COMMISSIONER OF CUSTOMS, MUMBAIversusMIS. TOYO ENGINEERING INDIA LIMITED

                COMMISSIONER OF CUSTOMS, MUMBAI                                  A
                                      v.
                MIS. TOYO ENGINEERING INDIA LIMITED

                             AUGUST 31, 2006

             [ASHOK BHAN ANDMARKANDEY KA TJU, JJ.]                               B

      Customs Tariff Act, 1975; Tariff Heading 98.01/Project Import Scheme/
Notification No.72185-Cus. dated March 17, 1985:

      Classification-Import of auxiliary equipments for setting up of an         C
Industrial Plant-Tariff Heading 98. 0 I-Application for grant of benefit under
the Project Import Scheme-Rejected by Revenue authorities-Affirmed by
Appellate authorities-Reversed by the Tribunal-On appeal, Held: Heading
98.01 specifically mention and includes auxiliary equipments-Since fertilizer
plant is an industrial plant specified under the Heading 98.01, all the          D
auxiliary equipments required for initial setting up of the plant could be
imported under the Project Import Scheme-Mere possibility of using them
subsequently for other purpose would not debar the assessee from availing
the benefit of Project !mport Scheme.

     "Auxiliary"-Meaning of in the context of Tariff Heading 98.01 of the        E
Customs Tariff Act, 1975.

     Appeal/second appeal-Raising of submissions/grounds for the first
time-Held: Not allowed-Practice and Procedure.

       Respondent-assessee engaged in the setting up of an industrial unit, a
                                                                                 F
fertilizer plant, had entered into an agreement with their parent Company in
Japan for designing, engineering, fabricating and commissioning of an
Ammonia Storage Package Unit and a Co-generation Plant. The Parent
Company in turn entered into an agreement with the assessee to carry out
all the works, services, erection and commissioning of the project on turn
key basis. The assessee filed an application with the authority concerned for    G
grant of benefit under the Project Import Scheme read with Notification No.
72/85-Cus., dated 17.03.1985 in respect of goods sought to be imported for
the purpose of setting up the plants. The application was rejected by the
authority concerned on the ground that the imported goods are the property
                                     657
                                                                                 H
    658                     SUPREME COURT REPORTS (20061 SUPP. 5 S.C.R.
                                                                                      (

A of the assessee and could be used by them elsewhere after the completion of
    the present proJect, and the goods so imported would not qualify for
    classification under Heading 98.01 of the Tariff Act and consequently for
    getting the benefit under the Scheme. Aggrieved, the assessee filed an appeal
    before the revenue authorities, which was rejected by them. The assessee filed
    second appeal before the Tribunal which was allowed by the Tribunal holding
B   that the grounds on which both the lower authorities have denied the facility
    of project import to the respondent were not sustainable in law. Hence the
    present appeal filed by the Revenue.

          Revenue contended that the respondent-assessee is not eligible to get
C   the benefit of the project import scheme under heading 98.01 of the Tariff
    Act in view of the decision of this Court in the Punjab State Electricity Board
    v. Collector ofCustoms, Bombay, (1997) (91) ELT 247 (SC),

          Assessee submitted that in terms of note (2) to Chapter 98, Tariff
    Heading 98.01 of the Customs Tariff Act would apply to goods which are
D   imported in accordance with the Project Imports Regulations, 1986; that in
    terms of Regulation 4 the assessment under Heading 98.01 shall be available
    only to those goods which are imported against one or more specific contracts
    which have been registered with the appropriate Customs House; that in the
    absence of a specific contract being registered Heading 98,01 would not be
    applicable to the impugned goods as imported by the respondent; and that the
E   benefit of concessional duty under Project Import is not available ifthe goods
    had arrived before the application for grant of the benefit was submitted for
    registration of the goods.

          Dismissing the appeal, the Court

F         HELD:t.1. Since the fertiliser plant is covered by the industrial plant
    specified in Heading 98.01 of the Customs Tariff Act all the "auxiliary
    equipments" which are required for the initial setting up of the plant could
    be 'imported under the Project Import Scheme. 1662-A-BI

          1.2. What is required under heading 98.01 Tariff Act is that the
G machinery imported should be required 'for the initial setting up of a unit,
    or the substantial expansion of an existing unit". This heading specifically
    mentions and includes "auxiliary equipment". The "auxiliary equipment" has
    not been defined under the Tariff Act. As per Dictionary meaning, it is an
    equipment which aids or helps. Any equipment which aids or helps in the
H   setting up of an industrial plant would fall and be covered under heading 98.01
    COMMR. OF CUSTOMS. MUMBAI r. TOYO ENGINEERING INDIA LIMITED [BHAN, .I.] 659

of the Tariff Act. The mere possibility of its being used subsequently for other    A
project would not debar the assessee from availing the facility of project import
scheme. (662-F-G-HI

      Words and Phrases of Excise and Cusioms by S 8. Sarkar; Black'.s Law
Dictionary, sixlh edition; World Book Dictionary and Webster's Encyclopedic
Unabridged Dictionary, referred to.                                                 B
       2. The goods imported by the respondent would certainly be auxiliary
equipments which would help in the initial setting up of the industrial plant.
The facility of the project import was denied to the respondent because the
ownership of the imported goods did not pass to the project authority. Since it
is not disputed that the construction equipments imported by the respondent         C
were used in the initial setting up of the plant, and thereafter as per the
provisions of heading 98.01 of the Tariff Act, the respondent could not be denied
the benefit of the project import scheme. (663-F-G-H; 664-AI

      Punjab State Electricity Boardv. Collector of Customs, Bombay, (1997)         D
91 EL T 247 (SC) distinguished.

      3. The Tribunal was right in not allowing the revenue to raise certain
submissions for the first time in the second appeal before the Tribunal. Neither
adjudicating authority nor the appellate authority had denied the facility of
the project import to the respondent on any of these grounds. These grounds         E
did not find mention in the show cause notice as well. The Revenue cannot be
allowed to travel beyond the show cause notice. (664-E-FJ

      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2532 of2001.

      From Final Order No. 1813/2000-B dated 25.10.2000 of the Customs,             p
Excise and Gold (Control) Appellate Tribunal, New Delhi (Bench-B) in Appeal
No. C/164/89-B.

     B.B. Singh, Binu Tamta and B. Krishna Prasad for the Appellant.

     Joseph Vellapally, D.K. Subhedar, Debmalya Banerjee and Manik                  G
Karanjawala for the Respondent.

     The Judgment of the Court was delivered by

     BHAN, J. Revenue has filed this appeal against the final Order No.
1813/2000-B dated 25. J0.2000 in Appeal No. C/J 64/89-82 passed by the Customs,     H
    660                     SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.

A Excise and Gold (Control) Appellate Tribunal (for short "the Tribunal") whereby
  the Tribunal has set aside the order in original as well as the order passed
  in the appeal and held that the machinery and equipment imported by the
  assessee-respondent was classifiable under Heading 98.0 I of the First
  Schedule to the Customs Tariff Act, 1975 (for short "the Tariff Act") and
  granted the benefit of Project Import under the Project Import Regulation to
B the assessee.
          Facts:

         Assessee-respondent (for short "the respondent") is engaged in the
  setting up of industrial unit such as fertiliser plant. Mis. Indian Farmers
C Fertilisers Cooperative Ltd. entered into a contract with their parent Company
  Mis. Toyo Engineering Corporation, Japan for designing, engineering,
  fabricating and commissioning an Ammonia Storage Package Unit and a Co-
  generation Plant. Their Parent Company in turn entered into an agreement
  with the respondent to carry out all the works, services, erection and
D commissioning of the project on turn key basis. The respondent filed an
  application on 17.03.1986 with the Contract Registration Cell for grant of the
  benefit under the Project Impmt Scheme read with Notification No. 72185-Cus.,
  dated 17 .03.1985 in respect of goods sought to be imported. Respondent has
  imported various special construction equipments, available at their overseas
  project at Kuwait, and filed eleven Bills of entry in March, 1986 for the
E clearance of goods, which were cleared on payment of duty under protest.
          The Assistant Collector, under Adjudication Order No. Sl5-Misc. 3161
    86-CC, dated 18.08.1987, rejected the request of the respondent for registration
    under the Project Import Regulation on the ground that the imported goods
F   are the property of the respondent and even after execution and completion
    of the work, the11e goods would remain the property of the respondent and
    the ownership of the imported goods would not pass on to the Project
    Authority. It further held that as the goods could be used for other work
    elsewhere after the completion of the present project, the imported goods
    would not qualify for classification under Heading 98.01 of the Tariff Act.
G
         Being aggrieved, the respondent filed an appeal before the Appellate
  Authority which was rejected. It was held that as per Heading 98.01 of the
  Tariff Act the items of machinery or component parts should go into the initial
  setting up of the unit and should not merely be used as an aid for the setting
  up of the unit or its substantial expansion. As the respondent could utilise
H the machinery elsewhere in the setting up of other plants, the impugned
    COMMR. OF CUSTOMS, MUMBAI r. TOYO ENGINEERING INDIA LIMITED [BHAN. J.j 66 J


goods could not be classified under Heading 98.01 of the Tariff Act.               A
      The respondent being aggrieved filed an appeal before the Tribunal
which has been accepted by the impugned order. The Tribunal held that the
grounds on which both the lower authorities have denied the facility of
project import to the respondent were not sustainable in law. After detailed
discussion the Tribunal set aside each of the findings recorded by the appellate   B
authority and held that the respondent would be eligible to the benefit asked
for.

      Heading 98.0 I of the Tariff Act reads as under:

        "98.01 All items of machinery including prime movers, instruments,         C
        apparatus and appliances, control gear and transmission equipment,
        auxiliary equipment (including those required for research and
        development purposes, testing and quality control), as well as all
        components (whether finished or not) or raw materials for the
        manufacture of the aforesaid items and their components, required for
        the initial setting up of a unit, or the substantial expansion of an       D
        existing unit, of a specified:

        ( 1) Industrial plant,

        (2) Irrigation project,
                                                                                   E
        (3) Power project,

        (4) Mining project,

        (5) Project for the exploration for oil or other minerals, and

        (6) Such other projects as the Central Government may, having regard       F
        to the economic development of the country notify in the Official
        Gazette in this behalf; and spare parts, other raw materials (including
        semi-finished material), or consumable stores not exceeding I 0% of
        the value of the goods specified above provided that such spare
        parts, raw materials or consumable stores are essential for the
        maintenance of the plant or project mentioned in (1) to (6) above."        G
      Heading 98.01 covers all the items of machinery including prime movers,
instruments, apparatus and appliances; control gear and transmission
equipment, auxiliary equipments besides components and raw materials required
for the initial setting up of a unit or the substantial expansion of an existing
                                                                                   H
    662                     SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A unit of specified industrial plant. The industrial plant would include fertiliser
    plant as well, as it is designed to be employed directly in the performance of
    processes necessary for manufacture of fertiliser. Since the fertiliser plant is
    covered by the industrial plant specified in Heading 98.0 I of the Tariff Act
    all the "auxiliary equipments" which are required for the initial setting up of
B   the unit could be imported under the Project Import Scheme.

          As per Words and Phrases of Excise and Customs by S.B. Sarkar
    "auxiliary" means:

            "giving additional help; supplemental or subsidiary; an item not directly
            a part of a specific component or system but required for its functional
c           operation.

            According to Black's Law Dictionary, sixth edition, 'auxiliary' means:

            "Aiding; attendant on."

D           According to the World Book Dictionary, 'auxiliary' means:

                "a person or thing that heips; aid; syn; accessory".

               Webster's Encyclopedic Unabridged Dictionary of the English
            Language, (1996 Edn.) "auxiliary" means:\

E               "giving s1.1pport; serving as an aid; helpful"

         It is not disputed that construction equipments imported by the
  respondent were used in the initial setting up of the plant. The Assistant
  Collector and the appellate authority denied the facility of the project import
  as the ownership of the imported goods would not pass to the project
F authority and that the machinery imported could be utilized elsewhere in the
  setting up of any other plant. What is required under heading 98.01 Tariff Act
  is that the machinery imported should be required "for the initial setting up
  of a unit, or the substantial expansion of an existing unit". This heading
  specifically mentions and includes "auxiliary equipment". The "auxiliary
G equipment" has not been defined under the Tariff Act. As per Dictionary
  meaning, extracted above, it is an equipment which aids or helps. Any
  equipment which aids or helps in the setting up of an industrial plant would
  fall and be covered under heading 98.01 of the Tariff Act. The mere possibility
  of its being used subsequently for other project would not debar the respondent
  from availing the facility of project import. If the contention of the Revenue
H is accepted, then resultant effect as put by the Tribunal would be:
    COMMR. OF CUSTOMS, MUMBAI r. TOYO F.NGINEERING INDIA LIMITED[BHAN,J.] 663

        " .... no equipment can be imported for projects like Konkan Railway        A
        Project, Road Development Projects of the National Highway Authority
        of India, etc. specified under Heading 98.01 of CTA."

      We agree with this observation of the Tribunal.

      Counsel appearing for the appellant strenuously contended that the            B
respondent could not be given the benefit of the project import under 11eading
98.01 of the Tariff Act in view of the decision of this Court in the Punjab State
Electricity Board v. Collector of Customs, Bombay, (1997) 91 ELT 247 (SC).

       We do not find any substance in this submission. In that case this
Court did not consider the vehicles imported to be an item of auxiliary C
equipment required for setting up of an initial unit on the ground that it was
used only in shifting of the transformers which would not constitute an
 integral part of the power project. The vehicles imported were required for
transportation of the transformers from railway yards to the erection sites and
had no relation to power generation or power project. After transporting the
specified number of transformers to the site of sub-station the utility of the D
vehicles would be over at the end of such transport and thereafter the
vehicles could certainly be used for other purposes of the assessee. That
the vehicles, which are used in the shifting of the transformers, would not
constitute integral activity of the project. In the present case goods imported
by the respondent are hydle truck cranes, excavator, shovel loader, truck, E
forklift truck, power generators, diesel welder, welding rectifier, containers
tools and tackles instruments, level Nako with tripod, theodlite nako with
accessories & tripod besides window air conditioners, electric typewriter and
camera with flash (the total cost of last three items is only Rs. 70,000/-, which
is negligible). In fact, it was not disputed before the Tribunal or before us as
well that the construction equipments imported by the respondent were used F
in the initial setting up of the plant. The goods imported by the respondent
such as hydle truck cranes, excavator, shovel loader, truck, forklift truck,
power generators, diesel welder, welding rectifier, containers tools and tackles
instruments, level Nako with tripod and theodlite nako with accessories &
tripod would certainly be auxiliary equipment~ which would help in the initial G
setting up of the industrial plant. The facility of the project import was denied
to the respondent because the ownership of the imported goods did not pass
to the project authority. Since it is not disputed that the construction
equipments imported by the respondent were used in the initial setting up of
the plant, then, as per the provisions of heading 98.0 l of the Tariff Act the
                                                                                    H
     664                    SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.

A respondent could not be denied the benefit of the project import.
         Before the Tribunal learned departmental representative appearing for
  the Revenue had made various other submissions such as (I) that absence
  of a contract specifically registered for impo1t of construction material: (2) that
  note (2) to Ch.apter 98 according to which Heading 98.0 I would apply to
B goods which are imported in accordance with the Project Imports Regulations,
   1986; (3) that under Regulation 4 the assessment under Heading 98.01 shall
  be available only to those goods which are imported against one or more
  specific contract which have been registered with the appropriate Customs
  House. In the absence of a specific contract being registered Heading 98.0 l
C would not be applicable to the impugned goods imported by the respondent;
  and (4) that the benefit of concessional duty under Project Import was not
  available if the goods had arrived before the application was submitted for
  regis~ration of the goods. All these submissions were not allowed to be raised
  by the tribunal as these submissions had been made for the first time before
  the Tribunal. These submissions had neither been raised before the
D adjudicating authority nor the first appellate authority. It was held by the
  Tribunal that the Department could not be allowed to make out a new case
  at the appeal stage.

         Learned counsel for the Revenue tried to raise some of the submissions
  which were not allowed to be raised by the Tribunal before us, as well. We
E agree with the Tribunal that the revenue could not be allowed to raise these
  submissions for the first time in the second appeal before the Tribunal.
  Neither adjudicating authority nor the appellate authority had denied the
  facility of the project import to the respondent on any of these grounds.
  These grounds did not find mention in the show cause notice as well. The
F Department cannot be travel beyond the show cause notice. Even in the
  grounds of appeals these points have not been taken.

          For the reasons stated above, we do not find any merit in this appeal.
    We agree with the findings recorded by the Tribunal. Accordingly, the appeal
    is dismissed, leaving the parties to bear their own costs.
G
    S.K.S.                                                       Appeal dismissed.