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Shri Ram Refrigeration Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1996)(82)ELT606TriDel
AppellantShri Ram Refrigeration Ltd.
RespondentCollector of Customs
Excerpt:
.....held that recommendation letter from the d.g.t.d. is not mandatory requirement for registration of import contract. he also submitted that substantial expan- sion of the production of a unit also amounts to substantial expansion of an existing unit.3. in reply, sh. mohd. ali, ld. j.d.r., submitted that it is an admitted fact on the record that no contract was produced before the authorities below with their request for the registration of the contract and the order does not amount to contract. he also took us through the statement made by the appellants in the appeal memo under the heading 'statement of facts' wherein the appellants have stated that pursuant to the installation of the imported machinery, the average daily production of the motor housing has gone up from 150 pcs.to 230.....
Judgment:
1. Being aggrieved with the rejection of the claim for registration of the Contract relating to the import of One Horizontal Machining Centre by the authorities below, the appellants have filed this appeal.

2. Arguing on behalf of the appellants, Sh. R. Subramanian Ld. Con- sultant, submitted that the authorities below have rejected the request of the appellants for registration of the Contract on the ground that the Import Licence Authority had not endorsed the Import Licence for project import and that the upgradation of the appellants' factory does not amount substantial expansion of their project. He cited the cases of Collector of Customs, Bombay v. Five Star Enterprises, Bombay -1992 (41) ECR 584 to support his contention that endorsement on Import Licence for the grant of benefit of project import is not mandatory under Heading 84.66. He further cited the case of Bharat Heavy Electricals Etd. v. Collector of Customs - 1989 (42) E.L.T. 255 wherein it was held that recommendation letter from the D.G.T.D. is not mandatory requirement for registration of Import Contract. He also submitted that substantial expan- sion of the production of a unit also amounts to substantial expansion of an existing unit.

3. In reply, Sh. Mohd. Ali, Ld. J.D.R., submitted that it is an admitted fact on the record that no contract was produced before the authorities below with their request for the registration of the contract and the order does not amount to Contract. He also took us through the statement made by the Appellants in the Appeal Memo under the heading 'Statement of Facts' wherein the Appellants have stated that pursuant to the installation of the imported machinery, the average daily production of the Motor Housing has gone up from 150 pcs.

to 230 pcs. approximately. Thus, there is an increase of more than 50% in the capacity of the unit. To support his contention that substantial expansion of the production of the unit does not amount to substantial expansion of an existing unit, he cited the case of National Newsprint & Paper Mills Ltd. v. Collector of Customs, Bombay - 1987 (32) E.L.T.153, which according to him applies on all fours to the facts of the present case. He also cited the case reported in 1983 (12) E.L.T. 829.

Case reported in 1989 (42) E.L.T. 413 was also cited to support his submission that formal contract is contemplated under Heading 84.66 and therefore, mere placement of order, or its acceptance, does not amount to contract, and, therefore, the Importer was not entitled for the benefit under Heading 84.66.

4. Considered. In the case of National Newsprint & Paper Mills Ltd. (supra), while dealing with the meaning of "Substantial expansion of an exist- ing unit" it was held by the Tribunal that the said expression implies addition, comparable to setting up of a new unit and, therefore, what is contemplated is the substantial expansion of the unit and not the substantial expansion of the production of the unit.

Consequentially, mere upgrading of existing unit for achieving more output does not fall within the meaning of Heading 84.66. Further, that modernisation and revamping is not equivalent to substantial expansion.

On this count only, we are of the view that the claim of the appellant for registration of the contract was rightly denied by the authorities below.


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