No import duty after Essentiality Certificate: SC

By Staff
|
Google Oneindia News

New Delhi, Apr 1: In an important ruling, the Supreme Court has held that no import duty can be imposed on items for which an Essentiality Certificate was issued by the sponsoring ministry for the expansion of an industrial project.

A Division Bench comprising Justices S H Kapadia and B Sudershan Reddy, while allowing the appeal of Goa-based M/s Zuari Industries Ltd, manufacturers of fertilisers, set aside the March 1997 order of the Customs, Excise&Gold (Control) Appellate Tribunal (CEGAT) denying exemption of duty to the firm.

The apex court said the Assessing/Customs authorities cannot act beyond the decision of the government on such matters.

The appellant company has imported machinery for setting up a 6 MW Captive Power Plant. The imports fell under serial no. 226(i) as goods required for the substantial expansion of the fertiliser project and thus entitled to full exemption of customs duty.

The Union Ministry for Chemicals and Fertilisers, the sponsoring ministry, had issued an Essentiality Certificate to the appellants after the company submitted the complete project report to the ministry.

The apex court in its judgment dated March 29 noted, ''An 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 Certificate is also a proof that an item like a Captive Power Plant, in the given case could be treated as a capital goods for the fertilizer project.

However, it would depend upon the facts in each case.

''If a project is to be installed in an area where there is a shortage of electricity and if that project is approved by the sponsoring ministry saying that such supply is needed than the Revenue cannot go beyond such certificate and deny the benefit of exemption from payment of duty or nil rate of duty provided continous flow of electricity is needed for the project,'' the court held.

UNI

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