Judgment:
1. This appear is directed against the order in Appeal No. M. CUS.1195/89, dated 23-5-1989 of Collector of Customs (Appeals), Madras.
2. The Appellants manufacture, inter alia, oil well cement under an Industrial licence. This oil well cement is used by ONGC after adding certain additives to make slurry. This slurry has to be designed to conform to suit certain specifications and specific site conditions before it is actually used in drilling wells. The confirmation of slurry design to be prepared with the oil well cement being supplied by the appellants requires highly sophisticated equipments which, it is claimed, are not indigenously available. Appellants therefore imported the equipments and spares for testing the quality of oil well cement.
The appellants claimed total exemption from customs duty under Notification No. 127/82 or 173/82 or alternatively sought exemption under Notification No. 197/76. The claims were rejected. Collector (Appeals) upheld the order. Hence this appeal.
3. Arguing for the appellants the ld. Counsel submits that he is not pressing his claim for equipment under Notification No. 127/82 or 173/82. However, he submits that the impugned goods which are meant for testing the quality of oil well cement used in connection with exploration of the mineral oil or gas are covered by Notification No.197/76, dated 2-8-1976. At SI. No. 13 it reads "Cementation units, bunkers and ancillary equipments." He submits reading the notification exemption is granted to the articles specified in the schedule annexed to the Notification and the component parts thereof. This equipment can be considered as an ancillary equipment. In the alternative it can be considered component part of cementation unit because it is not possible to make use of oil well cement unless the quality of such cement is treated. In their case, therefore, such equipment which is essential in the preliminary stage for oil exploration is component part of the cementation unit. Notification required use of imported goods in connection with exploration of mineral oil. The intended use therefore need not be direct and indirect use for testing the oil well cement used in the cementation unit which are further essential in the operation connected with oil exploration can be considered as full compliance of the conditions of the notification.
4. Ld. D.R. vehemently reiterates the Departmental arguments and submits the equipment meant for testing the oil well cement cannot be considered ancillary equipments of Bunkers or component part of cementation unit and therefore would not be covered [by] Notification No. 197/76.
5. Ld. D.R. submits that registration of contract is a pre-requisite before entertaining claim under Project Import and that appellants had produced no evidence that the contract in fact was registered at the time goods were imported.
6. We have heard both sides. We straightaway take up claim under Notification No. 197/76 since the other claims under Notification No.127/76 or 173/82 are not being pressed by the Consultant. Notification No. 197/76 partially exempts specified articles and component parts thereof; when imported in India provided it is proved to the satisfaction of Assistant Collector of Customs that "such articles or component parts have been imported for use in connection with exploration of mineral oil or gas." There is no doubt about proposition that the "use" may not be direct since the expression in Notification is imported for "use in connection with the exploration." We are, however, unable to accept the proposition that the testing equipment is ancillary equipment for cementation unit. Notification clearly indicates; that the ancillary equipment qualifies only the bunkers; and does not qualify the cementation units as such. The insertion of a comma after "cementation unit" and its absence in expression "Bunkers and ancillary equipment" indicates that ancillary equipment should be for Bunkers. The expression "component part" has certain connotation and equipment intended to test the quality of oil well cement cannot be considered as a component part of the cementation unit. It may be used in testing the quality of the cement but it certainly is not a part of the cementation unit as such. We, therefore, cannot accept the proposition that an equipment intended to test the quality of the oil well cement can be considered component part of the cementation unit as such.
7. In regard to plea regarding project import we observe that no evidence has been produced even at this stage before us that the contract in fact was registered to entitle the appellants to claim benefit under the project import regulation. Ld. Consultant fairly concedes that he has no such evidence at this stage with him. This plea too therefore has to be rejected.
8. For the reasons mentioned hereinbefore we therefore uphold the impugned order and reject the appeal.