and these are parts and accessories of capital goods for upgradation of chemical industry. He submits that notification benefit is rightly denied and goods are not related to either upgradation of the capital goods of the chemical industry or these are parts or accessories of capital goods.

4. After hearing the submissions of both sides, we find that the short issue in this case relates to whether benefit of SHIS scheme is eligible in respect of various accessories imported by the appellants for 10 MW Steam Turbine Generator Set. It is relevant to reproduce para 3.16 of the notification as under :-

"3.16 Status Holders Incentive Scrip 3.16.1 With an objective to promote investment in upgradation of technology of some specified sectors as listed in para 3.16.4 below, Status Holders shall be entitled to incentive scrip @ 1% of FOB value of exports made during 2009-10 and during 2010-11, of these specified sectors, in the form of duty credit. This shall be over and above any duty credit scrip claimed / availed under this Chapter.

3.16.2 Status Holders availing Technology Upgradation Fund Scheme (TUFS) benefits (Under Ministry of Textiles during a particular year shall not be eligible or the Status Holder Incentive Scrip for exports of that year.

3.16.3 The Status Holder Incentive Scrip shall be with Actual User Condition and shall be used for imports of capital goods (as defined in FTP) relating to the sectors specified in Para 3.16.4 below.

3.16.4 The status Holders of the following Sectors shall be eligible for this Status Holders Incentive scrip:

1. Leather Sector (excluding finished leather)

2. Textiles and jute sector;

3. Handicrafts

4. Engineering Sector (excluding Iron & Steel, Non ferrous Metals in primary or intermediate forms, Automobiles & two wheelers, nuclear reactors & parts and Ships, Boats and Floating Structures :

5. Plastics ; and

6. Basic chemicals (excluding pharma products)"

5. It is evident from the above 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 appellants 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, we are of the considered view that 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.

(Dictated and pronounced in open court) (P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER gs 1