At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore
By, THE HONORABLE JUSTICE: S.S. GARG
By, MEMBER AND THE HONORABLE JUSTICE: V. PADMANABHAN
For Respondents: Parashiva Murthy, AR
1. The appeal is against the Order-in-Appeal No. 67/2003 dated 31.3.2003. The appellant is engaged in the manufacture of goods falling under Chapter 84 of the Central Excise Tariff Act. They were availing the benefit of Notification No. 6/2000-CE dated 1.3.2000 and cleared vibration insolation systems without payment of duty amounting to Rs. 97,280/-. The Revenue sought to disallow the benefit claimed under said Notification. In the Order-in-Original dated 7.11.2001, the demand was set aside whereas the Commissioner (A) held the view that central excise duty is payable on the said goods. Aggrieved by the impugned order, the present appeal has been filed.
2. With the above background, we heard Mr. Parashiva Murthy, AR for the Revenue and none appeared on behalf of the appellant.
3. The appellant has supplied vibration control systems to their customers M/s. Roshni Power Tech Ltd. which has been granted license from Non-Conventional Energy Development Corporation of Andhra Pradesh to set up six megawatt biomass based power project as per the guidelines of Ministry of Non-conventional Energy Sources. This equipment is claimed to be part of the main equipment installation which converts biomass into energy.
4. The appellant has claimed the benefit of Notification No. 6/2000 dated 1.3.2000 (Sl. No. 20) read with List 5 which reads as follows:
"List 5 (Sl. No. 20): Parts consumed within the factory of production of such parts for the manufacture of goods specified in Serial No. 1 to 19 above.
M/s. Roshni Power Tech Limited has sought the benefit of Notification No. 6/2000 dated 1.3.2000 vide Sl. No. 251 and read with List 5, which is read as follows, in the said Notification:
Sl. No. 251: Non-conventional energy devices/systems specified in List 5.
List 5 (Sl. No. 15): Bio gas plants and bio gas engines.
List 5 (Sl. No. 16): Agricultural, forestry, agro-industrial, municipal and urban waste conversion devices producing energy."
The benefit claimed by the appellant has been disallowed in the impugned order for the reason that the benefit claimed by the appellant is allowable only when the parts required for non-conventional energy devices are consumed within the factory of production of such parts for the manufacture of main equipments. In the present case, the goods manufactured in the appellant factory have been supplied to M/s. Roshni Power Tech Ltd., who in turn utilised such goods in the manufacture of non-conventional energy systems.
5. We find that the same issue pertaining to the same appellant has come before the Tribunal in an earlier case for a different period which stands decided as reported in 2008 (223) ELT 390. We have gone through the said decision of the Tribunal, which has held as follows:
"4. We heard both sides. The learned Advocate brought to our notice the decision of the Tribunal Mumbai Bench in the case of Pushpam Forging v. CCE, Raigad, 2006 (193) E.L.T. 334 (Tri.-Mumbai) wherein in the context of the same notification it was held that the benefit of the said notification cannot be denied on the ground that flanges were not consumed in the factory of production since the tower of the one wind mill being huge structure would come into existence at site. The relevant observation of the Tribunal is reproduced below:
2.2 Once tower is accepted and found and held to be part of Wind Operational Electric Generator (WOEG for short) it is to be held that part i.e. flange of this part i.e. tower will be part of the whole i.e. Wind Generated Mill producing electricity from unconventional services. Every devices/systems part in this case having been specifically designed for that purpose in mind. That part of part is part of whole is well settled, relying upon [CCE v. Mahendra Engineering Works : 1993 (67) E.L.T. 134 followed in Bensel Industrial Corporation : 2000 (118) E.L.T. 119]. We find the flanges to be a part of WOEG.
2.2 The restriction being given to the exemption as part of the tower by reading Sr. No. 20 of lists, only on the grounds that flanges were not eligible since they were not consumed in the factory of production for the manufacture of tower has to be considered with the fact that tower of a Wind Mill being huge structures would only came into existence in the factory of manufacture as a design and in fact they would arise only in fact at site after assembly using the flanges. Consumption at site in tower is not questioned on facts nor it can be said that flange is not used where the tower came into existence. The concept of interpretation of consumed in factory of production and limiting the same to the Central Excise registered premises of the appellants herein and deprive the use at site cannot be upheld.
5. On the other hand Revenue contends that in the present case, the goods are not consumed within the factory of production and they are cleared to another unit and therefore the condition of notification is not fulfilled. Revenue relied on the decision of the Apex Court in the case of Rajasthan Spinning and Weaving Mills Ltd. v. Commissioner of Central Excise, Jaipur : 1995 (77) E.L.T. 474 (S.C.) wherein it was held that notification should be construed strictly and there should be no liberal construction to enlarge the terms and scope of notification. Serial No. 237 of the relevant Notification 6/2002, dated 1-3-2002 reads as follows:
Sl. No. 237: Non-conventional energy devices/systems specified in list 9
List 9 (Item 15): Bio gas plants and bio gas engines
List 9 (Item 16): Agricultural, forestry, agro-industrial, industrial, municipal and urban waste conversion devices producing energy.
6. The appellant supplied the impugned goods to M/s. Raghurama Renewable Energy Ltd. and M/s. Arashi Hitech Bio Power Pvt. Ltd. claiming exemption under item 21 of list 9 of the said notification which is reproduced below:
List 9 (Item 21): Parts consumed within the factory of production of such parts for the manufacture of goods specified in Item No. 1 to 20 above.
7. The impugned goods are meant for use for Non-Conventional renewable bagasse biomass/bio waste based cogeneration power project. Since the impugned item can be considered as parts of waste convention devices producing energy there is no doubt that they would be entitled for the exemption notification. However in terms of the above mentioned entry in item 21 parts should be consumed within the factory of production. By this stipulation the Government
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has made it impossible for any manufacturer who supplies these goods to other units to avail the benefit of the exemption notification. In other words, a plain reading of item 21 indicates that the exemption is available only for captive consumption. When such a condition is stipulated can Tribunal just ignore it? Moreover in the decision cited by the appellant no reasoning has been given to hold that exemption cannot be denied on the ground that the parts are not consumed within the factory of production. In such circumstances we have no other option but to uphold the impugned order. Therefore the appeal is dismissed." 6. By following the above decision, the impugned order is upheld and appeal is dismissed.