1. The appellants filed Bill of Entry (for home consumption) No. 369413 dated 28.12.2001 through CHA for clearance of imported goods from Germany declared as HOT MIX PLANT BATCH TYPE WITH ELECTRONIC CONTROLS AND BAG TYRE FILTER ARRANGEMENT 160 TONS PER HOUR CAPACITY valued at DM 550,000/-. Clearance was sought under Customs Tariff Heading 8474.80 at 'nil' rate under Notification No. 17/2001-Cus. Dated 1.3.2001. The notification vide Serial No. 217 thereof granted full exemption from basis customs duty and additional customs duty, to goods of Chapter 84 specified in List-II, required for construction of roads. The first among the 21 items specified in List-II under the Notification was "Hot Mix plant batch type with electronic controls and bag type filter arrangements, more than 120 Tons per hour capacity." The exemption, allowed to the goods specified in the list, was subject to Condition No. 38 stipulated in the Notification. This condition reads : (ii) a person who has been awarded a contract for the construction of roads in India by or on behalf of the Ministry of Surface Transport, by the National Highways Authority of India, by the public Works Department of a State Government or by a road construction corporation under the control of the Government of a State or Union (iii) a person who has been named as a sub-contractor in the contract referred to in (ii) above for the construction of roads in India by or on behalf of the Ministry of Surface Transport, by the National Highways Authority of India, by Public Works Department of a State Government or by a road construction corporation under the control of the Government of a State of Union Territory; (b) the importer, at the time of importation, furnishes an undertaking to the Deputy Commissioner of customs or the Assistant Commissioner of Customs, as the case may be, to the effect that he shall use the imported goods exclusively for the construction of roads and that he shall not sell or otherwise disposes of the said goods, in any manner, for a period of five years from the date of their importation; The goods covered under the afore mentioned Bill of Entry were provisionally assessed and clearance thereof without payment of duty was allowed in terms of the Notification to the appellants against requisite Bond and Bank Guarantee. But, before physical clearance, the goods were examined by SIIB officers in the presence of representatives of the appellant-company and their CHA. A detailed scrutiny of import documents and allied investigations were conducted later. The investigative results suggested to the Department that the imported goods were only certain parts/components of what was declared as Hot Mix Plant and that the appellant-company had not been duly authorized by the National Highways Authority of India (NHAI) to import such plant. The appellant waived show-cause notice and made written and oral submissions pleading for the benefit of the Notification. The Commissioner of Customs who finalized the assessment passed the following order : "(i) I hold that the goods imported vide Bill of Entry No. 369413 dated 28.12.2001 are only components and not Hot Mix Plant.
(ii) I deny the benefit of duty exemption vide Notification No. 17/2001.
(iii) I order the finalisation of the provisional assessment by treating the goods imported as components of the plant.
(iv) I confiscate the goods under Section 111(m) of the Customs Act, 1962, for misdeclaration of the description of the imported goods.
However, I give the importers the option to redeem the goods on payment of a fine of Rs. 5,00,000/- (Ruppes five Lakhs only) under Section 125 of the Customs Act, 1962.
(v) I also impose a penalty of Rs. 1,00,000/- (Rupees One Lakh only) under Section 112(a) of the Customs Act, 1962 on the importers M/s.
IVRCL Infrastructure & Projects Ltd., Hydrabad".
2. Heard both sides. Learned counsel for the appellants gave a brief account of the relevant facts and stated two main issue to be decided on. The appellant-company viz. M/s. IVRCL Infrastructures & Projects Ltd. ["IVRCL", for short] entered into a Joint Venture Agreement with M/s. Shapoorji Pallonji & Co. Ltd. ["SPCL", for short] in October 2000.
The National Highways Authority of India (Ministry of Road Transport and Highways, Govt. of India) in June 2001 awarded to this Joint Venture a contract for construction of roads (including upgrading of existing roads, construction of service roads and other auxiliary works) in the Srikakulam-Palasa segment of NH-5 in Andhra Pradesh) which was referred to as "Contract Package AP-2" in the relevant agreement, which was executed on behalf of NHAI by its General Manager (East-I) and on behalf of the SPCL-IVRCL Joint Venture by the Authorised Representatives of the two companies. A Hot Mix Plant (Batch Type) of capacity above 140 Tons/hour was required for execution of the road construction work. Therefore, IVRCL placed a purchase order with M/s. Lintec GmbH & Co. KG '"Lintec", for short] for Hot Mix Plant (Batch Type) of capacity 160 Tons/hour and the goods supplied by the German Company were cleared at Chennai Customs by IVRCL under the subject Bill of Entry. The first issue stated by the counsel was whether the imported goods conformed to the description of item No. 1 in List-11 under Notification No. 17/2001-Cus., for the benefit of exemption in terms of Sl. No. 217 of the Table to the Notification. On this issue, he submitted that the goods were to be treated as Hot Mix Plant in unassembled condition. The purchase order placed on the German supplier was for Hot Mix Plant only. The plant was not capable of being supplied in fully assembled condition. Hence it was supplied in unassembled condition. The consignment included all components of Hot Mix Plant, except steel structure which was left out only for the sake of convenience of transportation. This, however, was not reason to hold that the complete plant covered by the purchase order was not imported by the appellant. After confirmation by the NHAI that the subject import fully met the characteristics of Hot Mix Plant required for execution of the road works, there was not justification in holding that only components of the plant were imported. Counsel was referring to a letter dated 20.1.2002 issued to the Chief Commissioner of Customs by the Chief General Manager (Technical) of NHAI. Leaned counsel argued that the relevant entry in List-11 under the Notification required to be given a liberal interpretation. The word "with" occurring in the entry ["Hot Mix plant batch type with electronic controls and bag type filter arrangements, more then 120 T/hour capacity"] was not to be taken in a restrictive sense so as to deny the benefit of the Notification to the goods imported, particularly in view of NHAI's recommendation. IN this context, reliance was placed on the Tribunal's decision in Kankar Synthetic Fibres Ltd. Vs. CCE, Mumbai [2003 (59) RLT 935].
3. On the second issue whether IVRCL was an eligible importer in terms of Condition No. 38 of the Notification, counsel submitted that the view taken by the Commissioner was not correct inasmuch as a Joint Venture was not a legal person and any of the two partners (viz. IVRCL and SPCL) of the Joint Venture was competent to import requisite machinery for the road project under the Joint Venture Agreement as well as under the contract between the Joint Venture and NHAI. Ld.
counsel relied on the Supreme Court's judgment in New Horizons Ltd. & Another Vs. Union of India & others [1995 1 SCC 478]to explain the concept of Joint Venture. He submitted that IVRCL was entitled to import the plant for and on behalf of the Joint Venture and therefore the contra view taken by the Commissioner required to be rejected.
4. Learned SDR, on the first issue, submitted that, as per the purchase order given by IVRCL to Lintec vide Annexure -4 to the appeal, the price of the complete Hot Mix Plant was DM 906,574/-; that, out of this amount, only an amount of DM 550,000/- was paid by IVRCL to Lintec which was for supply of only some components of the plant; that the balance amount of DM 356,574- was the payment given to Lintec's Indian Counterpart viz. M/s. Marshall Sons & Co. (MFG.) Pvt. Ltd. ["Marshall", for short] for the supply of indigenous components and for erection of the plant at the project site. Whereas the total cost of Hot Mix Plant agreed between IVRCL and Lintec Was DM 906,574, the payment actually made to the German supplied was only DM 550,000/-, which clearly indicated that the complete plant was not imported by IVRCL. Only some critical parts of the plant were imported. The rest of the parts were indigenously procured for erecting the plant. SDR sought to prove his point by quoting from the statement of Sh. M.V. Narasimha Rao (Project Director, NHAI), Sh. Jayant Bhattacharjee, (CEO & ED, Marshall) and Sh.
P.S. Banik (Vice-President, Marshall). He submitted that import of only some components of Hot Mix Plant would not attract Serial No. 217 under the Notification. A complete plant should have been imported for the benefit under that Serial Number. In this context, learned SDR quoted from S.B. Sarkar's "Words & Phraseson Customs and Excise" to explain the meaning of 'plant'.
5. On the second issue, Id. SDR submitted that the contract was between NHAI and the Joint Venture of IVRCL and SPCL but the import was made by IVRCL only. The payment for the imported goods was made by IVRCL out of their own account even though, under the Joint Venture Agreement, SPCL was the partner-incharge authorized to represent the Joint Venture. It was argued that IVRCL, on their own, were not entitled to import any goods for the execution of road works under the contract awarded to the Joint Venture by NHAI. Ld. DR relied on the Tribunal's decision in CC, Mumbai Vs. Gammon India Ltd. [2003 156 ELT 883] in this context.
Reliance was also placed on the Supreme Court's judgments in Novopan India Ltd. Vs. CCE, 2002-TAXINDIAONLINE-89-SC-CX and Mediwell Hospital & Health Care (P) Ltd. Vs. UOI 2002-TAXINDIAONLINE-69-SC-CUS. In his rejoinder, Id. counsel argued that the ratio of the apex court's decision in New Horizons (supra) was not correctly applied in Gammon India (supra).
6. We have given careful consideration to the submissions. There are two substantive issue before us, as stated by Id. Counsel. The second issue stated by him will be considered first as it is more fundamental then the first. Admittedly, the contract for the road construction work was awarded to the Joint Venture of SPCL and IVRCL by the National Highways Authority of India under an agreement executed between NHAI (represented by General Manager (East-I) and the SPCL-IVRCL Joint Venture (represented by authorized representatives of the two companies). The Joint Venture was constituted under the Joint Venture Agreement dated 23.10.2000 which we have perused. This Agreement indicates that the parties had agreed to from a Joint Venture to prequalify and, if successful, tender for the road works of NHAI "under joint and several responsibilities sharing risks, liabilities, payable and receivable monies in proportion as mutually agreed towards performance of these contracts and their successful completion SPCL and IVRCL would provide Equity in the project in the ratio 51:49 and would provide finances, machinery etc. in proportion to their shares of work.
SPCL was to be the prime contractor with the entire technical and contractual responsibilities for execution of the contract. The control, management and supervision of the works would be exercised by an Executive Board/Committee headed by a representative of SPCL and with four other members two from each party. SPCL was nominated as partner-in-charge to act on behalf of the Joint Venture in the prequalification/tender proceedings. Shri J.K. Trivedi of SPCL (partner-in-charge) was nominated to act on behalf of the Joint Venture and be a single point contract for the client (NHAI). It was also provided that the payments made by NHAI to the Joint Venture shall be operated by the authorized representatives of the Joint Venture. The partner-in-charge was authorized to "incur liability and receive instruction for and on behalf of the Joint Venture jointly or severally for the entire duration and execution of the contract (including payment)".The agreement again said vide clause 13: "Both parties shall have joint and several liabilities towards the performance of this contract and the successful completion of the works". The Agreement also provided for reconciliation and arbitration of any disputes between the parties. It appears from these terms and conditions of the Joint Venture Agreement that the Joint Venture was intended to be a partnership of the two companies and SPCL was the partner-in-charge authorized to transact business with NHAI on behalf of the Joint Venture and, while doing so, to incur liability for and on behalf of the Joint Venture jointly or severally for the entire duration and execution of the contract. It was accepted as a partnership by NHAI as well inasmuch as the project contract with NHAI was entered into by authorized representatives of both the partnering companies viz. SPCL and IVRCL. Ld. Commissioner has held that the goods should have been imported by the Joint Venture Company and not by one of its partners/constituents and, accordingly, he has denied the benefit of the Notification to the imports made by IVRCL, who was neither a contractor not a sub-contractor of the purpose of Condition No. 38, according to the Commissioner. Obviously, Id. Commissioner has treated the SPCL-IVRCL combine as a Joint Venture Company and as a legal entity distinct from the constituent companies. He fell into a gross error inasmuch as the SPCL-IVRCL combine was not a Company by itself but only a Joint Venture in the nature of partnership. There was no evidence on record to show that SPCL and IVRCL had set up a Joint Venture corporate entity for the purpose of contracting with NHAI and executing the road project. What they formed was a sort of partnership wherein SPCL and IVRCL had joint and several responsibilities and liabilities in respect of execution of the contract awarded by NHAI. SPCL and IVRCL were in the shoes of the partners of the partnership firm and the former was to function more or less like a managing partner. The Joint Venture had the trappings of a partnership firm under the Indian Partnership Act.
Therefore, in our view, the general principles of partnership under the Indian Law were applicable to the SPCL-IVRCL Joint Venture. Accordingly any one of the partners could represent the Joint Venture in its transactions with third parties. As far as the contract between the Joint Venture and NHAI was concerned, the Customs department was a third party, though the subject import was incidental to execution of the said contract. Hence any of the partners of the Joint Venture was competent to transact business with the department on behalf of the Joint Venture. In this context, a question could be raised. Was IVRCL competent to import the goods and file Bill of Entry for clearance thereof when the Joint Venture Agreement had expressly nominated SPCL as partner-in-charge with authority to incur financial liability for and on behalf of the Joint Venture? The Joint Venture Agreement did not specifically nominate or authorize the partner-in charge or the other partner for the import and the customs formalities connected therewith.
Any of the partners could do the job for the Joint Venture. The Joint Venture was the contractor employed by NHAI and IVRCL, being its partner, lawfully represented it for the job at Customs. the Revenue has not case that there was any dispute between the partners over the importation and clearance of the goods by IVRCL on behalf of the Joint Venture. As a matter of Fact, though statements were recorded from Shri S. Ramachandran, Sr. Vice President of IVRCL, the department did not query him as to whether his company was competent to import and clear the goods on behalf of the Joint Venture under the contract between the Joint Venture and NHAI. It is all the more significant to note that no statement was recorded from any functionary of SPCL so as to clear the department's doubt (if any) regarding the competence of their partner (IVRCL) to import the gods on behalf of the Joint Venture. Further, NHAI vide certificate dated 8.1.2002 of General Manager (East-I) themselves have acknowledged IVRCL's right to import Hot Mix Plant on behalf of the Joint Venture for the purpose of the road works. In the circumstances, we do not find any justification for taking a view that the goods imported by IVRCL did not fulfill Condition No. 38.
7. Coming back to Notification No. 17/2001-Cus., we note that any goods of List-11 claiming the benefit of exemption under the Notification can be imported by a person who has been awarded a contract for the construction of the roads in India by or on behalf of the National Highways authority of India. In the instant case, such a contract was awarded by NHAI to the SPCL - IVRCL Joint Venture, which, as we have already found, was a partnership of the two companies. Any of the partners was competent to import goods for and on behalf of the contractor viz. the Joint Venture Therefore, IVRCL (appellant-company) satisfied Condition No. 38 of the Notification. The Revenue has taken a contra view by relying on the Tribunal's decision in Gammon India (supra), wherein it was held that M/s. Gammon India Ltd., the partner-in-charge in a Joint Venture with M/s. Atlanta Infrastructure Ltd. was not competent to import an present Bill of entry for clearance of goods covered by Entry No. 217 to the Table to Notification No.17/2001-Cus. on behalf of the Joint Venture. Ld. counsel for the appellants has expressed the view that the concept of Joint Venture was not correctly understood in Gammon India Ltd. (supra). Counsel, in this connection, has relied on the Supreme Court's decision in New Horizons (supra).
8. In the case considered by the apex Court a Joint Venture company viz. New Horizons Ltd. (NHL, for short) consisting of a few India companies (with 60% share capital) and a Singapore-based company (with 40% shares) had participated in tender proceedings of the Department of Telecommunication for printing and binding of telephone directories of Delhi and Bombay. A rival participant was M/s. M*|&N Publications ltd.
(sort short, MNPL). The total amount of royalty for three years offered by NHL was Rs. 459.90 lakhs as against Rs. 95 lakhs offered by MNPL.
However, it was the tender of MNPL that was accepted by the Tender Evaluation Committee, apparently, on the basis of the fact that the said company had more technical experience than any one of the constituent companies in NHL. NHL petitioned the Delhi High Court. A division Bench of the High Court dismissed the writ petition, refusing to recognize NHL as a Joint Venture, thereby rejecting their plea that the technical experience of the constituents of the Joint Venture was liable to be treated as that of the Joint Venture. NHL appealed to the Supreme Court. Their Lordship of the apex Court examined the concept of "Joint Venture" and held that it was a legal entity in the nature of partnership engaged in the joint undertaking of a particular transaction for mutual profit or an association of person or companies jointly undertaking some commercial enterprise wherein all contributed assets and shared risks. It was further observed that a joint venture could take the form of a corporation wherein two or more persons or companies might joint together. Accordingly, the High Court was overruled and it was held that NHL was a Joint Venture Company in the nature of a partnership between the Indian Group of companies and the Singapore-based company who had jointly undertaken the commercial enterprise by contributing assets and sharing risks. As NHL was a company, the apex Court "lifted the corporate veil" to see the reality of the partnering companies contributing towards the resources of the joint venture in the form of machines, equipment and expertise in the filed. The Court held, on this basis, that the Joint Venture Company's technical experience could only be the experience of the partnering companies. The issue before the Apex Court, already discernible from the facts stated by us, was whether the technical experience of all constituent of NHL was liable to be cumulatively reckoned in the tender proceedings and not whether any of the constituents was competent to act on behalf of the Joint Venture Company. Their lordships recognized the partnership concept of Joint Venture and, from a commercial standpoint, found NHL to be a Joint Venture vide paragraphs 24, 25 and 26 of their judgment : "24 The expression "joint Venture" is more frequently used in the United States. it connotes a legal entity in the nature of a partnership engaged in the joint undertaking of particular transaction for mutual profit or an association of person or companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks. It requires a community of interest in the performance of the subject-matter, a right to direct and govern the policy in connection therewith, and duty, which may be altered by agreement, to share both in profit and losses (Black's Law Dictionary, 6th Edn/. p. 839). According to Words and Pharases, Permanent Edn., a joint venture is an association of two or more persons to carry out a single business enterprise for profits (p.
117, Vol. 23). A joint venture can take the form of a corporation wherein two or more persons or companies may join together. A joint venture corporation has been defined as a corporation which has joined with other individuals or corporations within the corporate framework in some specific undertaking commonly found in oil, chemicals, electronic, atomic fields (Black's Law Dictionary, 6th Edn. p. 342) Joint Venture companies are now being increasingly formed in relation to projects requiring inflow of foreign capital or technical expertise in the fast developing countries in East Asia, viz. Japan, South Koreia, Taiwan, China, etc. [See Jacques Buhart : Joint Ventures in East Asia - Legal Issues (1991).]. There has been similar growth of joint ventures in our country wherein foreign companies join with Indian counterparts and contribute towards capital and technical know-how for the success of the venture. This High Court has taken note of this connotation of the expression "joint venture". But the High Court has held that NHL is not a joint venture and that there is only a certain amount of equity participation by a foreign company in it. We are unable to agree with the said view of the High Court." "25... It would thus appear that the Indian group of companies (TPI, LMI and WML) and the Singapore-based company (IIPL) have pooled together their resources in the sense that TIP, LMI and WML have made available their equipment and organization at various places in the country while IIPL ahs made available its wide experience in the field as well as the expertise of its managerial staff. All the constituents of NHL have thus contributed to the resources of the Company (NHL). This show that NHL is an association of companies jointly undertaking a commercial enterprise wherein they will all contribute assets and will share risks and have a community of interest. We are, therefore, of the view that NHL has been constituted as a joint venture by the group of Indian companies and IIPL, the Singapore-based company and it would not be correct to say that IIPL which has a substantial stake in the success of the venture, having 40% of shareholding, is a mere shareholder in NHL".
"26. Once it is held that NHL is a joint venture, as claimed by it in tender, the experience of its various constituents namely, TPI, LMI and WML as well as IIPL had to be taken into consideration if the Tender Evaluation Committee had adopted the approach of a prudent businessmen". (Emphasis supplied) Their lordships approached the issue from a purely legal standpoint as well. After a threadbare analysis of case law on 'lifting/piercing the corporate veil", they held in para 38 as below : - "Seeing through the veil covering the face of NHL it will be found that as a result of reorganization in 1992 the Company is functioning as a joint venture wherein the Indian group (TPI, LMI and WML) and Mr. Aroon Purie hold 60% holds 40% shares. Both the groups have contributed towards the resources of the joint venture in the form of machines, equipment and expertise in the field. The Company is in the nature of a partnership between the Indian Group of companies and the Singapore-based company who have jointly undertake this commercial enterprise wherein they will contribute to the assets and share the risks. In respect of such a joint venture company the experience of the company can only mean the experience of the constituents of the joint Venture, i.e. the India group of companies (TPI, LMI and WML) and the Singapore-based Company (IIPL()". (Emphasis supplied) 9. We find that, in the case of Gammon Indian (supra), this Tribunal observed to the effect that Gammon - Atlanta Joint Venture was not a corporation and therefore there was no question of 'lifting the corporate veil'. In the instant case too, there being no evidence of incorporation of the SPCL - IVRCL Joint Venture under the Companies Act, we find that the doctrine of 'lifting the veil' is not applicable.
However, in our view, there is no reason why the legal entity-cum-partnership concept of Joint Venture adopted by the apex Court should not be applied to this case. The Commissioner himself recognized SPCL - IVRCL as a Joint Venture. It was a legal entity in the nature of a partnership of the constituent companies. By virtue of the partnership character, any of the partners was entitled to import the goods for and on behalf of the partners was entitled to import the goods for and on behalf of the partnership as the Joint Venture Agreement did not expressly provide otherwise. AS the Joint Venture was a legal entity i.e. a juridical person as ruled by the apex court, it was also a "person" for the purpose of Condition No. 38 stipulated that the gods should be imported by a person had been awarded a contract for construction of roads in India by NHAI. Therefore we are of the view that the importation and clearance of goods by IVRCL should be considered as having been done by the Joint Venture fulfilling Condition No. 38 of the Notification. In view of the Supreme Court's ruling that the Joint Venture is a legal entity in the nature of partnership, we are unable to follow Gammon Indian (supra) which, we respectfully observed, we decided per incuriam.
10. The next issue is whether the goods imported and cleared under the Bill of Entry filed by IVRCL were eligible for the benefit of exemption in terms of Sr. No. 217 of the Table (Read with Item No. (1) in List-11) annexed to the Notification. It settled law that an exempting provision under a taxing statute requires to be construed strictly vide Novopan India (supra) wherein the apex Court held that a person invoking an exempting provision to relieve him of tax liability must establish clearly that he is covered by the said provision and that, only in the case of doubt or ambiguity, the benefit thereof must go the State. If the goods in question satisfy the description given at Item No. (1) in List-11 it will be eligible for the exemption. The description road : "Hot mix plant batch type with electronic controls and bag type filter arrangement 160 tons per hour capacity." The Revenue has argued that a complete hot mix plant was not imported and that only some components thereof were imported. The appellants have contended that, barring some steel structure, all the essential components of hot mix plant wee imported in terms of purchase order placed on the German Supplies. We have come cross two purchase order in the file, marked as Annexures - 4 and 6 of the memorandum of appeal, both identically numbered and identically dated (No. 11 dated 21.7.2001). the Annexure 4/purchase order shows and amount of DM 906,574 while Annexure-6/purchase order shows an amount of DM 550,000 as the total price of what is described as "hot mix plant (batch type) CSD 2500, CAP 160 tons per hour as per specifications enclosed". It has been claimed by the appellants that the amount shown in Annexture-6/purchase order is the final price as settled through negotiations with the German Supplier. We have already noted that both the purchase orders are identically numbered and identically dated. Any negotiation between IVRCL and the German supplier should have taken placed on 21.7.2001 itself. No evidence of any such negotiation is available on record. We have also come across the work order issued by IVRCL to M/s. Marshall Sons & Co. (Mfg.) Ltd., Chennai. This work order gives the following description of work : "assembling of equipment supplied by Lintec Vide P.O. No. SRP/CAP/11/2K1-02 dated 21.7.2001 and also supply an erection of won structures as mentioned in Annexure".
The total cost of work shown in the work order is DM 356,574. We note that the amount shown in Annexure-4/purchase order is the arithmetical some of the amounts shown in Annexure-6/purchase order and Annexure-7/work order and, further, that the description of work allotted to Marshall includes supply and erection of structures, apart from assembling for the equipments supplies by Lintec . It is clear from these facts that some of the components viz. structures for the hot mix plant were supplied by Marshall, that the amount paid to them towards cost of such components and cost of assembling of Hot Mix Plant was DM 356,574, that the amount paid by IVRCL to Lintec for the components supplied by the latter was DM 550,000 and that the total cost of the hot mix plant as erected at the project site was DM 906,574. Lintec's letter to IVRCL vide Annexture-5 itself had called upon the appellants to place the necessary order with Marshall for their share of the deal of setting up hot mix plant. Only 9 containers were listed in the first annexure to that letter, which represented the "Lintec scope of supply". The second annexure to the latter, representing the "Marshall scope of supply", mentioned 2 containerised items besides structural parts. The documentary evidence is squarely in support of the Commissioner's finding that only some components of hot mix plant were imported from Garmany by the Appellant-company.
11. Coming to the oral evidence under Section 108 of the Customs Act, we not that it was stated by Sh. P.S. Banik of Marshall that they were the Indian agents of Lintec for sale of hot mix plants in India and that, as per orders received from IVRCL, they had provided bitumen tanks and storage silo (containers with internal fabrication) and other structural fabrications for the hot mix plant in question. He also stated that the plant consisted of 11 containerised sections, of which a few were provided by Marshall. Sh. J. Bhattcharjee of Marshall stated that the components manufactured indigenously were essential for the function of the plant. Sh. S.Ramachandran of IVRCL himself admitted that the plant was not complete without addition of the indigenous items. Sh. M.V.N. Rao of NHAI stated, after examining the import documents that the complete plant had not arrived and that the imported components did not have the essential characteristics of hot mix plant.
All these statements - none of them retracted or controverted - coupled with the documentary evidence would prove beyond doubt that the goods imported by IVRCL did not represent anything with essential character of a hot mix plant, let alone a complete plant, to satisfy the description at Item No. (1) of List -11 under the Notification.
Therefore, we are unable to accept the counsel's argument that the imported goods should be treated as 'hot mix plant unassembled.' What was exempted from import duty in terms of Sr. No. 217 read with Item No. (1) of list 11 under the Notification was a complete hot mix plant fully described at the said Item No. (1) and not some components thereof. There can be no doubt or ambiguity with regard to the description of goods at the said Item No. (1).
12. Ld. Counsel has relied on the Tribunal's decision in Konkan Synthetics Fibres Ltd. (supra) to argue that the relevant entry in List 11 should be liberally construed so as to give effect to the Notification in respect of the imported goods. In the cited case, the assessee had claimed the benefit of exemption in terms of Sr. No. 8 of the Table annexed to the Notification in respect of the goods imported by them. The said entry reads thus : "High Speed Warping machine with yarn tensioning, pneumatic suction devices and accessories." With reference to accessories used in the above description, the Tribunal has observed that it is common understanding that accessories may or may not be imported along with a machine and import of the same is optional. The Tribunal treated pneumatic suction devices as an accessory to the machine and accordingly rejected the department's stand that the benefit of exemption under the Notification was not available to the Warping Machine imported without pneumatic suction devices. The facts, in the instant case, are different. The terms "accessories" does not figure in the description of good at Item No.(1) of List-11 under the Notification, Moreover, some essential components of hot mix plant were not imported but locally procured. The appellant have not established that all those parts locally procured through Marshall were only accessories to the hot mix plant. On the other hand, the available evidence shows that those parts were essential components of the plant. The imported goods in question did not come anywhere the description at Item No. (1) of List-11 under the Notification and, therefore, the benefit of exemption cannot be extended to them.
13. In view of our findings, we hold that the appellant-company satisfied Condition No. 38 of Notification No. 17/2001-Cus. But the goods imported and cleared under Bill of Entry No. 369413 dated 28.12.2001 was not a hot mix plant covered by Item No. (1) of List-11 read with Sr. No. 217 under the Notification and, therefore, the benefit of exemption under the Notification was not available to them.
The final assessment of the Bill of Entry as ordered by the Commissioner is sustained.
14. It follows from out findings already recorded that the appellants had misdeclared the goods in the Bill of Entry. Therefore, we do not find any reason to interfere with the order of confiscation of the goods under Section 111(m) of the Customs Act. However, the redemption fine of Rs. 5 lakhs imposed by the Commissioner on IVRCL under Section 125 of the Customs Act appear to be on the higher side. Having regard to the facts and circumstances of the case, we reduce the fine to Rs. 1 lakh. A penalty of Rs. 1 lakh was imposed in IVRCL under Section 112 of the Act by the Commissioner. We find that this penalty is not supported by requisite finding against the importer. Such a penalty can be imposed only if it is found on the basis of adequate evidence that the appellant-company had rendered the goods liable to confiscation under Section 111 of the Act. Such a finding is not forthcoming in this case.
We, therefore, set aside the penalty.
15. The impugned order shall stand modified to the aforesaid extent and the appeal stands disposed of.