Cus - Electronic paver finisher - Machine itself should be able to lay pavement of 7 m size width for being held eligible for exemption - addition of bolt-on extensions by importing separately cannot qualify: CESTAT Larger Bench
By TIOL News Service
MUMBAI, JUNE 13, 2014: THE respondents imported "Electronic Sensor Pavers" for laying Bituminous Pavement of 9.5 mtrs and claimed the benefit under Notification No.21/2002-Cus (Sr. No.230, item 2 of the List 18).
The said entry reads -
Table
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S. No.
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Chapter or Heading or sub -heading
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Description of goods
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Standard rate
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Additional duty rate
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Condition No.
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|
(1)
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(2)
|
(3)
|
(4)
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(5)
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(6)
|
|
230.
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84 or any other Chapter
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Goods specified in List 18 required for construction of roads
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Nil
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Nil
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40
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List 18 (See S. No. 230 of the Table)
(2) Electronic paver finisher (with sensor device) for laying bituminous pavement 7 m size and above
The question is about the L-E-N-G-T-H - Whether the paver finisher should be 7m size and above or whether the pavement should be 7 m and above?
The Commissioner of Customs (Import), Mumbai denied the benefit of the above cited Notification to the respondents on the premise that the width of the machine is upto 6 mtrsonly, therefore, they are not entitled for the benefit of Notification as per List 18, item No.2.
The finding was - that as per the notification, the exemption is for pavers for laying pavements of 7 meter size and above, the machine itself cannot lay pavement more than 6 meter, therefore, they are not entitled for the benefit of the said Notification.
The Commissioner (A) took a contrary view. He held that the 'length' relates the size of the pavement inasmuch as the machine/pavers should be able to lay pavements of size 7 mtrsand above. Since the catalogue brought out by the manufacturer of the machines showed that these machines can lay Bituminous pavement upto 10 mtrs the Commissioner(A) allowed the appeal of the importer(s).
Revenue was aggrieved with the computation of the parameters of LENGTH and took the matter to the CESTAT.
The Revenue representative submitted that their appeals should be allowed as in an identical issue involving M/s Gammon India Ltd, the Division Bench had held that "as the width of the equipment is only 6 meters but Notification says that Electronic Sensor Paver of 7 meters and above is entitled for exemption, therefore, these machines are not entitled for exemption under the above said Notification." See (2013-TIOL-471-CESTAT-MUM).
The respondents submitted that the Tribunal (in the case of Gammon India) had not interpreted Sl. 2 of List 18 correctly inasmuch as the entry Electronic Paver finisher (with sensor) for laying bituminous pavement 7 meters and above means that the Electronic Paver finisher should be capable of laying down bituminous pavements 7 meters size and above andit is not concerned with width of the machine, the only concern being the capacity of laying of pavement of the machine.
The Division Bench was convinced with the arguments of the respondents and after declining to grant stay of the operation of the orders of the Commissioner (A) observed as below and referred the matter to the Larger Bench.
10. As per the notification it is not the machine which is having width of 7 meters and above but the capacity of the machine whether the machine is able to lay down pavement of 7 meters and above or not. The catalogue which is produced by the respondents clearly shows that maximum pave width is 10 meters. Therefore, in our opinion, the respondents are entitled for the benefit of the above said Notification.
We reported this reference order as 2013-TIOL-1248-CESTAT-MUM.
The Larger Bench heard the matter on 14.02.2014 and has passed an order on 23.05.2014.
After extracting the entry of the exemption notification (supra), this is what the Larger Bench observed -
"8. …The only contention of the present respondents is that with the addition of bolt-on extensions, the machine in question is capable of laying bituminous pavement of 7 meters size and above. From the purchase order and from the packing list, we find that the accessories i.e. bolt-on extensions were separately ordered. In a situation when bolt-on extensions are not imported, the relevant question would then be whether the machines still qualify for exemption under Notification 21/2002. Certainly, the benefit of the Notification is not available to such machine. In other instance, when the machine has been imported with accessories, whether the benefit of the Notification is available. The mere import of the accessories with the machine cannot change the basic character of the machine. As per the Webster New International Dictionary, accessory is ‘an object or device not essential in itself but adding to the beauty, convenience, or effectiveness of something else’. We find that the machine in question is complete in itself without the accessories."
The Larger Bench then proceeded to reproduce paragraph 18 of the Supreme Court decision in Novopan India Ltd. (2002-TIOL-89-SC-CX) and conclude thus -
"10. In the present case, as we find that as per the product literature, the machines in question are capable of having bituminous pavement from 3 meters to 6 meters i.e less than 7 meters, therefore, we find no reason to take a different view as in the case of Gammon India Ltd. (supra). The matter be placed before the regular Bench for further necessary orders."
This order, as mentioned, was pronounced by the Larger Bench on 23.05.2014.
And following the Larger Bench decision, the Referral Bench passed the final order on 03.06.2014 as below -
"In view of the decision of the Larger Bench of this Tribunal, the appeals filed by the Revenue’s are allowed."
In passing: The battle of length(s) begins!
(See 2014-TIOL-1020-CESTAT-MUM-LB)
