Custom, Excise & Service Tax Tribunal
Krish Industries Pvt Ltd vs Vadodara-Ii on 20 December, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
REGIONAL BENCH - COURT NO. 03
Excise Appeal No. 10247 of 2018
[Arising out of OIA-VAD-EXCUS-002-APP-373-2017-18 passed by Commissioner
(Appeals ) Commissioner of Central Excise, Customs and Service Tax-VADODARA-I ]
M/s. Krish Industries Pvt Ltd ....Appellant
503/A, Gidc, Halol, Panchmahal,
Gujarat-389350.
VERSUS
C.C.E. & S.T.-Vadodara-ii ....Respondent
1st Floor... Room No.101, New Central Excise Building, Vadodara, Gujarat-390023 APPEARANCE:
Shri. Saurabh Dixit with Willingdon Christian, Advocate for the Appellant Shri. T. G. Rathod, Authorized Representative for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU FINAL ORDER NO.A/ 12472 /2019 DATE OF HEARING: 19.09.2019 DATE OF DECISION: 20.12.2019 .2019 RAMESH NAIR The present appeals have been filed by M/s Krish Industries Pvt. Ltd. against Order-in-appeal No. VAD-EXCUS-002-APP-373/2017-18 dt. 01.09.2017 passed by Commissioner (Appeals), Central Excise wherein a demand of Rs. 1,52,12,471/- along with penalty was confirmed against Appellant. The brief facts of the case are that the Appellant are engaged in manufacture of ―Bulk Milk Coolers‖ and ―Stainless Steel Bulk Cooking Equipment viz. Rice Dal Cooker, Rice Cooker, Dal and Sambhar Cauldron, Dal Storage Tanks, Rice Storage Chute, Distribution vessel. The―Bulk Milk Cooler‖ was manufactured from April'2010 and the Appellant classified the same as ―Stationary Pre-cooling equipment‖ under CETH 84186990. They claimed exemption from payment of duty in terms of Notification No. 6/2006 - CE dated. 01.03.2006 (Serial No.5) and Notification No. 12/2012 - CE dated. 17.03.2012 (Serial No.232). After enquiry/ investigation by the revenue, the Appellant were issued show cause notice dated. 23.01.2017 alleging that the bulk cooler manufactured by the Appellant and mentioned as ―Stationary pre-cooling equipment‖ is not
2|Page E/10247/2018-DB supplied for installation of any Cold Storage, Cold Room or refrigerated vehicle but supplied to various Milk Co-operative societies for the purpose of storing milk and cooling it at 4 degree Celsius, accordingly the claim of exemption under Notification No. 6/2006 - CE dated. 01.03.2006 and Notification No. 12/2012 - CE dated. 17.03.2012 by the Appellant is not correct. The heading 8418 of the CETA applies to refrigerators, freezers and other refrigerating or freezing equipment whereas the tariff item 8419 of the CETA, 1985 applies to machinery, plant for treatment of material by a process involving a change of temperature. The said product cannot be classifiable as refrigerating equipment under chapter heading No. 8418 but as per its specific function the ― Bulk Milk Cooler‖ deserves the classification only under Chapter heading No. 8419 of the CETA, 1985.
Kitchen Equipment's consists of Stainless Steel Bulk Cooking Equipment like Rice & Dal Cooker; Rice, Dal & Sambhar Cauldron; Dal Storage Tanks; Rice Storage Chute; Distribution Vessels etc. which are the articles made of Stainless Steel. The Tariff Heading No. 7323 of CETA, 1985 corresponds to the Kitchen Articles as mentioned in the Chapter Heading No. 73.23 of the HSN. The Stainless Steel Bulk Cooking equipment viz. Dal and the Rice Cooker are basically large vessel of the category of Cauldrons and are not vessels wherein food is cooked by any pressure. The said goods are classifiable under chapter heading no. 73239420 and are liable for duty. It was also alleged that the Appellant has also cleared goods to its sister unit M/s. Allied Industries Pvt. Ltd. who in turn issued invoices to the buyers. That in case where the goods are sold by Appellant to related party M/s Krishna Allied Industries Ltd. Kalol (earlier Krishna Industries) or Krishna Allied Industries, Halol, the sale price of such entities will be the assessable value liable for tax and the same is governed by Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.It was proposed to classify the product ― Bulk Milk Cooler‖ under chapter sub heading 84198990 of the CETA, 1985 and Stainless Steel Products as Kitchen Equipment under chapter heading no. 73239420 of the CETA, 9185; to confiscate the goods valued at Rs. 47,54,482/- in terms of Rule 25; to demand duty of Rs. 1,52,12,471/- on goods cleared along with interest and to impose penalty under section 11AC read with Rule 25 of CER,2002.
2. The demands and proposals as proposed in SCNs were confirmed by the adjudicating authority vide order dated. 30.03.2017. Aggrieved the Appellant filed appeal before Commissioner (Appeals) who vide Order-in-
3|Page E/10247/2018-DB Appeal No. VAD-EXCUS-002-APP-373/2018-18 dated 01.09.2017 upheld the adjudication order. The Appellate authority held that the ―Bulk Milk Cooler‖ is not eligible for exemption prior to 16.03.2012 as the exemption was only to agricultural produce. Also that the exemption was available to ―Stationary Pre-cooling Equipment‖ which pre-cool the goods before the goods are cooled further during storage. Pre-cooling in different from the cooling at the time of storage. The Appellant is not in the manufacturing of such pre-cooling equipment. They have manufactured and cleared Bulk Milk Coolers which are installed at various Milk Co-operatives for cooling the milk to 4 degree Celsius. Hence the description of the goods ―Bulk Milk Coolers‖ are not tallying with the description ―Stationary Pre-cooling equipment‖. For the period post 17.03.2012 he held that as the goods cannot be regarded as pre-cooling equipment‖ hence not eligible for exemption. He also held that the condition of the notifications viz. use of goods for the specified purpose and the condition of following the procedure laid down in Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods), Rules, 2001 was not followed. He also upheld the confiscation of goods and levy of penalty. Aggrieved the Appellant has filed the present appeal.
3. Shri. Saurabh Dixit, Learned Counsel appearing for the Appellant submits that firstly the notification No. 6/2006 - CE was amended vide notification No. 12/2010 - CE dated 27.02.2010 by which the exemption to dairy operations was also provided. He submits that the contention of the lower authorities that exemption is available to stationary pre-cooling equipment whereas bulk milk coolers cannot be said to be stationary pre- cooling equipment since it reaches only 4 degrees Celsius temperature for cooling the milk and does not freeze is not correct. He relies upon the Tribunal order in case of Praj Industries 2009 (242) ELT 430 (TRI). to submit that the goods is classifiable under chapter heading 8418.10 and the description of such heading is ―Refrigerators, freezers and other refrigerating or freezing equipment‖. The Bulk Milk Coolers thus qualify not only as stationary pre-cooling equipment but also ―Refrigerating equipment (including compressor, condensing units and evaporator) having capacity of 2 Tonne Refrigeration and power rating 5 KW and above‖. The products are heavy capacity (other than domestic type) refrigeration equipment including compressor, condensing units and
4|Page E/10247/2018-DB evaporator) having capacity of 2 Tonne Refrigeration and power rating 5 kw and above ―As per HSN the temperature at the active cooling element is important and not the temperature of refrigerated product. Being Refrigerated equipment as per nature of use as well as classification itself, the Bulk Milk Cooler tanks will fall within the ambit of exemption. The milk is stored at 4 degree C temperature while the refrigeration unit generates sub zero temperature. The temperature at 4 Degree C by way of heat exchange is maintained in order to prevent milk from turning into ice crystallization so that potency of milk is maintained. He also relies upon the Tariff conference by the CBEC and instruction F. No. 96/85/2015-CX.I, dated 07.12.2015 (Item No.B9) to the above effect. He also relies upon product broucher that the Bulk Milk Coolers are exactly same as one considered in case of Praj Industries supra. The assumption of the Appellate Authority that stationary pre cooling equipment is generally used to pre cool raw milk right after it is extracted from cow whereas in the present case the bulk milk coolers are installed at milk co-operative Unions and hence cannot be considered to be pre-cooling equipment has no basis. As regard condition that the exemption is available subject to satisfaction of the Assistant/ Deputy Commissioner of Central Excise that the goods are cleared for intended use as specified in column 3 of the exemption table, the ld. Counsel submits that admittedly the Bulk Coolers were cleared to various milk cooperative unions either directly or initially sold to M/s Krishna Allied Industries who had sold to Milk Co-operative Union for the purpose of use in Dairy Industry. They had also intimated the revenue authorities in this regard on 12.01.2012 and 25.04.2012 and in response they were informed on 24.02.2012 and 10.07.2012 that exemption can be claimed if the conditions of the same are satisfied. That the condition is satisfied once the goods are cleared to Milk Co-operatives. As regard condition of following the procedure laid down in Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods), Rules, 2001, he submits that the rule is to be followed only where the goods are cleared to manufacturers and not when the goods has been cleared to actual consumers. There is no doubt about the use of the goods for intended purpose and hence the exemption is available. The impugned order holds that even where the recipient is not ―registered with Central Excise‖ still such rule has to be followed. However the same is not correct as the issue deals with recipients who are not manufacturers at all, irrespective of excise registration. That even as per
5|Page E/10247/2018-DB rules, the receiver of the goods has to follow the conditions and not the supplier. The Appellant has recorded all the details and there is no doubt about the use of the goods for intended purposes. The consumers are not manufacturers and hence the condition of following rules could not be fulfilled. The exemption cannot be denied on this ground. He relies upon judgments in case of Hico Enterprises 2005 (189) ELT 135 (TRI-LB), Hico Enterprises 2008 (228) ELT 161 (SC), Hetero Drugs Ltd. 2010 (262) ELT 490 (TRI), Jindal Steel & Power Ltd. 2015 (329) ELT 595 (TRI). He also relies upon judgment as reported in Aidek Tourism Services P. Ltd. 2016 (318) ELT 3 (SC), Thermax Pvt. Ltd. 1992 (61) ELT 325 (SC) and Malwa Industries Ltd. 2009 (235) ELT 214 (SC) to submit that the conditions of the Rule could not have been fulfilled. As regard demand of duty on other goods he submits that since the bulk coolers are exempted from duty and the sale value of other goods was below the SSI exemption limit, hence they did not pay duty. As regard clearances made to co-operative unions through the billing raised on M/s Krishna Allied Industries an interconnected undertaking, he submits that rule 9 is not applicable when the goods are sold to interconnected undertakings. He relies upon judgments in case of Sri Kannapiran Mills Ltd. 2016 (344) ELT 1107 (TRI) and 2017 (349) ELT A157 (SC), Mahindra Ugine Steel Co. Ltd 2015 (318) ELT 592 (SC), H.H.Interior Auto Components Ltd. 2018 (360) ELT A312 (SC), Universal Starch Chem Allied Ltd. 2017 (358) ELT 279, Handy Wires P. Ltd. 2015 (329) ELT 169 (TRI). He submits that the SCN and OIO intentionally mis-produced the text of Rule 9 of Valuation Rules so as to omit reference to interconnected undertaking which stands on a different footing for valuations purposes. He further submits that they were under bonafide belief that they are not liable to pay duty since the bulk coolers are exempted and other items exempted from payment of duty under notification No. 8/2003. The impugned order wrongly considers the value of various optional out item such as DG sets which were supplied separately to customers and value of such bought out has to be deducted and not included in value of bulk coolers. The issue involved is of interpretation and they were under bonafide belief that the product in question is exempt from payment of duty and the other turnover was exempt under SSI Exemption Notification No. 8/2003 - CE. The department was informed and was in knowledge right from the starting of production and claiming of exemption from Jan' 2012. Thus no fraud or suppression of facts can be alleged. The revenue was well aware about
6|Page E/10247/2018-DB the product being manufactured and cleared by the Appellant and since the product was exempt from duty, they did not take registration. Hence the demands are time barred.
4. As regard confiscation of goods, he submits that the goods were lying in factory and hence the same cannot be confiscated. The goods were not offending in nature. He relies upon order in case of Nakoda Enterprises 2017 (357) 474 (TRI).
5. Shri. T.G. Rathod, Learned Joint Commissioner, Authorized Representative appearing for the revenue submits that since the Bulk Milk Cooler does not fulfill the description of the exempted goods covered by the Notification No. 6/2006 - CE dated 01.03.2006 and Notification No. 12/2012 - CE dated 17.03.2012, the Appellant are not eligible for the exemption. He also submits that since bulk cooler is liable for duty, therefore its clearance value is to be added to the turnover during the impugned period and this result into crossing of SSI Exemption limit. Hence all clearances of Appellant is liable for duty. He supports the impugned order and reiterates the findings given by the adjudicating authority.
6. Heard both the sides and perused the records. We find that the Appellant apart from other items were manufacturing Bulk Milk Cooler. The Appellant intimated the jurisdictional authorities on 12.01.2012 vide their letter that they are availing exemption from duty on said goods under notification No. 6/2006 - CE dated 01.03.2006 ( Serial No. 5) and 12/2012 dated 17.03.2012 (Serial No. 232). The Stationary Bulk Mill Cooling equipment were supplied by Appellant to Milk Co-operative Societies for use as cold storing and preserving the Milk along with dairy products. The Appellant along with such Bulk Milk Cooler were also clearing bought out items viz. DG Sets, Solar Panels, Milk Pump, Water Pump, Stabilizer etc. and were cleared as per option of customers. The goods were assembled at the premises of co-operative societies. The goods covered under the exemption were ―Goods specified in List 7 intended to be used for the installation of a cold storage, cold room or refrigerated vehicle, for the preservation, storage, transport or processing
7|Page E/10247/2018-DB of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat.‖ The conditions to be followed were as under :
Condition No.2 - Where such use is elsewhere than in the factory of production, the exemption shall be allowed if the procedure laid down in the Central Excise (Removal of Goods at concessional Rate of duty for manufacture of excisable goods), Rule 2001 is followed.
Condition No.3 - The exemptions hall be allowed if it has been proved to the satisfaction of an officer not below the rank of the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction that such goods are cleared for the intended use specified in column (3) of the said Table.
6.1 The list 7 of the notification amongst other goods covered ―Stationary Pre-cooling equipment‖. Earlier during the period up to 16.03.2012, the Appellant has claimed exemption under Notification No. 6/2006 - CE dated 01.032006 Which has been denied to the Appellant on the ground that the exemption was only to agricultural product and did not cover dairy product like Milk. The adjudicating authority has also held that the goods fall under the classification of chapter sub heading No. 84198990 against the Appellant's classification of 84186990.
7. We find that it is an undisputed fact that ―Bulk Milk Cooler‖ were supplied for installation of cooling facility for preservation and storage of Milk by cooling by Mechanical Appliances. The goods in question are Stationary Pre-cooling equipment which is also not disputed and the product broucher also shows the same. When the bulk milk cooler are in stationary stage and are used for cooling the milk so as to bring down the temperature to 4 degree centigrade with intention of storage and preservation, it is clear that the goods are for use as cold storage of Milk. In Case of Praj Industries 2009 (242) E.L.T. 430 (Tri. - Mumbai), the tribunal has held as under :
"10. We have examined the position. We find that the explanatory note to Harmonized commodity description and coding systems explains about Ch. Heading 8418 as under :-
"The refrigerators and refrigerating equipment of this heading are in the main machines or assemblies of apparatus for the production, in a continuous cycle of operations, of low temperatures (in the region of Zero degree Centigrade or less) at the active cooling element, by the absorption of the latent heat of evaporation
8|Page E/10247/2018-DB of liquefied gases (e.g. ammonia, halogenated hydrocarbons), of volatile liquids or, in the case of certain marine types, of water".
The respondents have stated that the preservation temperature of the milk is 4 degree Centigrade. We also note that the Bulk Milk Cooling Tank consists of milk vessel, ice water vessel, heat exchangers coil and condensing unit. The cooling coil immersed in water vessel produces ice. The ice water is sprayed on the outside surface of the milk vessel thereby maintaining the temperature at 4 degree Centigrade. Thus in effect though the milk may be maintained at around 4 degree Centigrade, the machinery do have the refrigerating function of generating ice. As per the explanatory note to CH. 8418, the temperature at the active cooling element is what is important and not the temperature of the refrigerated product. The cooling coil immersed in water generates ice of 38 mm dia around it, thus producing cryogenic temperature.
11. The Hon'ble Supreme Court in the following cases has held that the Central Excise Tariff in the Central Excise Tariff Act, 1985 being broadly based on the HSN, the explanatory notes to the HSN are a safe guide and aid for ascertaining the true meaning of any expression used in the Act in case of any doubt and that the explanatory notes to HSN are not only of persuasive value but are entitled to greater consideration in classifying goods under Customs and Central Excise Tariff :
(i) Collector of Central Excise, Shillong v. Wood Craft Products Ltd. [1995 (77) E.L.T. 23 (S.C.)]
(ii) Collector of Central Excise, Hyderabad v. Bakelite Hylam Ltd.
[1997 (91) E.L.T. 13 (S.C.)]
(iii) Collector of Customs, Bombay v. Business Forms Ltd. Thr. O.L [2002 (142) E.L.T. 18 (S.C.)]
(iv) O.K. Play (India) Ltd. v. Collector of Central Excise, Delhi-III (Gurgaon) [2005 (180) E.L.T. 300 (S.C.)]
12. Keeping in view the above explanatory notes and the Hon'ble Supreme Court's judgments cited supra, we hold that Bulk Milk Cooling Tank is correctly classifiable under Chapter Heading 8418.10."
8. We find that the above judgment of Tribunal was also discussed and agreed in the Tariff Conference. The Minutes of conference circulated by the CBEC vide Instruction F. No. 96/85/2015 - CX.I, dt. 07.12.2015 accepting the classification of Bulk Cooler under CETH 8418. The relevant extracts are as under :
B.9 - Vadodara Zone - Classification - Classification of "Milking Machines and Dairy Machines" - Whether Classifiable Under Tariff Item 84.18 or 84.19 :
9|Page E/10247/2018-DB
Issue :
The Bulk Milk Cooler is described as an insulated tank made up of SS 304 stainless steel sheets with evaporators, direct expansion condensing unit and smooth agitation, which is installed at village unions of dairy co-operative societies and in the farms. This equipment is defined by the international standard ISO 5708 which require : to cool down the temperature of milk from 35 degree C to 4 degree C in less than 3 hours with an ambient temperature upto 38 degree C and then to keep the temperature of milk at 4 degree C constant so that the quality of milk doesn't get deteriorated and bacteria are not generated in the milk. The unit classified the said product under tariff item 8434 20 00 prior to 2011. However, after objection by the audit, accepting the suggestion to classify the goods under tariff item 8419 89 90 instead of 8434 20 00, the assessee started to classify "Bulk Milk Cooler" under tariff item 8419 89 90 which attract duty @ 12.5%. References have been received from the Trade that in respect of the said product there is no uniformity of practice. Different classifications under contention in different zones are under the headings 8418, 8419 and 8434.
Sponsoring zone requested that the scope of these headings and classification of the product may be decided.
Discussion & Decision The issue was discussed in the conference with respect to scope of the three headings. It was noted that in the context of the goods under discussion heading 8418 applies to refrigerators, freezers and other refrigerating or freezing equipment; tariff item 8419 applies to machinery, plant for treatment of material by a process involving a change of temperature whereas tariff item 8434 applies to Milking machines and dairy machinery. Note 2 of chapter 84 inter alia provides that a machine or appliance which answers to a description of one or more of the heading of 8401 to 8424 and at the same time to a description in one or other of the headings 8425 to 8480 is to be classified under appropriate heading 8401 to 8424 and not under heading 8425 to 8480. Further, as per HSN explanatory note to Chapter Heading 84.34, that machines for processing milk dependent essentially on the principle of heat exchange (heading 84.19) are excluded from coverage under chapter heading 84.34. The heading also excludes refrigerating appliance (whether or not specially designed for cooling or keeping milk and milk cooling vats incorporating evaporator of a refrigerating unit (heading 84.18) from Chapter Heading 84.34. Thus any machinery which answers to a description under headings 8418 or 8419 cannot be classified under heading 8434. This principle was upheld by Hon'ble Supreme Court in case of HMT Limited [2007 (214) E.L.T. 10 (S.C.)] where milk/cream chillers and chilling plants were under consideration amongst other equipments for classification and classification under 84.34 rejected.
As far as classification under CETH 8418 is concerned, HSN notes for the heading provides that - "The refrigerators and refrigerating equipment of this heading are in the main machines or assemblies of apparatus for production, in a continuous cycle of operations, of low temperatures (in the region of 0 degree centigrade or less) at the active cooling element, by the absorption of the latent heat of evaporation of liquefied gases (e.g. ammonia, halogenated hydrocarbons), of volatile liquids or, in case of certain marine types, of water." In case of M/s. Praj Industries [2009 (242) E.L.T. 430], Hon'ble Tribunal decided classification of Bulk Milk Cooling 10 | P a g e E/10247/2018- DB Tank having following items viz. (i) Milk Vessel (ii) Ice Water Vessel, (iii) Cooling Coil, (iv) Condensing Unit etc. relying on the HSN notes decided the classification of goods under CETH 8418. Hon'ble Tribunal recorded the following argument as justification for classification of the equipment under the heading 8418 - "as per the explanatory note to CH. 8418, the temperature at the active cooling element is what is important and not the temperature of the refrigerated product. The cooling coil immersed in water generates ice of 38 mm diameter around it, thus producing cryogenic temperature.
"For scope of classification under heading 8419, two case laws were examined. In case of M/s. Universal Heat Exchangers [2000 (122) E.L.T. 770], Hon'ble Tribunal noted that Ammonia condenser, used by appellant in chilling of water is able to achieve cooling only up to 8°C and not freezing temperature which is around zero or sub-zero degree, hence it is not classifiable as refrigerating equipment [8418]. In case of Pan Asia Corporation [1999 (107) E.L.T. 306] the distinction between the two headings 8418 and 8419 was explained by the tribunal to say that - A distinction is to be made between Tariff Heading 84.18 and 84.19.
Cooling is no doubt affected by machineries and appliances falling under Tariff Heading 84.18 but the cooling should be of the range which a refrigerator or refrigerating machines achieves i.e. around zero or sub-zero temperatures. In the present case it is not disputed that the cooling effect is from 45°C to 6°C. Further it is also clear that it is not based on the refrigerating system. The lower appellate authority's finding that the goods would be rightly classifiable under Tariff Heading 84.19 is correct."
The conference noted that the Bulk Milk Cooler under discussion apparently achieves a cooling up to 4 degree centigrade in three hours. The information regarding whether the machine under discussion is a refrigeration machine and achieves zero and sub- zero temperatures around the cooling coil is not available in the reference, but if these two conditions are satisfied, then the Bulk Milk Cooler under discussion would be covered by the judgment in case of Praj Industries (supra) and the equipment would be prima facie classified under 8418. However, the sponsoring Zone may verify the facts of the case and scope of the headings explained in the foregoing paragraphs and decides the classification 8.1 Looking to the nature and use of the product we have no doubt that the goods would merit classification under 84186990 of the CETA, 1985.Coming to the availability of exemption notification we find that the Bulk Milk Cooling equipments being installed and stationary in position are used for immediate cooling of Milk to conserve and store. The system auto stops once the Milk reaches the 4 degree centigrade temperature and auto restarts if the temperature goes up. Thus it is not a refrigeration system but mechanical system. The product broucher in the present case clearly shows that the products is same as one considered in Praj Industry 11 | P a g e E/10247/2018- DB supra and in such case the bulk milk cooling equipment being stationary in nature clearly falls under the description of goods under exemption and is clearly a Stationary Pre-cooling equipment. Hence the exemption is available to the Appellant.
9. As regard condition of the notification viz the following of procedure laid down in central excise (Removal of Goods at Concessional rate of duty for manufacture of excisable goods) Rules, 2001, and the exemption under notification is available to the satisfaction of the Assistant/ Deputy Commissioner, we find that the goods were for use in dairy product preserving and the customers are not manufacturers with no central excise registration. Seemingly it was not possible for the Appellant to follow such condition. Even on non following of such condition the benefit cannot be denied. The undisputed fact is that the goods were used for intended purposes covered by the Notification. It is coupled with the fact that the Appellant had informed their jurisdictional authorities about the clearance of goods under exemption. In such case when the goods are covered by the exemption notification and there is no dispute about the use of goods, we are of the view that the intended benefit be given to the Appellant. Our views are also based upon judgments in case of Hetero Drugs Ltd. 2010 (262) ELT 490 (TRI) and Jindal Steel & Power Ltd. 2015 (329) ELT 595 (TRI) wherein it was held that where the condition is not possible to fulfil, it cannot be expected to follow such condition and thereafter extend the benefit. Even the Apex Court in case of Aidek Tourism Services P. Ltd. 2016 (318) ELT 3 (SC) and Thermax Private Ltd. v. Collector -- 1992 (61) E.L.T. 352 (S.C.) in similar situation has extended the benefit. Thus in view of the above judgments we are of the view that the Appellant are eligible for the exemption under the subject notification.
10. As regard demand of duty on stainless steel articles and other utensils, we find that the Appellant had claimed SSI exemption on said goods, but the duty was demanded on the ground that after addition of the value of the Bulk Milk Cooler, the aggregate gross turnover value goes above the exemption limit. However since we have held that the Bulk Milk 12 | P a g e E/10247/2018- DB Cooler is not liable for duty, hence the turnover value of the same has to be computed by excluding the value of Bulk Milk Cooler. Thus the Appellant are eligible for SSI Exemption.
11. As regard allegation that the Appellant made clearances to interconnected undertaking M/s Krishna Allied Industries Ltd. and hence the sale price of said company would be chargeable to duty at the end of Appellant in terms of Section 4 (3) (b) (i), we find that said section is applicable where the goods are sold to or through any related party and the assessable value would be eventual sale price to the actual customer. The Rule 9 at material time was as under :
"RULE 9. [Where whole or part of the excisable goods are sold by the assessee to or through a person who is related in the manner specified in any of the sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) of section 4 of the Act, the value of such goods shall be the normal transaction value] at which these are sold by the related person at the time of removal, to buyers (not being related person); or where such goods are not sold to such buyers, to buyers (being related person), who sells such goods in retail :
Provided that in a case where the related person does not sell the goods but uses or consumes such goods in the production or manufacture of articles, the value shall be determined in the manner specified in rule 8."
11.1 Thus from the perusal of Rule 9, it is clear that in case of sale to interconnected undertaking the assessable value would be the transaction value to the interconnected undertaking only and the sale price of the interconnected undertaking will not merit any consideration. Our views are based upon order in case of Sri Kannapiran Mills Ltd. 2016 (344) ELT 1107 (TRI) and 2017 (349) ELT A157 (SC), Mahindra Ugine Steel Co. Ltd 2015 (318) ELT 592 (SC), H.H.Interior Auto Components Ltd. 2018 (360) ELT A312 (SC), Universal Starch Chem Allied Ltd. 2017 (358) ELT 279, Handy Wires P. Ltd. 2015 (329) ELT 169 (TRI).
12 We also find that from the show cause notice and the impugned order, it nowhere appears that the Appellant had any intention to evade payment of duty. They had made correspondence with the department way back in 2012 intimating the description of goods and availment of exemption. Further from the facts of the case no contumacious conduct of the Appellant is appearing. They had bonafide belief that Bulk Milk Cooler is exempted from payment of duty by virtue of exemption notification 13 | P a g e E/10247/2018- DB supra. In such case it cannot be said that the Appellant had any intention to suppress the fact. Therefore we are of the view that the demands are time barred also.
13 Thus in view of our above discussions and findings, we hold that the Appellant being eligible for exemption are not liable for duty. Resultantly we set aside the impugned order and allow the appeal with consequential reliefs to the Appellant, if any, in accordance with law.
(Pronounced in the open court on 20.12.2019) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Prachi