Import of Machinery - competent person to import machinery for claiming exemption

PJ/Case Laws/2012-13/1007

Case:- M/S GAMMON INDIA LTD. VS COMMISSIONER OF CUSTOMS MUMBAI

Citation: - 2011-TIOL-60-SC-CUS

Issue: - Import of machinery – competent person to import machinery - Whether any one of two partners of joint venture competent to import machinery for and on behalf of contractor for execution of road project under contract between joint venture and NHAI?

Brief fact:-Appellant namely, M/s Gammon India Ltd and one M/s Atlanta Infrastructure Ltd., Mumbai, both incorporated as Public Limited Companies, entered into a joint venture agreement on 18th September, 2000. The joint venture was named and styled as "Gammon Atlanta JV". The agreement was entered into for the purpose of submitting a bid to the National Highways Authority of India (for short "NHAI") for award of a contract for construction of 31.40 Kilometers of road on National Highway-5. The terms of the agreement, inter-alia, provided that: each of the said parties would share financial responsibilities in the form of guarantees, securities etc. to the extent of 50% of the project value; the venture would be managed by setting up of a management board consisting of a Chairman and one Director to be nominated by Gammon and a Joint Chairman and another Director to be nominated by Atlanta. Although Gammon was to be designated as the lead partner to the venture but both the companies were to be jointly and severally liable to NHAI for due execution of the contract.

Appellant approached NHAI for issue of the certificate, as contemplated in para (c) of Condition no.38, for import of one 'Concrete batching plant 56 cum/hr covered under Item No. 13 of List 11, referred to at Serial No. 217 in the said Exemption Notification. Vide letter dated 3rd August, 2001 NHAI forwarded a Certificate, issued by the Deputy Secretary, Government of India, Ministry of Road Transport and Highways, addressed to the Assistant Commissioner of Customs, Mumbai, certifying that the said equipment was required for construction of roads and recommending its duty free import. Equipped with the said certificate, Gammon, the appellant herein, imported the specified Concrete Batching Plant from Germany and filed Bill of Entry (for home consumption) for its clearance at 'nil' rate of duty under Notification No.17/2001-cus, dated 1st March, 2001.

The Deputy Commissioner of Customs, by his order dated 5th October, 2001 rejected the claim of the appellant for exemption from payment of Customs duty on the ground that the appellant had failed to comply with the conditions stipulated at Serial No. 38 appended to the exemption notification. According to the Adjudicating Authority, as per the said condition, the exemption is available only if the goods are imported by "a person who has been awarded the contract" by NHAI for construction of roads in India by or on behalf of Ministry of Surface Transport, but in the present case the goods have been imported by Gammon to whom no contract had been awarded by the authorities specified in the notification. Admittedly, the contract had been awarded in the name of joint venture - M/s Gammon-Atlanta JV. Thus, the adjudicating authority came to the conclusion that the appellant was not entitled to the benefit of exemption notification in their capacity as a partner in the joint venture, to whom the contract had been awarded.

Aggrieved thereby the appellant preferred an appeal to the Commissioner of Customs (Appeals). The Commissioner (Appeals) was of the view that Gammon having been nominated as the lead partner in the joint venture for due performance of the contract awarded by NHAI, with authority to incur liabilities and to receive instructions for and on behalf of the joint venture, and the machine having been imported on behalf of the joint venture for the purpose of road construction, the benefit of the said exemption notification could not be denied to the appellant. Inter-alia, observing that the appellant was not an outsider and perhaps due to some technical reasons the machine had been imported in the name of the appellant, the Commissioner held that outright denial of the benefit of the said notification was not warranted. Accordingly, he allowed the appeal.

Being dissatisfied with the decision of the Commissioner (Appeals), the revenue carried the matter in further appeal to the Tribunal. Tribunal has allowed the said appeal. Distinguishing the case of New Horizons Limited & Anr. Vs. Union of India & Ors. (1995) 1 SCC 478, relied on behalf of the importer, the Tribunal has come to the conclusion that the benefit of Exemption Notification cannot be availed of by a joint venture because it is nothing more than an association of two persons, having no identity in law. The Tribunal has gone on to observe that had such a bill of entry been filed even by a joint venture, the department would have been justified in rejecting it on the ground that the identity of the real importer was not known. Aggrieved, Gammon is before us in this appeal.

Appellant Contention: - The Appellant contended that in the case of New Horizons (supra), wherein the concept of a joint venture has been explained and the same has been subsequently followed in Ganpati RV-Talleres Alegria Track Private Limited Vs. Union of India & Anr. (2009) 1 SCC 589, the view taken by the Tribunal is clearly erroneous. It was contended that since a joint venture is a legal entity with all the trappings of a partnership under the Indian Partnership Act, 1932, the general principles of the said Act were applicable to the joint venture and, therefore, any one of the two partners of the joint venture, viz. Gammon and Atlanta was competent to import the subject machinery for and on behalf of the contractor viz, the joint venture for execution of the road project under contract between the joint venture and NHAI. It was argued that the eligibility certificate dated 3rd August 2001, issued by the Ministry of Road Transport and Highways, stating that the subject machine would be imported by the appellant herein, will sustain the eligibility of the joint venture in view of the law laid down by this Court in New Horizons (supra). It was submitted that in view of an inclusive definition of the word "person" in the Export and Import policy for the years 1997-2002, which includes a "legal person", the import of machinery by the appellant for and on behalf of the joint venture is as good as an import by the joint venture who has been awarded the contract for construction of roads, thus fulfilling condition No.38 of the Exemption Notification. Learned counsel asserted that since in identical fact situations in the cases of IVRCL Infrastructures & Projects Ltd. Vs. C.C., Chennai (Sea) 2004 (166) E.L.T. 447 (Tn. -Del.) = 2004-TIOL-233-CESTAT-DEL and Techni Bharathi Ltd. Vs. Commissioner of Customs, Mumbai-II 2006 (198) E.L.T. 33 (Tri.-Bang.) = (2006-770L-613-CESTAT-BANG), when machinery for a road project was imported by one of the constituents' of the joint venture, the benefit of the same Exemption Notification had been granted by the Tribunal. It was argued that the said orders of the Tribunal having been accepted by the revenue, it cannot be permitted to take a different stand on the same point in the case of the appellant. Lastly, relying on the decision of this Court in Commissioner of Customs (Preventive), Mumbai Vs. M. Ambalal & Co. (2011) 2 SCC 74: 2010 (260) E.L.T. 487 (S.C.) = (2010-770L-111-SC-CUS), learned counsel submitted that a beneficial and promotional exemption notification has to be construed liberally.

Respondent contention:- The Revenue supporting the decision of the Tribunal, submitted that the joint venture and Gammon being two independent entities, the eligibility certificate dated 3rd August, 2001 issued in favour of the latter was of no consequence in so far as the Exemption Notification was concerned because the contract for construction of roads had not been awarded to Gammon, who had imported the machine but to the joint venture. It was stressed that Gammon, on their own, were not entitled to import any goods for the execution of road works under the contract awarded to the joint venture by NHAI. Placing reliance on the decision of this Court in Novopan India Ltd., Hyderabad Vs. Collector of Central Excise & Customs, Hyderabad 1994 Supp (3) SCC 606 = (2002-TIOL-89-SC-CX), learned counsel contended that the Exemption Notification has to be construed strictly. Responding to the allegation of pick and choose policy adopted by the revenue, learned counsel urged that non-filing of an appeal in a similar case does not operate as a bar for the revenue to prefer an appeal in another case. In support, learned counsel commended us to the decision of this Court in C.K. Gangadharan & Anr. Vs. Commissioner of Income Tax, Cochin (2008) 8 SCC 739 : (2008) 228 ELT 497 = (2008-TIOL-140-SC-IT-LB). It was thus, asserted that the decision of the Tribunal did not warrant any interference and the appeal deserved to be dismissed.

Reasoning of Judgment:- The Supreme Court Concluded that import of “concrete batching plant 56 cum/hr” by gammon cannot be considered as an import by M/s Gammon Atlanta JV, “a person” who has been awarded contract for construction of roads in India and therefore neither Gammon Atlanta JV nor Gammon fulfill the requisite requirement stipulated in Condition No. 38 of the Exemption Notification 17/2001/Cus dated 1 st march, 2001. In the instant case Supreme Court are of the opinion that language of the Condition No.38 in the Exemption Notification is clear and unambiguous. There is no need to resort to the inter-pretative process in order to determine whether the said condition is to be imparted strict or liberal construction. They wish to place on record their deep concern on the conduct of the two Benches of the Tribunal deciding appeals in the case of IVRCL Infrastructure & Project Ltd (Supra) & Techni Bharati Ltd. (Supra). They concluded that it was need to be emphasized that if a bench of Tribunal , in identical Fact-situation , is permitted to come to a conclusion directly opposed to the conclusion reached by the another bench of Tribunal on earlier occasion , that will be destructive of the institutional integrity itself . if the bench or Tribunal wishes to take a view different from the one taken by the earlier bench, the proprietary demand that it should placed the matter before the president of the Tribunal so that the case is referred to the larger Bench, for which provision exists in the Act itself so the decision of the Tribunal , holding that the appellant was not entitled to the benefit of Exemption Notification No. 17/2001- Cus Dated 1 st March, 2001, cannot be flawed. The appeal being bereft of any merit is dismissed accordingly, with costs, quantified at Rs 50,000/-

Decision: -Appeal dismissed.

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PJ/Case Laws/2012-13/1007

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