LexZUARI INDUSTRIES LTD. versus COMMISSIONER OF CENTRAL EXCISE & CUSTOMS
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-... ZUARI INDUSTRIES LTD. A v. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS MARCH 29, 2007 [S. H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] B l' Customs Act, 1962--Customs duty-Exemption from-Entitlement- Expansion of Fertilizer Project by assessee---Goods imported for such project entitled to benefit of Project Import Assessment and benefit under Notification C specifying 'nil' rate of duty in respect of goods required for fertilizer plant- Assessee seeking 'Essentiality Certificate' in respect of 6 MW Captive Power Plant as part of the entire capital goods for the project-Sponsoring Ministry granting the certificate in respect of the Power Plant as well-Revenue denying the exemption on the Power Plant-Order of Revenue upheld by the authorities and courts belo~n appeal, held: when the sponsoring Ministry D ....... certifies that such Power Plant was essential for the project, the Revenue cannot go behind such certificate and deny the benefit of exemption-Customs Exemption Notification No. 11197 dated 1.3.1997-Project Import Regulations-Customs Tariff Act, 1975-Heading 98.01. Customs Tariff Act, 1975-Heading 98.01-Nature and interpretation E of the Heading-Held: The heading is a specific entry-It is neither general nor residuary entry-It should be interpreted liberally as it deals with industrialization-It has to be read in the context of the exemption Notification-Customs Exemption Notification No. 11197 dated 1.3.1997. Assessee was the manufacturer of fertilizers. It obtained registration F of all its imports required for expansion of its fertilizer project under the provisions of Project Import Regulations, 1986. The goods imported for such expansion were entitled to the benefit of Project Import Assessment under Heading 98.01 of Schedule to Customs Tariff Act, 1975 and also to the benefit of Customs Exemption Notification No. 11/97 dated 1.3.1997. The Notification G specified nil rate of duty in respect of "goods required for fertilizer plant". The assessee gave its project report to the sponsoring Ministry under the ~ Regulations, seeking 'Essentiality Certificate'. It was indicated therein that for the expansion of the fertilizer project they also needed 6 MW Captive 553 H 554 SUPREME COURT REPORTS [2007) 4 S.C.R. A Power Plant for continuous flow cf electricity which was required for the project. The sponsoring Ministry by the 'Essentiality Certificate' recommended the Power Plant as part of the entire capital goods required by the assessee for substantial exapansion of the fertilizer project. Revenue denied the assessee the benefit of 'nil' duty in respect of the Power Plant and B held the same liable to duty at 20% to 2% and additional duty of 13% holding that fertilizer project and the Captive Power Plant were two distinct projects so far as the rate of duty was concerned. All the Authorities below as well as Customs, Excise and Gold (Control) Appellate Tribunal upheld the view of the Revenue. Hence the present appeal. C Allowing the appeal, the Court HELD: 1.1. The assessee had given to the sponsoring Ministry its entire Project Report. In that they had indicated that for the expansion of the fertilizer project they needed an extra item of capital goods, namely, 6MW Captive Power Plant. In their application, the assessee had made it clear that D the fertilizer project was dependent on continuous flow of electricity, which could be provided by such Captive Power Plant. Therefore, it was not open to the Revenue to reject the assessee's case for nil rate of duty on the said item, particularly when the certificate says so. Essentiality certificate must be treated as a proof of fulfilment of the eligibility conditions by the. importer for obtaining the benefit of the exemption notification. The essentiality E certificate is also a proof that an item like Captive Power Plant in a given case could be treated as capital goods for the fertilizer project. It would depend upon the facts of each case. If a project is to be installed in an area where there is shortage of electricity supply and if the project needs continuous flow of electricity and if that project is approved by the sponsoring Ministry p saying that such supply is needed them the Revenue cannot go behind such certificate and deny the benefit of exemption from payment of duty or deny nil rate of duty. Once an essentiality certificate was issued by the sponsoring authority, it was mandatory
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