Judgment:
1. The appellants are engaged in the manufacture of crown corks. They obtained Import Licence dated 19-2-1983 for import of Spot Coating Machine and Automatic Metal Decorating Press and applied for registration of the contract as Project Import on 25-2-1983 under Heading 84.66 of the Customs Tariff. The appellants were directed to approach the sponsoring authority for obtaining recommendatory letter and from March 1983 onwards the appellants wrote to the sponsoring authority in this regard. On 25-1-1984, the Director of Industries intimated to the appellants that their case of Project Import will be considered as and when they made arrangements for the premises, power and Municipal Corporation Licence. In the meanwhile, the machines arrived at Bombay and were subsequently transferred to the warehouse at Okhla, New Delhi. By letter of 7-5-1985 the Director of Industries wrote to the Asstt. Collector of Customs informing the Customs Department that the case of the unit has been recommended for initial setting up of the unit. The contract was subsequently registered as Contract No. 12/85. The relevant file was transferred to Bond Section, Customs House, New Delhi under whose jurisdiction the goods were lying under bond in the Customs Bonded Warehouse for clearance as Project Import under Heading 84.66. The appellants filed Bill of Entry under Heading 84.35 and paid duty in excess of duty payable under Heading 84.66 as Project Import. As the Asstt. Collector (Bond) refused to extend the benefit of Project Import to the warehoused goods, the appellants applied for refund which was rejected by order dated 4-5-1987 on the ground that the contract was registered after the order for warehousing had been passed. The Collector of Customs (Appeals) upheld the rejection of the refund claim holding that as on the date of importation there was no registration of the project and therefore the assessment was finalised in accordance with the provisions of Section 15 of the Customs Act, 1962 since the benefit of assessment under Heading 84.66 CTA was not available at the time of assessment. Hence this appeal.
2. We have heard Shri P.S. Bedi, Consultant for the appellants and Shri S.K. Roy, SDR for the department and carefully considered their submissions.
3. The contention of the Learned Consultant is that since registration was applied for prior to the importation of the goods, the delay of the department in registering the contract will not take away the right of the appellant to get the contract registered as Project Import as the import licence was issued by the Chief Controller of Imports & Exports on the recommendation from the Director of Industries after the scheme for installation of the plant has been approved. As the registration of contract was applied for as early as on 25-2-1983, the objection of the Customs Department that the registration of contract could only be effected on the receipt of recommendatory letter from the sponsoring authority was not in accordance with the statutory provisions of Heading 84.66, according to the appellants. We are unable to accept this contention. As pointed out by the Learned SDR when the appellants applied for registration of contract in February 1983, they were directed to produce the recommendation of the sponsoring authority i.e., Directorate of Industries, as per the requirement of the Project Imports (Registration of Contract) Regulations, 1965. Sub-clause (3) of Regulation 3 sets out particulars to be specified in the application for registration of contract as Project Import under the abovementioned regulations. Regulation 3(3) sets out that the application shall specify - (b) the description of the articles to be manufactured, produced, mined or explored; (c) the installed or designed capacity of the plant or project and in the case of substantial expansion of an existing plant or project the installed capacity and the proposed addition thereto; (d) such other particulars as may be considered necessary by the proper officer for purposes of assessment under the said Heading.
Regulation 3 sub-clause (4) states that the application shall be accompanied by the original deed of contract together with a true copy thereof, the Import Trade Control Licence for the import of the articles together with a statement describing the articles licensed to be imported duly attested by the authority issuing the Import Trade Control Licence. Sub-clause (5) of Regulation 3 states that the importer shall also furnish such other documents or other particulars as may be required by the proper officer in connection with the registration of the contract. It is relevant to note at this stage that Directorate of Industries by letter dated 25-1-1984 informed the appellants that their case of Project Import would be considered as and when arrangements were made for premises, power and Municipal Corporation Licence. This itself would go to show that there was no recommendation of the sponsoring authority prior to this date and it was only on 7th May, 1985 that the sponsoring authority wrote to the Assistant Collector of Customs that the unit has requested for recommendation for concessional rate of customs duty under Project Import as provided under Heading 84.66 and the case of the unit has been examined by Industries Department and recommended for initial setting up of the unit. In this case the contract was registered after the order was passed permitting clearance of imported goods for deposit in a warehouse and, therefore, the provisions of Heading 84.66 of CTA are not satisfied - Heading 84.66 provides for registration of contract as Project Import before any order is made by the proper officer of Customs permitting clearance for home consumption or deposit in a warehouse of items, components or raw materials. The case law cited by the Learned Consultant is not applicable to the facts of this case. In the case of Saurashtra Cement & Chemical Industries Ltd. v. Collector of Customs, Ahmedabad reported in 1983 (12) E.L.T. 829 (Tri.), the Tribunal held that "having passed final orders registering their contract for the benefit of Heading 84.66 the Collector was not entitled to have second thoughts and de-register their contract". We agree with the appellants that the Collector by granting registration after considering their explanation for delay, had impliedly accepted their explanation and it was therefore not fair on his part to make the question of delay a ground for proceeding against the appellants later.
We also agree with the appellants that their failure to produce the Project Import endorsement on their import licence or recommendatory letter to that effect was not a bar to their availing of the benefit of Heading 84.66 if otherwise due to them (emphasis supplied).Zenith Electronics Ltd., Bombay v. Collector of Customs, Bombay -1985 (21) E.L.T. 273, the Tribunal held that the observations made by the Appellate Collector that the main contract was not registered as Project Import seems to be without any bearing on the issues involved because the requirement that the appellants have to establish is only that the imported machinery is to be used either in the initial setting up of an industrial plant or for substantial expansion thereof since they do not claim it as an auxiliary equipment for registered contract. The Tribunal remanded the matter to the lower authorities for de novo adjudication. Similarly, in the case of Bharat Heavy Electricals Ltd. v. Collector of Customs, Bombay - Order No.273-B/84, dated 10-4-1984 - it was held that it was for the appellants to satisfy the Customs authorities at the time of import and before clearance that the Project for which the goods had been imported was eligible for the concessional rate of duty. Therefore, the facts of the cases cited by the Learned Consultant are distinguishable from the facts herein and the Tribunal in the cases supra did not have any occasion to deal with the controversy in this case namely clearance at concessional rate of duty after the imported goods had been deposited in a warehouse.
5. In the light of the above discussion, we see no reason to interfere with the impugned order. We uphold the same and dismiss the appeal.