2026-VIL-1789-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs - Eligibility of Thermic Fluid Imported for Initial Charging of Continuous Polycondensation Plant as Capital Goods for Exemption under Notification No. 104/2009-Customs dated 14.09.2009 - Appellant, a manufacturer of polyester filament yarn, imported the Continuous Polycondensation plant under EPCG authorisation without thermic fluid and subsequently imported heat transfer fluid separately by utilising SHIS scrips under the Foreign Trade Policy 2009-2014 - SCN proposed recovery of customs duty on the allegation that the fluid is a chemical and not capital goods, and the Commissioner confirmed the duty demand with interest but did not order confiscation or impose penalty - Whether thermic fluid imported for initial charging of the plant is covered under capital goods and is eligible for exemption under the notification - HELD - The definition of capital goods in the notification and in the Foreign Trade Policy is identical, and it covers any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods. The Chartered Engineer's certificate shows that almost the entire quantity of the fluid was used as one time initial charge in the plant, enabling high temperature at low pressure for the polycondensation process. The final products fall under the plastics sector to which the SHIS scheme applies, and the value of the fluid was capitalised in the books of accounts. The definition also includes catalysts for initial charge and refractories for initial lining, which are similar in nature - The fluid is covered under capital goods even though it is classifiable as a chemical. The plant cannot function without the fluid, which is therefore part of the plant, and Customs cannot dissect the system and treat one part of it as a consumable - Denial of exemption does not stand the scrutiny of law, the impugned order is set aside and the appeal is allowed
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