N.K. Bajpai, Member (T)

1. This matter has arisen out of a reference made by a three Member Bench of the Tribunal to the Hon'ble President for constituting a Larger Bench on the question whether, in the facts and circumstances of this case, the auxiliary equipment in the present case can be extended the benefit of concessional duty under sub-heading 9801.00 of the Customs Tariff. While making the reference, two of the Members of the Bench referred to a decision of a three Member Bench in the case of Punjab State Electricity Board, Patiala v. Collector of Customs, Bombay [MANU/CE/0227/1986 : 1987 (27) E.L.T. 432 (Tribunal)] and observed as under:-

"19. The word 'specified' occurring in Heading 9801 and sub-heading 9801.00 has not been defined. Question is whether 'unit' occurring in sub-heading 9801.00 and the word 'specified' would mean that the items of machinery and auxiliary equipment etc. which can be extended the benefit of the said subheading 9801.00 must be confined to a particular project, as appears to have been construed in the case of PSEB, mentioned supra by the Tribunal or it can be extended even to such items of machinery and auxiliary equipment which are liable to be used in different types of projects and industrial plant, as mentioned in that Heading 9801. From the reading of the description under sub-heading 9801.00, as extracted above, narrow construction of the sub-heading adopted in PSEB as confined to a particular project is perhaps not warranted. The items entitled to benefit, it can be argued with some force, may be used in any or all of the specified projects mentioned at S. Nos. (1) to (6) in the sub-heading 9801.00."

2. The matter was heard over a period of six sessions and detailed arguments were submitted by both sides. Before we proceed to the matter a brief narration of the facts may be made. The appellants imported a consignment of used and second-hand construction aids and machinery, tools, tackles, instrument spares, etc. from Kuwait. On 17th March 1986, they made an application to the Assistant Collector of Customs, Project Import Group 'K' of the Bombay Customs House for registration under the Project Import (Registration of Contract) Regulations, 1965 for assessment of the goods under Heading 98.01. These goods were required for initial setting up of Ammonia Storage Package Unit and Co-generation Plant of the Indian Farmers Fertilizers Cooperative Limited (IFFCO) being installed at Aonla, near Bareilly, U.P. The relevant extract from the application is as under:-

"We state that we have at our disposal necessary erection machinery equipment and other items lying at our overseas project and the same are being imported for use in the initial setting up of the fertilizer project of IFFCO at Aonla.

We have approached Director of Industries for the recommendation for availing the benefit of project import duty exemption and will submit the same in due course. In view of the fact that the use of the imported goods is essential for the initial setting up of the fertilizer project, we submit that the said goods are classifiable under Heading 98.01....

We may mention that the subject goods are bought by us in Kuwait for execution of overseas project with RBI's approval in terms of the Import Policy 85-88 para 213(5) and accordingly, no Import Licence or CCP is required for the clearance of the same and therefore the question of separate contract with the foreign supplier does not arise in this case." (Emphasis added)

3. By an order, dated 18th August 1987, the Assistant Collector of Customs, Contract Cell, rejected the application for registration on two grounds. The operative part of this order is as under:

"3. ... In the instant case, the status of the importer is that of a Private Contractor who has been entrusted certain work. For execution of the contract, the importer has imported machinery, equipment etc. The imported goods are the property of the importer and even after execution and completion