Full Judgment
Their claim was that the camera is to work in conjunction with other printing machinery and hence was meant for initial setting up of their project. The Assistant Collector of Customs (Appraising Department) after hearing the respondents, adjudicated the matter by his order dated 29-4-1985 holding that the import of a single camera cannot be treated as initial setting up of the machinery when the main machine is printing press and not a camera even though the camera may form an essential component of the press. He further, observed that since the respondents had already started production in 1984 itself, the camera with accessories cannot be considered as import for initial setting up of a project. Therefore, the Assistant Collector rejected the application for registration of the import under Heading 84.66 CTA as Project Import. The Assistant Collector's order was challenged by the respondents before the Collector of Customs (Appeals). The Collector (Appeals) noted that the process camera imported is an essential equipment for use in conjunction with the offset printing machines. The import of printing machine was made through canalising agency M/S.Project & Equipment Corporation of India Ltd. and that it was purchased by the respondents after import from the canalising agency. The Collector (Appeals), further, observed that the fact that the order for camera was placed by the respondents well before the import of offset printing machine, had to be taken into account. The import of the main equipment had already taken place and the import of camera had been made within a resonable time. He, further, found that the respondents is a small scale industrial unit in the printing industry an has been recognised by the Govt. of Indian as an industrial plant me concessional assessment under Heading 84.66 C.T.A. The respondents were also registered as factory under the Factories Act 1949. The Collector (Appeals), further, over-ruled the Assistant Collector's finding that the import of a single camera alone cannot be treated as required for initial setting up of an industrial plant for the reason that neither the tariff heading nor the Project Import Regulation specify such a condition. The Collector (Appeals), therefore, allowed the respondents' appeal setting aside the Assistant Collector's order and directed the Assistant Collector to extend concessional assessment as Project Import under Heading 84.66 CTA to the imported goods.
2. Shri K.K. Jha, ld. S.D.R. for the appellant Collector contended that the Collector (Appeals) had gone wrong in extending the Project Import concession and ignoring the fact that the import of the process camera cannot be accepted as required for setting up of a new plant because the printing machinery was already installed by the respondents who had commenced production in 1984. The imported camera, according to the Department, did not lead to any substantial expansion, but only helped in increasing the efficiency and cost effectiveness of the printing machinery already installed and in production. The ld. S.D.R., in this context, also relied upon the Tribunal decision in the case of Collector of Customs v. Shri Sarathi Studios (P) Ltd. - 1994 (73) E.L.T. 382 (Tribunal) wherein the Tribunal, by a majority decision, held that a camera imported for shooting of films will not be eligible for Project Imports concession when the import was without reference to any project and no proper contract existed for the import.
3. Shri Arjun, Marketing Executive of the respondents appeared and drew attention to their submissions made in the Cross Objection filed by them wherein it has been stated that the process camera is a part of the plant and equipment and is mainly for initial setting up even though the offset press was imported first and process camera was imported subsequently. The fact remains that both these machines form part of the same plant required for its initial setting up. Even at the time of preparation of the project report and arranging for the finance for the product, the respondente had included the process camera in the list of equipments. Their plant for offset printing was complete only with the inclusion of the process camera.
4. We have carefully considered the submissions made by the ld. S.D.R., Shri Jha and Shri M. Arjun, Marketing Executive for the respondents. We find that in this case the respondents had claimed the registration as Project Imports for the process camera imported on the basis of purchase order. The Collector (Appeals) in the impugned order has observed that the respondents had included the camera as well as other machinery for offset printing in their application for financial assistance from the Andhra Pradesh State Financial Corporation; that the-order for the camera has been placed before import of offset machine with the conditions under Heading 84.66 being fulfilled for the unit being registered under the Factories Act and also the fact that they are registered SSI unit, would be in their favour, according to the Collector (Appeals). As against this, it is seen that the Tribunal in the case law cited and relied upon by the ld. S.D.R. in the case of Sri Sarathi Studios (P) Ltd. (supra) had held that order placed, acceptance letter of credit, etc. could not be taken as contract as contemplated in Heading 84.66 CTA and the Tribunal in that decision has also noted the Larger Bench decision in the case of Toyo Engineering India Ltd. v. Collector of Customs, Bombay reported in 1994 (70) E.L.T.769 (Trib.) that the existence of specific contract covering the goods required for initial setting up is a necessary condition to be fulfilled for availing of the concession under Heading 98.01 CTA which is similar to Heading 84.66 CTA. In the case of Sujatha International v. Collector of Customs reported in 1989 (42) E.L.T. 413 (Trib.) the Tribunal had held as follows : "The arguments of the appellants that the order placed by them, acceptance letter of Credit, etc. should be taken as a contract, does not appear to be tenable. As submitted by the ld. SDR in commercial practice when valuable goods are bought and sold, there should be some sort of a formal contract. This is what is contemplated by the Heading 84.66 wherein a contract is specifically mentioned".
5. From these decisions, it is clear that the existence of a formal contract is necessary and it is this contract which has to be registered with the Customs House for claiming concessional assessment as Project Imports under Heading 84.66 CTA. In the present case, it is found that the respondents had sought registration only on the basis of purchase order. This has been held to be not satisfactory fulfilment of the condition under heading by the Tribunal decision mentioned supra.
In such a view of the matter, the rejection of their application for registration under the Project Imports Rules by the Assistant Collector is sustainable and, accordingly, the impugned order of the Collector (Appeals) is set aside and the Department's appeal is allowed.