By TIOL News Service

MUMBAI, JULY 15, 2013: BY denying the benefit of Notification No.21/2002 (Sl.no.230), the Commissioner of Customs (Imports) has confirmed the demand of customs duty along with imposition of interest and penalty on the company and the Managing Director. The imported machines have also been confiscated with an option to redeem the same on payment of redemption fine.

The appellant is before the CESTAT and submits that they have complied with the conditions of the Notification 21/2002-Cus, Sl. No. 230 and in particular condition no. 40(a).

The Bench observed that the issue before it is whether MMRDA is a Road Construction Corporation under the control of the Government of a State or Union Territory or not.

The appellant submitted that the issue had come before the Bench in the case of Patel Engineering Ltd. & Ors. and vide order No. A/150 to 159/2012/CSTB/C.I dated 1.3.2012 - (2012-TIOL-2027-CESTAT-MUM) the tribunal held that the MMRDA is a Road Construction Corporation and the said order has been affirmed by the apex Court; therefore, the appellants have fulfilled the condition No. 40(a) of the Notification No.21/2002 (sl.no.230).

The Revenue representative submitted that in the case of Shreeji Construction vs CC(I), Mumbai - (2013-TIOL-441-CESTAT-MUM), the CESTAT has held that MMRDA is not a Road Construction Corporation.

The Bench observed -

"6. We have considered the submissions made by both sides. In the case of Patel Engineering Ltd. & Ors. it is contended on behalf of the appellants that MMRDA is a Road Construction Corporation under the control of the State of Maharashtra and as such it was covered by condition 40(a) of the above Notification and it is not disputed by the department that MMRDA is not under the control of the State of Maharashtra. Thus condition No. 40(a) is fully complied with in that case. The said contention of the appellant was not disputed by the ld. A.R. appearing on behalf of the Revenue. Therefore, in that case, this tribunal came to the conclusion that as there is no dispute with regard to the compliance of the Condition No.40(a) of the above Notification, this tribunal proceeded to decide the issue involved in that matter. But in the case of Shreeji Construction, this tribunal has dealt with the issue whether MMRDA is a Road Construction Corporation or not and thereafter this tribunal has come to the conclusion that MMRDA is not a Road Construction Corporation as required by Condition No. 40(a) of the above said Notification.

7. As there are divergent views of this tribunal, therefore, as held by the Hon'ble Mumbai High Court in the case of Mercedes Benz India Pvt. Ltd. vs. UOI - (2010-TIOL-195-HC-MUM-CX) and in the case of M/s. Gammon India Ltd. vs. CC, Mumbai - (2011-TIOL-60-SC-CUS), whereby both the Hon'ble Apex Court as well as Hon'ble Mumbai High Court has observed that when there are divergent views of this tribunal on the same issue, instead of deciding the issue, the tribunal should refer the matter to the Hon'ble President for constitution of Larger Bench. Therefore, we refer this matter to the Hon'ble President to place before the Larger Bench of this tribunal the following issue:-

Whether as per Condition No.40(a) of the Notification No.21/2002-Cus (sl.no.230) MMRDA is Road Construction Corporation under the control of the State of Maharashtra or not?"

In fine, the Registry was directed to take appropriate steps for referring the matter to the CESTAT President.

ROM Largesse - In Patel Engineering Works (cited supra), the Bench had in fact denied the benefit of the notification 21/2002-Cus, Sl. No.230 and the facts prevailing in that case were as under -

"3. On intelligence, SIIB Import found that the appellant are engaged in the act of evasion of customs duty by diverting the imported goods to other entities which before the completion of the five years from the date of import and thereby have violated the condition of Notification. Therefore, further investigations were conducted and it was found that the said ‘paver finisher' was found in Ligiri Pukhari near Jorhat airport in Assam. In investigation, it was found that the model, engine no. of the said ‘paver finisher' was of the same "paver finisher" which was imported by the appellant and it was ascertained that the said ‘paver finisher' belonged to M/s. Nicco Corporation Ltd. Further, it was found that M/s. Nicco Corporation Ltd. procured this ‘paver finisher' from M/s. United Construction Co., Mumbai for the intended use. On further investigation, the said ‘paver finisher' was seized and various statements were recorded. On the basis of investigation, a show-cause notice was issued for wrong availment of benefit of exemption Notification no. 21/02 sr. no. 230 and violating the condition 7 undertaking given by the appellant that the said ‘paver finisher' shall be used in road construction and shall not be disposed of in any manner within a period of 5 years from the date of its import …."

The Bench had arrived at the following conclusion -

"13. As per the condition of the Notification, the undertaking was given by the appellant at the time of import that the impugned paver finisher shall be used only and only for construction of roads for a period of 5 years. From the facts ascertained hereinabove, we find that the paver finisher was not used for the intended purpose as undertaken by the appellant. In view of this finding, the department has rightly issued show-cause notice to the appellant for violation of condition of their undertaking and thereby for denying the exemption under Notification 21/02. As show-cause notice has been rightly issued and in the adjudication order it is also found that the impugned paver finisher was not used for construction of road, therefore they have not fulfilled the condition terms of undertaking/bond at the time of import. As they have violated the terms of condition of their bond/undertaking, therefore they are liable to pay duty as demanded in the impugned order…."

Nonetheless also see the decision in Mahavir Roads & Infrastructure Pvt. Ltd. - (2009-TIOL-558-CESTAT-MUM).

(See 2013-TIOL-1069-CESTAT-MUM)