Custom, Excise & Service Tax Tribunal
M/S. Turbotech Precision Engg. Pvt. Ltd vs Cce-Ii, Bangalore on 3 June, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Court I(DB) Date of Hearing & decision:03/06/2013 Application No.E/Stay/1993/2011 Appeal No.E/3168/2011 (Arising out of Order-in-Appeal No.278/2011 dt. 26/09/2011 passed by CCE(Appeals), Bangalore) M/s. Turbotech Precision Engg. Pvt. Ltd. ..Appellant(s) Vs. CCE-II, Bangalore ..Respondent(s)
Appearance Mr. N. Anand, Advocate for the appellant.
Ms. Sabrina Cano, Superintendent(AR) for the respondent.
Coram:
Honble Mr. D.N. Panda, Member(Judicial) Honble Mr. B.S.V. Murthy, Member(Technical) FINAL ORDER No._______________________ Order per: D.N. Panda During the course of the hearing of the stay application, it is observed that the entire dispute being on a very narrow compass as to eligibility of the appellant to the grant of Notification No.63/95-CE dt. 16/03/1995, it is considered proper to dispose the appeal itself without keeping the same pending in Tribunal.
2. It is an admitted fact on record that 45 nos. of oil cooling system valued at Rs.3,67,20,000/- was supplied by the appellant during the period from June 2009 to January 2010 to M/s. Hindustan Aeronautics Ltd., Bangalore (HAL) claiming the benefit under Notification No.63/95 dt. 16/03/1995 (Ref: page 74 of the appeal folder). The said notification reads as under:
Goods for defence purposes or other projects In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts, goods specified in column (2) of the Table hereto annexed, and falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), subject to the conditions, if any, specified in the corresponding entry in column (3) of the said Table, from the whole of -
(i) the duty of excise leviable thereon which is specified in the said Schedule; and
(ii) the additional duty of excise leviable under the second mentioned Act on goods specified against S. No.1 of the said Table :
Provided that nothing contained in this notification shall apply to goods specified against S. No. 16 of the said Table on or after the 1st day of April, 1999.
TABLE S.No. Description of goods Conditions (1) (2) (3)
1.
All goods If manufactured in a prison.
2. All goods If manufactured by the following units and are for supply to the Ministry of Defence for official purposes :-
(i) Hindustan Aeronautics Limited.
(ii) Bharat Electronics Limited
(iii) Bharat Dynamics Limited
(iv) National Instruments Limited, Calcutta.
(v) National Aerospace Laboratories.
3. All goods If, -
(i) manufactured in a shipyard;
(ii) intended for use in the manufacture or repair of goods falling under heading Nos. 89.01, 89.02, 89.04, 89.05 (excluding floating or submersible drilling or production platforms) or 89.06 in a shipyard; and
(iii) such use is in a shipyard of the manufacturer of such goods, different from the shipyard where the said goods have been manufactured, the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed.
4. All goods If manufactured in workshops situated within the precincts of mines and intended for use in such mines.
5. All goods falling under sub-heading Nos. 2505.00, 2702.00, 2703.00, 2705.00, 2709.00, 2711.21, 2714.90 or 7101.39 If manufactured in a mine.
6. Bolts, nuts and screws falling under sub-heading Nos. 7318.00, 7415.32, 7616.10 or 7907.00 If manufactured by the Hindustan Aeronautics Limited, and used within their units for the manufacture of aircrafts or as spare parts of aircrafts.
7. Billets, rods and sheets, of oxygen-free copper or beryllium copper falling under Chapter 74 If manufactured by the Defence Metallurgical Research Laboratory, Hyderabad out of copper supplied by the Hindustan Copper Limited.
8. Tools, jigs and fixtures falling under Chapter 82 If manufactured by Tool Rooms or Institutions specified below :-
(i) Central Tool Room, Ludhiana.
(ii) Central Tool Room and Training Centre, Calcutta.
(iii) Central Institute of Tool Design, Hyderabad
(iv) Institute for Designing of Electrical Measuring Instruments, Bombay
(v) Central Institute of Hand Tools, Jallandhar
(vi) Tool Room and Training Centre, Delhi
(vii) Government Tool Room and Training Centre, Bangalore
(viii) Institute of Training and Tool Room of Uttar Pradesh, Lucknow.
9. Motor vehicles, namely, BEML, Tatra Model 815 and BEML Tatra Model HDT-45 falling under Chapter 87 If manufactured by M/s. Bharat Earth Movers Limited for supply to the Government of India in the Ministry of Defence, for official purposes.
10. Assemblies and sub-assemblies If, -
(i) for use in motor vehicles specified at S. No. 9 above, manufactured by M/s. Bharat Earth Movers Limited for supply to the Government of India in the Ministry of Defence, for official purposes; and
(ii) such use is elsewhere than in the factory of production, the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed.
11. Transmission and allied assemblies If manufactured by M/s. Bharat Earth Movers Limited and intended to be supplied to the Ordnance Factory, Medak belonging to the Central Government for the manufacture of Infantry Combat Vehicles, namely, BMP-2.
12. Chemical reagents falling under heading No. 38.22 If manufactured by M/s. Hindustan Antibiotics Limited, Pimpri, and used in the factory of production in the manufacture of goods specified against S. No. 13 below.
13. Kits for testing narcotics drugs and psychotropic substances falling under heading No. 90.27 If manufactured by M/s. Hindustan Antibiotics Limited, Pimpri.
14. Jet and aero engines falling under Chapter 84.
If manufactured by the Hindustan Aeronautics Limited, Bangalore for use for defence purposes.
15. Internal combustion engines falling under Chapter 84.
If manufactured by the Hindustan Aeronautics Limited, Bangalore for supply to the Ministry of Defence for official purposes.
16. Pistol 9 mm and Rifle 7.62 mm SLR falling under Chapter 93 If, -
(i) manufactured by M/s. Bharat Dynamics Limited, Hyderabad and supplied to the Armed Forces of the Union and Police Forces of the States or the Union Territories; and
(ii) before the clearance of the said goods, in each case, an officer not below the rank of a Deputy Secretary in the Ministry of Home Affairs recommends grant of this exemption indicating the full description and quantity of the said goods to be supplied to the said force.
Explanation. - For the purposes of this notification, the expression, -
(i) prison means any jail or place used permanently or temporarily under the general or special orders of a State Government for the detention of prisoners and includes, -
(a) any place which has been declared by a State Government by general or special order to be a subsidiary jail; and
(b) any reformatory, borstal institution or other insitution of a like nature;
(ii) mine has the meaning assigned to it in clause (j) of section 2 of the Mines Act, 1952 (35 of 1952);
(iii) narcotic drugs and psychotropic substance shall have the meanings respectively assigned to them as defined in clause (xiv) and clause (xxiii) of section 2 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985);
(iv) kits for testing narcotic drugs and psychotropic substances means kits consisting of chemical reagents in small bottles for testing narcotic drugs and psychotropic substances manufactured by M/s. Hindustan Antibiotics Limited, Pimpri, including test tubes, droppers, test plates and similar other accessories supplied with such kits;
(v) Armed Forces of the Union means the Central Reserve Police Force, the Indo-Tibetan Border Police Force, the Special Services Bureau, the Border Security Force, the Central Industrial Security Force and the National Security Guard maintained or constituted under the Central Reserve Police Force Act, 1949 (66 of 1949), the Indo-Tibetan Border Police Force Act, 1992 (35 of 1992), the Border Security Force Act, 1968 (47 of 1968), the Central Industrial Security Force Act, 1968 (50 of 1968) and the National Security Guard Act, 1986 (47 of 1986) respectively.
[Notification No. 63/95-C.E., dated 16-3-1995]
3. The notification above intended in terms of Sl.No.2 thereof that all goods manufactured by certain specified manufacturers in Column 3 thereof were exempt from excise duty. HAL was an admitted buyer of the goods manufactured by the appellant of the description aforesaid without being a manufacturer thereof. Appellants contention before the authorities below was that the goods as described above being manufactured by the appellant and supplied to HAL for incorporation in to goods supplied by HAL to Defence department and such supplies by HAL being ultimately exempt in the hands of the HAL, that should also qualify the goods manufactured by appellant for HAL to the exemption in the hands of the appellant. Appellant acted on the basis of the certificate issued by the HAL on 21/05/2008 which reads under (ref: page 73 of the appeal folder) TO WHOMSOEVER IT MAY CONCERN WE, Hindustan Aeronautics Limited (HAL), Engine Test Bed Research & Design Centre, Old Madras Road, CV Raman Nagar, Bangalore 560 093, is a public sector undertaking under the Ministry of Defence, Government of India.
THIS is to certify that the goods ordered on M/s. Turbotech Precision Engineering (P) Ltd. A-343, 9th Main, 2nd Stage, Peenya Industrial Estate, Bangalore 560 058 as per our Purchase Order No.3241059 dt. 28.4.2006 are required for manufacture of Aero-Engines for Helicopters in HAL, Bangalore. These Helicopters are ordered by the Ministry of Defence and such Helicopters manufactured by HAL using these goods would be ultimately cleared by HAL under Notification No.63/95-CE dt. 16.3.1995 to the Ministry for official purposes. The said goods as listed below are, therefore, exempted from excise duty under Notification No.63/95-CE dt. 16.03.1995 and CBEC Circular No.5/92 dt. 19.5.1992 and CBEC letter No.201/22/2006-CX dt. 23.6.2006.
Sl.No.
Description
Quantity Value
1
Fabrication and supply of oil cooling system for Shakti-Afriden Engine as per Spec. HAL-ETBRDC-Shakti-OCS-01-Issue 2 dt. 01.12.2005 60 Nos. Rs.4.80 crores
4. Learned counsel submits that the appellant was under bona fide belief because of the clarification issued by the CBEC on 23/06/2006 in F.No.201/22/2006-Cx.6 (ref.: page 63 of the appeal folder) stating that the goods manufactured by intermediaries are exempt from duty. In terms of the said clarification, the goods manufactured by the appellant and supplied to HAL are exempt from the duty liability. According to the appellant, there should not be levy of the duty on the goods stated above, manufactured by appellant for HAL.
5. Learned AR for Revenue on the other hand submits that similar such matter was under scrutiny before the Tribunal in the case of National Engg. Industries Ltd. Vs. CCE, Jaipur-I [2010(259) ELT 235 (Tri. Del.)]. The Tribunal came to the conclusion that extension of benefit of the Notification to a job worker and vendor supplying input to the manufacturer of final goods for ultimate supply to Ministry of Defence would apparently amount to extending the scope of exemption to such job worker and vendor which is not permissible. According to the Tribunal, it is not merely supply to Ministry of Defence but such supplies should be for official purpose when the exemption is available in relation to finished goods but not in relation to inputs supplied to manufacture of finished goods. Therefore the appellant has no case at all to succeed.
6. Heard both sides and perused records. Certainly clarification on which the appellant relies at page 63 of the appeal record stated aforesaid is in favour of the appellant bringing out that the purport of Circular No.5/92 dt. 19/05/1992 is applicable to the Notification No.63/95 dt. 16/03/1994 and intermediate goods can be construed to be ultimately supplied for use of Ministry of Defence. Therefore according to above clarification, if the goods are cleared/sold by job worker to the ultimate supplier, the job worker is covered by the Notification since that is ultimately meant for supply to Ministry of Defence. But soon after that clarification, the Government by a further clarification dt. 27/10/2009 in F.No.110/32/2009 Cx.3 clarified that the Circular No.5/92 dt. 19/05/1992 is applicable to the present Notification No.63/95-CE dt. 16/03/1995. However supply made to vendors would not be covered by the Notification No.63/95-CE dt. 16/03/1995. The clarification above although are not issued under any of the provisions of the statute and lacks legal sanction, that was binding on the tax administration for uniformity approach to the subject to remove anomaly.
7. For the intention of the Government as indicated by the aforesaid letter and also for the decision of the Tribunal in the case of National Engg. Inds. Ltd. (supra), it is not possible to allow the appeal of the appellant by an inconsistent view. Therefore following judicial discipline, appeal is dismissed.
8. Learned counsel at this stage submits that the benefit of CENVAT credit is admissible to it. It is not possible to hold that without scrutiny of the documents and also the factual circumstances as to whether such benefit can be granted is tested, plea of CENVAT credit entertainable at this stage. Therefore, that contention is also rejected. (Pronounced and dictated in open court) (B.S.V. MURTHY) MEMBER (TECHNICAL) ( D.N. PANDA ) MEMBER (JUDICIAL) Nr 8