S.H.Kapadia, J. - (1.) THIS statutory appeal is filed by the assessee-Zuari Industries Ltd. under Section 130 E of the Customs Act, 1962 directed against Order dated 15.11.2001 passed by Customs, Excise and Gold (Control) Appellate Tribunal ("CEGAT") in appeal No. C/277/01-Bom denying the assessee the benefit of exemption under Notification No. 11/1997 dated 1.3.1997. The appeal involves the issue as to the rate of duty applicable to the imports made for expansion of a Fertiliser Project.
(2.) ASSESSEE is the manufacturer of fertilizers at their facility at Goa. It obtained registration of all their imports required for expansion of their fertilizer project under the provisions of the Project Import Regulations, 1986 (for short "the PIR"). In respect of the said expansion, the goods imported were entitled to the benefit of Project Import Assessment under Heading 98.01 of the Schedule to the Customs Tariff Act, 1975 and correspondingly the company was entitled to the benefit of customs exemption Notification No. 11/97 dated 1.3.1997. The said notification specified nil rate of duty in respect of "goods required for fertilizer plant". Ministry of Chemicals and Fertilisers was the duly constituted Sponsoring Authority under the said PIR. The said Ministry had issued a certificate dated 22.10.1997 (Essentiality Certificate) to the effect that the import of capital goods for expansion of the fertilizer project stood examined and the list of goods annexed to the certificate had been attested from the essentiality angle by the Deputy Secretary to the Government of India. At this stage, it may be noted that in their application for issuance of essentiality certificate, the assessee had stated that on account of load shedding in the concerned area, a Captive Power Plant was essential for the substantial expansion of the fertilizer project. By the said essentiality certificate dated 22.10.1997, the sponsoring Ministry requested the Customs to exempt the customs duty on import of equipments by the assessee vide Notification No. 11/97. The said certificate indicated vide item Nos. 14.a and 14.b, a 6 Mega Watt Captive Power Plant. The essentiality certificate 'recommended' the said Captive Power Plant as part of the entire capital goods required by the assessee-company for substantial expansion of the fertilizer project. As stated above, the dispute which arises in the present case is the rate of duty applicable to the imports made by the assessee for the fertilizer project. According to the Department, the goods imported under serial Nos. 14.a and 14.b of annexure 'A' to the essentiality certificate did not fall under serial No. 226(i) of the said notification No. 11/97 and, therefore, the assessee was not entitled to the benefit of nil rate of duty in respect of 6 MW Captive Power Plant. According to the Department, items 14.a and 14.b fell under serial No. 226(iii) which stated that Captive Power Plants of 5 MW or more are liable to duty at 20% + 2% and additional duty of 13%. By the impugned order of adjudication, the Adjudicating Authority held that 6 MW Captive Power Plant imported under Heading 98.01 as part of the fertilizer project, in terms of the essentiality certificate, cannot be given the benefit of nil rate of duty, which was available only to fertilizer projects. In other words, according to the Department, the fertilizer project and the Captive Power Plant are two distinct and separate projects as far as the rate of duty was concerned. This contention of the Department has been accepted by all the authorities below. It has been confirmed even by the CEGAT vide the impugned judgment dated 15.11.2001. Heading 98.01 is a specific entry. It is not a general entry. It is not a residuary entry. It finds place in the exemption notification No. 11/97. Project imports fall under this entry. It is for this reason that Entry 98.01 is said to be a specific entry. We quote hereinbelow the relevant entry of the Notification No. 11/97. JUDGEMENT_243_TLPRE0_2007Html1.htm
(3.) WE also quote hereinbelow the Essentiality Certificate dated 22.10.1997 along with the attested copy of list of capital goods to be imported for the expansion of the fertilizer project. JUDGEMENT_243_TLPRE0_2007Html2.htm There is no dispute regarding other items mentioned in the list. Regarding those items, the Department has accepted that they have been attested by the Sponsoring Ministry. According to the Department, the only dispute is with regard to the Captive Power Plant. According to the Department, Captive Power Plant needs to be segregated from the fertilizer project on the ground that the fertilizer project can work even without the Captive Power Plant and that the output from the fertilizer project can be produced even without the Captive Power Plant. According to the Department, the power plant is a separate project by itself. According to the Department; the power plant is not a component or an integral part of the fertilizer project. According to the Department, 6 MW Power Plant consisted of a generating set which operated on diesel. According to the Department, even if on the technical side a Captive Power Plant constituted an aid to the working of the fertilizer project still for the purposes of chargeability one has to go by the strict interpretation of the exemption notification No. 11/97 under which the rate of duty is nil for the fertilizer project whereas it is 20% for the power generation project. According to the Department, since fertilizer project and power generation project are two different and independent projects, the assessee was not entitled to claim nil rate of duty in respect of 6 MW Captive Power Plant.;