Custom, Excise & Service Tax Tribunal
M/S. Bangalore Genei Pvt. Ltd vs Cce, Bangalore on 18 January, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing: 08/12/2009
Date of decision:..
Appeal No.E/19/06
(Arising out of Order-in-Appeal No.186/2005-Central Excise dt. 29/9/2005 passed by CCE(Appeals), Bangalore )
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
Honble Mr. P.Karthikeyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
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 their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Bangalore Genei Pvt. Ltd.
..Appellant(s)
Vs.
CCE, Bangalore
..Respondent(s)
Appearance Ms.Radhika, Advocate for the appellant.
Ms.Sudha Koka, SDR for the Revenue.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) Honble Mr. P.Karthikeyan, Member(Technical) FINAL ORDER No._______________________2009 Per M.V.Ravindran This appeal is directed against the Order-in-Appeal No.186/2005-Central Excise dt. 29/9/2005.
2. The relevant facts that arise for consideration are that during the internal audit of the records maintained by the appellant, it was observed that the appellant had cleared certain Bio-technology products such as Enzymes falling under chapter 29, 30, 35 of the Central Excise Tariff Act, 1985 during the period August, 2003 to August, 2004 to various reputed research institutions, universities, colleges for research purposes at nil rate of duty by availing exemption under Notification No.10/97-CE dt. 1/3/1997. Lower authorities coming to conclusion that the provisions of Notification No.10/97 are not properly complied with, issued a show cause notice to the appellant on the ground that only items which are used as consumables to various machineries specified in the Notification are only eligible for exemption and demanded the duty liability to be paid on such Enzymes cleared by the appellant. The appellants contested the show cause notice. The adjudicating authority after considering the submissions made by the appellants before him came to the conclusion that assessee is eligible for the benefit of Notification No.10/97. Coming to such conclusion, he dropped the proceedings initiated by the show cause notice . Aggrieved by such an order, Revenue preferred an appeal before the ld. Commissioner(Appeals). The ld. Commissioner(Appeals), after considering the submissions made before him by the assessees representative, set aside the impugned order and allowed the appeal filed by the Department. Aggrieved by such an order, the assessee is before us.
3. Ld. Counsel appearing on behalf of the appellant, submits that the appellants have cleared the Enzymes to the various research institutions, universities, colleges, after getting an exemption certificate from the said institutions as per the provisions of Notification No.10/97. It is her submission that ld. Commissioner(Appeals) failed to appreciate the purpose and usage of the term used in the notification. It is her submission that the Enzymes are cleared to the research institutions were entitled to purchase the same without payment of duty. It is her submission that the said notification as in Second clause very clearly indicated that the consumables thereof means the consumables to be read separately. It is her submission that the decision of the co-ordinate Bench of the Tribunal in the case of Inductotherm (India) Pvt. Ltd. Vs. CCE, Ahmedabad [2009(240) ELT 565(Tri. Ahmd.)] will squarely apply in this case as there is no dispute in the certificates issued by the appellants for clearing such Enzymes. It is also her submission that the Enzymes which are supplied by them were used in the instruments in course of research. It is her submission that the ld. Commissioner(Appeals) has not considered this particular aspect before coming to conclusion.
4. Ld. SDR on the other hand would submit that the conditions of the Notification are not complied with by the appellant. It is her submission that the said Notification clearly indicates that the consumables should be used along with the scientific and technical instruments. It is her submission that the word and should be read as or.
5. We have considered the submissions made by both sides and perused the records. It is undisputed in this case that the appellants are clearing their Bio-technology products i.e. Enzymes to various research institutions, colleges, universities. It is also undisputed that the said research institutes are providing the appellant with excise duty exemption certificate in terms of Notification No.10/97. We have perused the sample certificates produced by the appellants counsel. On perusal of the said certificates, we find that the said certificates are issued by Bhabha Atomic Research Centre, Mumbai, Indian Institute of Science-Deptt. Of Biochemistry, Bangalore, National Institute of Oceanography, Centre for DNA Fingerprint Diagnostics and National Institute of Virology, Regional Medical Research Centre, Port Blair, National Centre for Biological Sciences etc and find that the said certificates clearly indicate that these Enzymes were purchased/procured from the appellant to be used by the said institutes as consumables. These said certificates are not disputed by the Revenue.
6. On the factual matrix, we find that the Notification No.10/97-CE dt. 1/3/1997 exempts the goods specified in column 3 from the payment of excise duty. We may reproduce the relevant portion of the said notification:-
Exemption to specified goods supplied to specified institutions In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in column (3) of the Table below and falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from the whole of the duty of excise leviable thereon which is specified in the said Schedule, when supplied to the institutions specified in the corresponding entry in column (2) of the said Table, subject to the conditions specified in the corresponding entry in column (4) of the said Table.
TABLE S.No. Name of the Institutions Description of the goods Conditions (1) (2) (3) (4)
1.
Public funded research institution or a university or an Indian Institute of Technology or Indian Institute of Science, Bangalore or a Regional Engineering College, other than a hospital
(a) Scientific and technical instruments, apparatus, equipment (including computers);
(b) accessories and spare parts of goods specified in (a) above and consumables;
(c) computer software, Compact Disc-Read Only Memory (CD-ROM), recorded magnetic tapes, microfilms, microfiches.
(d) Prototypes
(i) If the institution (a) is a public funded research institution under the administrative control of the Department of Space or Department of Atomic Energy or the Defence Research Development Organisation of the Government of India and produces a certificate to that effect from an officer not below the rank of a Deputy Secretary to the Government of India in the concerned department to the manufacturer at the time of clearance of the specified goods; or
(b) is registered with the Government of India in the Department of Scientific and Industrial Research and the manufacturer produces at the time of clearance, a certificate from the Head of the institution in each case, certifying that the said goods are required for research purposes only.
(ii) The aggregate value of prototypes received by an institution does not exceed fifty thousand rupees.
7. It can be seen from the above reproduced portion of the Notification that the main condition for exemption of the excise duty is mentioned in Column-4. As already recorded by us, the certificates which are issued by the institutes are not disputed. The question now arises, is whether the Enzymes supplied by the appellants would be eligible for exemption under the category of consumables. On perusal of the certificates issued by various institutes, we find that they have clearly indicated that Enzymes supplied by the appellant were to be used as consumables for research purposes. We find that the technical write-up given by the appellants shows the follwoing different types Enzymes:-
1. Restriction enzymes:
Definition: A restriction enzyme also called restriction endonuclease cut a double stranded DNA. The cut DNA is purified for further applications during which the remains / residues of enzyme are removed either by purification kits or organic solvents and discarded.
Example: EcoRI, BamHJ, Hindlil, Aval etc.
2. Modifying enzymes:
Definition: Modifying enzymes are the enzymes that modify the DNA or RNA. After the reaction the product is purified either by purification kits or organic solvents for further applications during which remains / residues of enzyme are removed and discarded.
Example:
T4 DNA Ligase: Joins two DNA fragments. The reaction is called Ligation.
Polynucleotide Kinase: This enzyme catalyses the transfer of gamma phosphate group from ATP to the 5-hydroxyl group of polynucleotides of a DNA strand.
3. Polymerases Definition: A polymerase is an enzyme whose central function is associated with polymers of nucleic acids such as RNA and DNA. The primary function of a polymerase is the polymerization of new DNA or RNA against an existing DNA or RNA template in the processes of replication and transcription. In association with a cluster of other enzymes and proteins, they take nucleotides from solvent, and catalyse the synthesis of a polynucleotide sequence against a nucleotide template strand using base-pairing interactions. -- After the reaction the product is purified for further application during which remains / residues of enzyme are removed either by purification kits or organic solvents and discarded.
Example:
Taq DNA Polymerase: This is a thermostable enzyme whose optimum activity is between 550C and 750C. It amplifies DNA fragments of varied sizes. This is the most popular enzyme used for PCR (Polymerase Chain Reaction) T7RNA Polymerase: This enzyme is a DNA dependent RNA that produces RNA. In cells, RNAP is needed for constructing RNA chains from DNA genes as templates, a process called transcription. This enzyme is used for invitro transcription.
8. It can be noted from the above technical literature that the Enzymes are used by the research institutes for the purpose of research in the field of DNA or RNA. It is a common knowledge that the said Enzymes are used in the scientific instruments in the course of research. It is also to be noted that the Enzymes which are supplied by the appellants are cleared to the institutions, for research on DNA and RNA and the said Enzymes are used as consumables in the scientific instruments which are installed in the premises of the institutes. We are of the considered view that the Enzymes which are used in the scientific and technical instruments, would be eligible for the benefit of the exemption of excise duty as per the Notification No.10/97 as they are consumed during the research conducted by such various institutes. It is also seen that the conditions which are laid down by the said notification have been complied with by the appellant. We find our view is fortified by the decision of the co-ordinate Bench in the case of Inductotherm (India) Pvt. Ltd. (supra). We reproduce the ratio as under:-
4.?In the case of M/s. Featherlite Products Pvt. Ltd. [2007 (208) E.L.T. 143 (Tri.-Bang.)], Tribunal observed that the goods supplied under a certificate issued by the competent authority laying down that the same are required for research purposes, are required to be extended the benefit of the Notification. Accordingly, furniture meant for research purposes was valid to be covered by the Notification. Reference may also be made to the Tribunals decision in the case of M/s. Godrej Appliances Ltd. (Final Order No. A/253/WZB/AHD/08 dated 7-2-2008) [2009 (236) E.L.T. 729 (Tribunal)], extending the benefit to transformers supplied to scientific and research institutions. By applying the ratio of the above decisions to the facts of present case, we agree with the ld. Advocate, that the goods supplied to various specified institutions for the purposes of research, under a certificate by the appropriate authorities have to be held as covered by the Notification. The demand is accordingly set aside and appeals are allowed with consequential relief to the appellant.
9. In sum, we hold that the Enzymes which are cleared by the appellant to the research institutes, on the strength of the certificates issued by such institutes, could be considered as consumables used in the scientific and technical instruments.
10. Accordingly, in view of the findings as recorded hereinabove, we find that the impugned order is liable to be set aside and we do so. The impugned order is set aside and appeal is allowed with consequential relief, if any.
(Pronounced in court on ..) (P.KARTHIKEYAN) Member (Technical) (M.V. RAVINDRAN) Member (Judicial) Nr 9