Custom, Excise & Service Tax Tribunal
Lm Wind Power Blades (India) Private Ltd vs Commissioner Of Customs, Tuticorin on 2 December, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal No.C/291/2006
[Arising out of Order-in-Appeal No.29/2006 dt. 26.7.2006 passed by the Commissioner of Customs, Central Excise (Appeals), Tiruchirappalli]
For approval and signature :
Honble Shri P.K. Das, Judicial Member
Honble Shri R. Periasami, Technical Member
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not ? :
3. Whether the Members wish to see the fair copy of
the order? :
4. Whether Order is to be circulated to the Departmental authorities ? :
LM Wind Power Blades (India) Private Ltd. Appellant
Versus
Commissioner of Customs, Tuticorin Respondent
Appearance:
Shri R. Parthasarathy, Advocate
For the Appellant
Shri M. Rammohan Rao, JC (AR)
For the Respondent
CORAM :
Honble Shri P.K. Das, Judicial Member
Honble Shri R. Periasami, Technical Member
Date of Hearing : 30-10-2014 Date of Pronouncement : 02-12-2014
FINAL ORDER No.40865/2014
Per R. Periasami
1. The appellant has filed appeal against the impugned Order-in-Appeal No.29/2006 dt. 26.7.2006 passed by Commissioner of Central Excise (Appeals).
2. The brief facts of the case are that the appellants are manufacturers of "Rotor Blades" for wind-operated electricity generators (WOEG) and they filed Bills of Entry for import of goods used for manufacture of Rotor Blades and they imported the following goods and claimed CVD exemption under Sl.No.237A of Notification No.6/2002-CE dt.1.3.2002 as amended by Notification No.29/2005-CE dt.31.5.2005 :-
Sl.
No.
Description of the goods imported
Nature of the goods
Classification claimed by assessee in the B/E's
Classifica-
tion according to Revenue
Type of resin
1.
Crystic
0209 KSD/KH
Gelcoat
3208 2090
3208 1090
Polyester
2.
Polylite
413-577
Infusion resin
3907 3090
3907 9190
Polyester
3.
Polylite
410-M912
Hand
lay up resin
3907 3090
3907 9190
Polyester
4.
Polylite
413-573
Hand
lay up resin
3907 3090
3907 9190
Polyester
5.
Polylite
413-571 &
413-587
Infusion resin
3907 9990/
3907 3090
3907 9190
Polyester
It was alleged that the appellants have availed exemption wrongly as the subject goods are not classifiable under Chapter heading specified in the said notification. Accordingly, the show cause notice dt. 2.12.2005 was issued read with corrigendum dt. 3.1.2006 demanding differential customs duty of Rs.1,48,92,523/- for re-classification of the imported goods and denying the exemption notification. Adjudicating authority confirmed the demand. The appellants filed appeal against the said order and the Commissioner (Appeals) has upheld the adjudication order and rejected their appeal. Hence the present appeal.
3. Ld.Advocate for the appellants submits that they have imported Infusion Resins, Hand lay up Resins (Crystic KH) and Gelcoat (Crystic KSD) for manufacture of rotor blades for WOEG. They have availed concessional rate of Basic Customs Duty under Notification No.21/2002-Cus. dt.1.3.2002 and CVD exemption under Central Excise Notification No.6/2002-CE dt.1.3.2002 as amended by Notification No.29/2005 dt. 31.5.2005 for the specified resins. The department attempted to reclassify the goods under different 8 digit chapter headings and denied the benefit of CVD exemption and held that the imported goods do not fall within 8 digit classification specified in the said notification. There is no dispute on the fact that the imported goods are conforming to the description given in the notification. The exemption was denied only on the ground that the goods are not covered under 8 digit classification specified in the notification. He also submits that there is no dispute on the use of the imported goods in the manufacture of rotor blades.
4. He further submits that prior to 8.7.2004, there was a total exemption from basic customs duty in excess of 5% and from the whole of additional duty of customs for import of raw materials falling under any chapter for use in rotor blades. During the period from 9.7.2004 to 30.5.2005, exemption from CVD was temporarily withdrawn on representation from the concerned industry, the government has again notified exemption from payment of excise duty vide above notification dt. 31.5.2005. While specifying the description and correct classification, the notification under list 9A gives the description of the items along with 8 digit classification. He further submits that again when the industry represented to the government, Notification No.6/2006-CE was amended vide notification No.12/2010-CE dt. 7.2.2010 wherein the exemption was clearly made available to the specified goods. He submits that since the government's intention was not to levy excise duty on the Inclusion Resin, Hand lay up Resins and Gelcoat for use in manufacture of rotor Blades in WOEG, the same exemption should be made available for interregnum period. The narrow construction adopted by the Department will deprive the legitimate benefit of the Industry otherwise available to the manufacture of Rotor blades for WOEG. He further submits that the department has also taken another ground and denied exemption that they have not fulfilled the conditions under Notification No.6/2002-CE as amended and they have not produced the required certificate prescribed under the notification at the time of import.
5. He submits that since they have fulfilled the conditions of the Notification No.6/2002 and they have submitted the certificate issued by the Ministry of Non-conventional Energy Sources (MNES) for claiming benefit under Customs Notification 21/2002. The said certificate is also valid for other excise notifications for availing CVD. Mere non-mention of notification No.29/2005-CE or 6/2002-CE is only technical lapse. He submits, there was no proposal in the SCN to deny exemption on the ground of non-production of certificate. This issue was not raised before the authority. The benefit cannot be denied on this count. He submits that considering the Govt's intention to allow import raw materials duty free for manufacture of rotor blades for WOEG there was exemption available from 31.5.2005 and thereafter once again exemption was extended upto 24.4.2010, the government rectified the omission which was left out in notification No.29/2005-CE dt. 31.5.2005 since the govt realized the omission and extended the benefit of CVD exemption and the exemption should be made applicable to the goods covered in the present case.
He relied on the following case law :-
1) Jain Engineering Co. Vs CC Bombay
1987 (32) ELT 3 (SC)
2) UOI Vs Wood Papers Ltd.
1990 (47) ELT 500 (SC)
3) Krishna Sahakari Sakhar Karkhana Ltd. Vs CCE
1991 (55) ELT 411 (Tribunal)
4) CCE Shillong Vs Wood Craft Products Ltd.
1995 (77) ELT 23 (SC)
5) CCE, Vadodara Vs Dhiren Chemical Industries
2002 (143) ELT 19 (SC)
6) W.P.I.L Ltd. Vs CCE Meerut
2005 (181) ELT 359(SC)
7) Government of India Vs Indian Tobacco Association
2005 (187) ELT 162 (SC)
8) Max India Ltd. Vs CC New Delhi
2006 (200) ELT 245 (Tri.-Del.)
6. On the other hand, Ld. AR for the Revenue reiterated the findings of the adjudicating authority as well as the impugned order. He submits that the notification benefit is available to the specified goods both by description and by tariff item described in the notification at 8 digit level and exemption should be available only to the description in the chapter heading not to any other goods. Any exemption covered under the notification is to be construed strictly as per the language used in the notification. No other meaning can be given. The exemption notification No.6/2002 as amended by notification 29/05 dt. 31.5.05 is not eligible to the goods imported by the appellant as they are classifiable under different chapter heading. The adjudicating authority has rightly reclassified the goods as per the importer's technical literature. He also submits that the items imported are purely chemicals and any classification of chemicals should be classified as per the chemical description not by general description. He also submits that there was no exemption available on the said goods during the disputed period. He submits that subsequent amendment issued by the Govt. by notification No.12/2010 dt. 27.2.2010 is only prospective. It is not an omission as contended by the appellant but is only an extension of the list of goods. He also submits that the importer has not submitted the essentiality certificate required under Central Excise Notification during the clearance of goods. Therefore, the original authority has rightly denied the exemption on this ground. He relied on the following decisions :-
1) Appraiser, Madras Customs Vs TNPL
1988 (36) ELT 272 (Mad.)
2) HICO Products Ltd. Vs CCE
1994 (71) ELT 339 (SC)
3) Novopan India Ltd. Vs CC Hyderabad
1994 (73) ELT 769 (SC)
4) Sarabhai M. Chemicals Vs CCE Vadodara
2005 (179) ELT 3 (SC)
5) Airport Authority of India Vs CC Chennai
2005 (180) ELT 223 (Tri.-Del.)
7. We have carefully considered the submissions made by both sides and also written synopsis and written submissions and carefully perused the records. The issue involved in the appeal relates to denial of exemption of additional duty of Customs (CVD) on the items listed below :-
Table-I
Sl.
No.
Description of the goods imported
Nature of the goods
Type of resin
1.
Crystic
0209 KSD/KH
Gelcoat
Polyester
2.
Polylite
413-577
Infusion resin
Polyester
3.
Polylite
410-M912
Hand
lay up resin
Polyester
4.
Polylite
413-573
Hand
lay up resin
Polyester
5.
Polylite
413-571 &
413-587
Infusion resin
Polyester
The appellants have claimed CVD exemption under notification No.6/2002 as amended by notification No.29/2005 by classifying the items under different classification as under :-
Table-II
Sl.
No.
Description of the goods imported
Nature of the goods
Type of resin
Classification according to assessee
1.
Crystic
0209 KSD/KH
Gelcoat
Polyester
3208 2090
2.
Polylite
413-577
Infusion resin
Polyester
3907 3090
3.
Polylite
410-M912
Hand
lay up resin
Polyester
3907 3090
4.
Polylite
413-573
Hand
lay up resin
Polyester
3907 3090
5.
Polylite
413-571 &
413-587
Infusion resin
Polyester
3907 9990/
3907 3090
The adjudicating authority has re-classified the goods under different 8 digit chapter headings which are listed below :-
Table-III
Sl.
No.
Description of the goods imported
Nature of the goods
Classifica-
tion according to Revenue
Type of resin
1.
Crystic
0209 KSD/KH
Gelcoat
3208 1090
Polyester
2.
Polylite
413-577
Infusion resin
3907 9190
Polyester
3.
Polylite
410-M912
Hand
lay up resin
3907 9190
Polyester
4.
Polylite
413-573
Hand
lay up resin
3907 9190
Polyester
5.
Polylite
413-571 &
413-587
Infusion resin
3907 9190
Polyester
The impugned goods are reclassified as per the technical literature submitted by the appellants. For sake of convenience, we reproduce below the description and classification of each items as discussed in the impugned order as under :-
"It is observed that the (i) Crystic 0209 KSD/KH Hand layup application is isopthalic polyester based gelcoat designed for spray application as per technical write up given by appellant and is classifiable under 3208 1090 but the exemption for CVD is available only for Gelcoats falling under CTH 32082090 which are Acrylic/vinyl Polymer based Gelcoats, as per List 9A appended to Sl.No.237A of C.Ex. Notfn.06/02 dt. 01.03.02. Chemically polyester resins are characterized by the presence of [-C-O-C]- linkage in the polymer chain and they are obtained by condensing a polyfunctional alcohol with a polyfunctional organic acid. Whereas acrylic / vinyl polymers are characterized by [C-C-C]- or
[C-C-C]- linkage in the polymer chain and they are obtained from acrylic / vinyl monomers. (ii) Polylite 413-577, 413-571 and
413-587 are infusion resins of unsaturated polyester resins as per the technical write up given by the appellant. These resins are based on unsaturated polyester resins classifiable under 39039190 whereas exemption is available only to infusion resins falling under CTH 39073090 which is only for Expoxide category resins. Chemically Epoxide resins are characterized by presence of reactive Epoxide groups C-C (which are obtained by condensing phenolic compound with Ephichlorohyderin) in the polymer chain and are thus chemically completely different from polyester resins which are characterized by the presence of [-C-O-C]-linkage in the polymer chain (iii) Polylite 410-M912 and 413-573 are Hand lay up resins of Orthophathalic polyester resins as per the technical write up given by the appellant and therefore is to be classified under CTH 39079190. But CVD exemption is available to hand lay up resins classifiable under CTH 39079190 i.e. for expoxide category resins, as per List 9A of Sl.No.237 of C.Ex. Notfn.06/02 dt. 01.03.02. Orthophathalic polyester resins are chemically different from epoxide category resins for reasons stated in Sl.No. (ii) above. CVD exemption are only for resins falling under the specified CTH."
9. As per the rules of interpretation, first any imported goods are to be correctly classified as per the description provided in the Schedule to the Customs Tariff Act. The classification of goods precedes over the determination of rate of duty or any exemption applicable to the said product. Only after classifying the goods into correct chapter headings, under respective chapter of CTA or CETA, the question of extending of notification benefit or rate of duty to be finalised and not vice versa. In the present case, the appellants have filed B/E's and classified the products under 8 digit heading also claiming the CVD exemption under the said notification. The classification of the said goods was disputed by the department and therefore the Revenue had rightly reclassified the imported goods in the 8 digit Tariff headings under chapter heading as per Table above. The classification of the imported goods arrived at by the department has not been disputed by the appellants. As seen from the above both the adjudicating authority and the lower appellate authority have clearly gone into detailed chemical description on each of the imported items whether it is a epoxy resin or not, based on the chemical nature and their chemical bonding in the polymer chains. The appellant's contention is that what they have imported is squarely covered under the description given in the exemption notification No.6/2002 under Sl.No.237A as Hand lay up resin, Infusion resin, Gelcoat read with list 9A of the notification. It is relevant to reproduce relevant notification No.6/2002 as under :-
"Exemption and effective rates of basic excise duty for specified goods of Chapters 9 to 96 . In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 91 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below or specified in column (3) of the said Table read with the concerned List appended hereto, as the case may be, and falling within the Chapter, heading No. or sub heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 or 19860 (hereinafter referred to as the Central Excise Tariff Act), specified in the corresponding entry in column (2) of the said Table,-
(a) from so much of the duty of excise specified thereon under the First Schedule (hereinafter referred to as the First Schedule ) to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table; and
(b) from so much of the special duty of excise leviable thereon under the Second Schedule (hereinafter referred to as the Second Schedule to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (50 of the said Table,
Subject to the relevant conditions specified in the Annexure to this notification and referred to in the corresponding entry in column (6) of the said Table.
Table
S.No.
Chap er or heading No. or sub heading No.
Description of goods
Rate under the First Schedule
Rate under the Second Schedule
Condition
(1)
(2)
(3)
(4)
(5)
(6)
237A
32,
38,
39,44
or 70
Goods specified in List 9A for the manufac-ture of rotor blades for wind operated electricity generators
Nil
-
58A List 9A (S.No. 237A of the Table) (1) Injection resin, falling under tariff item 3907 30 90 (2) Hardener resin injection, falling under tariff item 3907 30 90 (3) Hand lay up resin, falling under tariff item 3907 30 90 (4) Infusion resin, falling under tariff item 3907 30 90 (5) Epoxy resin, falling under tariff item 3907 30 10 (6) Adhesive resin, falling under tariff item 3907 99 90 (7) Vinyl ester adhesives, falling under tariff item 3905 99 90 (8) Hardener for adhesive resin, falling under tariff item 3814 00 10 (9) Hardeners, falling under tariff item 3814 00 10 (10) Foam kit, falling under tariff item 3921 90 99 (11) PVC foam sheet and PS foam, falling under tariff item 3921 90 99 (12) Balsa kit, falling under tariff item 4421 90 90 (13) Glass fibre fabrics, falling under tariff item 7019 19 00 (14) PU painting system, falling under tariff item 3208 20 90 (15) Gel coat, falling under tariff item 3208 20 90
10. From the above exemption notification it is evident that the exemption is extended to the excisable goods of the description specified in table read with concerned list appended and falling within chapter, heading number or sub heading number of the First Schedule to the CETA 1985 specified in the corresponding entry in Column No.2 of the said table. Therefore exemption available subject to fulfillment of the criteria given in the notification viz. (1) goods should be conforming to the description given in the Table of the notification (2) the goods must fall under the heading or sub heading of the first Schedule of the CETA. From the plain reading of the said exemption notification, we find that if the goods do not fall under any heading or sub heading or under 8 digit tariff heading but only fall under the description, then they would not be covered by the notification. The law has been settled by the Hon'ble Supreme Court in various judgements regarding the interpretation of any exemption notification. The Honble Supreme Court in the case of Appraiser Madras Customs Vs Tamil Nadu Newsprint Papers Ltd. (supra) had clearly laid down the guidelines . The relevant portion of the Hon'ble Supreme Court's order in the aforesaid case is reproduced below:-
"12. ...... It is common ground that the respondent was entitled to the benefit of this Notification as the conditions prescribed therein were satisfied. It is significant to note that the Notification does not exempt in general all the articles imported into India for manufacture of newsprint and printing and writing paper where at least 75% bagasse pulp is used for such manufacture, and the Directorate General of Technical Development certifies in each case that such articles are required for the said purpose. But, it exempts only those articles falling under Heading No. 84.66 of the First Schedule. It is a condition precedent for claiming exemption under the said Notification that the import should be under Heading No. 84.66. When the Central Government takes care to specify the Heading and grants exemption to goods of a particular description under that Heading, it will not be open either to the importer or to the Customs Department to contend that the Notification would apply to all goods of such description whether they fall under that heading or not. In our view, the relevant Notification, viz. Notification No. 61/83 and Notification No. 62/83 are unambiguous in their terms and there is no question of overlapping. We hold that the respondent is not entitled to the benefit of Notification No. 62/83 and the appellants are right in levying auxiliary duty as per the terms of Notification No. 61/83.
13....
14. The aforesaid ratio will apply on all fours to the present case. When the exemption notification refers specifically to Heading No. 84.31, and describes certain goods falling under that heading, it will not be open to the importer to contend that the goods falling under another heading, viz., Heading No. 84.66 would be covered by the notification."
11. Further, the Honble Supreme Court in the case of Novopan India Ltd. Vs CCE & Customs, Hyderabad (supra), held that the principles laid down by the apex court in the case of Mangalore Chemicals & Fertilizers Vs Deputy Collector and in UOI Vs Woods Papers Ltd. has to be followed. The relevant portion of the order is reproduced below:-
"18. We are, however, of the opinion that, on? principle, the decision of this Court in Mangalore Chemicals - and in Union of India v. Wood Papers referred to therein - represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound - does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave [1978 (2) E.L.T. (J 350) (SC) = 1969 (2) S.C.R. 253) that such a Notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption."
The above case laws squarely applies to the facts of the present case. The other case law relied by appellants also is not relevant to the present issue. In the above case laws goods are either described and classified it may be classifiable one or more headings and the description of the goods are given in general description. Whereas in the present case, we are of the considered view that the adjudicating authority has correctly re-classified the goods and it conforms to the correct classification . Once the classification of the goods is held correct, the applicability of CVD exemption notification read with list is to be looked into and we find that 8 digit tariff headings of the imported goods did not figure under List 9A of the Sl.No.237A of the Table under notification No.6/2002 as amended by notification 29/05.
12. We are not satisfied with the Ld.Advocates reliance on history of the exemption that the intention of the government is to give relief on the imported goods used in manufacture of rotor blades for WOEG. There is no dispute that the appellants availed exemption on the said goods prior to the period 8.7.2004 as there was no 8 digit Tariff headings specified in the customs notification during the relevant period and the said exemption was withdrawn. The Central Excise Notification 29/2005 dt. 31.5.2005 was issued exempting the resins for manufacture of rotor blades of WOEG. On plain reading of the notification and specific description along with 8 digit tariff heading exemption benefit is available only to the described under the 8 digit Tariff items. It is evident that all the six items do not fall under any of the 8 digit Tariff description given in the List 9A of the Sl.No.237A of the notification. Appellant cannot claim benefit under sl. No.237A merely claiming that their goods are falling under chapter 32 and 39. Appellants another contention that exemption benefit was subsequently extended to these goods by notification 12/2010-CE dt.27.2.2010 cannot be accepted as the said notification will have only prospective effect from the date of notification. In the absence of any retrospective provision in the said notification, it can be construed that the notification has extended the benefit to the additional items only from the date of notification. As held by the Honble Supreme Court (supra) while interpreting notification it has to be strictly interpreted in the language in which it was described.
13. As regards the non submission of the essentiality certificate, we find that the lower authority as rightly denied the exemption on the ground that the appellant have not submitted the essentiality certificate prescribed as one of the main conditions in the notification No.6/02 as amended. Essentiality certificate issued by the competent authority for claiming the benefit under customs notification 21/2002 cannot be made applicable to avail CVD exemption under notification 6/02. The appellants have to comply with the conditions of the said notification which clearly stipulates that a certificate from the competent authority should be produced before the clearance of the goods for claiming above exemption. The condition in the customs notification and the excise notification are independent and the exemption benefit also are independent of each other. Non-submission of the essentiality certificate is sufficient evidence to hold that appellants have not fulfilled the conditions of notification. Therefore, lower authorities have rightly denied on this ground by relying the Tribunal decision in the case of Airport Authority of India Vs CCE (Supra).
14. In view of the above discussions, we hold that adjudicating authority has rightly classified the imported goods under chapter sub-heading as explained at Table-III above and denied CVD exemption. Commissioner (Appeals) also dealt with the issue in detail in the impugned order. By respectfully following the Supreme Court decision (supra) and the Tribunals decision on the issue (supra) therefore we do not find any infirmity in the impugned order. We uphold the impugned orders and dismiss the appeal filed by the appellants.
(Pronounced in open court on 2.12.2014)
(R. PERIASAMI) (P.K. DAS)
TECHNICAL MEMBER JUDICIAL MEMBER
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