Custom, Excise & Service Tax Tribunal
Harsha Engineering Bangalore Pvt Ltd vs Bangalore-I on 11 February, 2025
Excise Appeal No. E/26481/2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
Regional Bench COURT-2
Excise Appeal No. 26481 of 2013
[Arising out of the Order-in-Appeal No. 207/2010 dated 10.12.2010 passed by
the Commissioner of Customs, Bangalore.]
M/s Harsha Engineering (Bangalore) Pvt., Limited.
No 32E, 2nd Cross,
Veerasandra Industrial Area,
Hosur Main Road,
Bangalore - 560100 .......Appellant
VERSUS
The Commissioner of Central Excise,
Bangalore -I Commissionerate
C.R. Building, Queens Road,
P.B. NO. 5400, Bangalore
Karantaka - 560001 ....... Respondent
Appearance:
Mr. M.S. Nagaraja, Advocate Appeared for Appellant Mr. Rajesh Shastry, Authorized Representative for Respondent Coram:
Hon'ble Mr. P. Dinesha, Member (Judicial) Hon'ble Mr. Pullela Nageswara Rao, Member (Technical) FINAL ORDER No. 20203 of 2025 Date of Hearing: 12.08.2024 Date of Decision: 11.02.2025 Per: Pullela Nageswara Rao M/s Harsha Engineering (Bangalore) Pvt., Ltd., the appellant is engaged in the manufacturer of cabins, counter weights and platform assembly, etc. Page 1 of 8 Excise Appeal No. E/26481/2013
2. The brief facts of the case are BEML, Bangalore was issuing purchase orders with the condition that the goods manufactured by the 'Job Workers' and 'Vendors' and supplied to BEML for use in the manufacture of goods, which are supplied to the Ministry of Defence are exempt from payment of duty. BEML, Bangalore was referring to the instructions of the Commissioner of Central Excise, Bangalore vide letter C.No.IV/16/04/2003-TechBGI dated 07.11.2003, wherein the Commissioner has conveyed that the Chief Commissioner has clarified that the benefit of Notification No. 63/1995-CE dated 16.03.1995 will be extended to the job workers and vendors, who supply inputs used in the manufacture of furnished goods supplied to the Ministry of Defence and that the concerned Jurisdictional Deputy Commissioners have been instructed to extend the benefit of Notification No. 63/1995-CE dated 16.03.1995 to all the Job Workers, Vendors supplying the goods to Ministry of Defence under the said Notification. The appellant was clearing the goods and supplied to the BEML, availing the duty free exemption in terms of Notification No. 63/1995-CE dated 16.03.1995, which were further used in the manufacture of goods and supplied to Ministry of Defence. CBEC vide Circular No. 110/32/2009-CEx-3 dated 27.10.2009 clarified that supply made by vendors would not be covered by Notification No. 63/1995-CE dated 16.03.1995. Based on this clarification a Show Cause Notice was issued to the appellant demanding Excise duty of Rs. 2,32,848/- along with interest and proposing imposition of penalty. The proposals in the Show Cause Notice were confirmed by the Adjudicating Authority and the demand of duty of Rs. 2,32,248/- was confirmed along with interest and penalty of Page 2 of 8 Excise Appeal No. E/26481/2013 Rs. 50,000/- was imposed on the Appellant under Rule 25 of Central Excise Rules, 2002.
3. On appeal by the appellant, Commissioner (Appeals) has also confirmed the duty with interest, however, set aside the penalty. Aggrieved, with the order of Commissioner (Appeals), the appellant filed this appeal before the Tribunal.
4. The Learned Counsel for the appellant contends that they were clearing the goods to BEML based on the instruction of the Central Excise issued vide letter 07.11.2003; however, after the issue of Circular No. 110/32/2009 CX-3 dated 27.10.2009 by CBEC they have paid duty on the goods cleared to BEML from November 2009 onwards; dispute in the present appeal is only for the period from June 2009 to October 2009; the benefit of Notification No. 63/1995-CE. dated 16.03.1995 was extended by Commissioner of Central Excise vide letter dated 07.11.2003, the exemption was granted by specific instruction to the industry or trade by the Commissioner, which could not have been denied during the subsistence of the instruction or till the same is revoked. Learned Counsel relied on the following decisions;
i. Vulcan Gears Vs. CCE, Vadodara 2014 (306) ELT 655 (Tri-Ahm) Maintained by Hon Supreme Court 2014 (309) ELT A50 (SC) ii. PSG & Son's Charities Metallurgy & Foundry Division Vs CCE, Coimbatore - 2011 (267) ELT 270 (T- Chen) iii. Sujan Industries Vs. CCE, Mumbai 2007 (220) ELT 161 (T-Mum) iv. Final Order No 1499-1500 dated 20.09.2004 issued by CESTAT, Bangalore in the case of M/s Harsha Industries Vs. CCE, Bangalore.
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Excise Appeal No. E/26481/2013
5. Learned Counsel during the hearing submits that the instructions of the Central Excise, Bangalore, were in existence for about 6(six) years and CBEC vide Circular F. No. 110/32/2009 CX-3 dated 27.10.2009 has issued a clarification, wherein the supplies made by the vendors would not be covered by Notification 63/1995-CE. The clarification of the Board is prospective and has also not instructed for recovery of the duties from vendors, retrospectively. It is a well settled position that beneficial Circular issued by CBEC has to be applied retrospectively while oppressive Circular has to be applied prospectively. Thus, when the Circular is against the assessee they have right to claim enforcement of the same, prospectively. This will imply that the Circular No. F.No. 110/32/2009 CX-3 dated 27.10.2009 of CBEC has to be applied, prospectively. The Learned Counsel relied on the following judgments in this regard.
a. Suchitra Components Ltd., Vs. CCE, Guntur -
2007 (208) ELT 321 (SC) b. CCE, Bangalore Vs. Mysore Electricals Industries Ltd., 2006 (204) ELT 517 (SC) c. M Bags Manufacturer Vs. CCE-1997 (94) ELT 3 (SC) d. Paper Products Ltd Vs CCE-1999 (112) ELT 765 (SC)
6. The Learned Authorised Representative (AR) for the Revenue submits that the Notification has to be strictly interpreted and in this regard he has relied on the Hon'ble Apex Court decision in Commissioner of Customs, Mumbai Vs. M/s. Dilip Kumar and Company-2018 (367) ELT 577 (SC). He further submits that Notification No. 63/1995-CE dated 16.03.1995 provides for exemption from the Excise duty for the goods manufactured for the supply to Page 4 of 8 Excise Appeal No. E/26481/2013 Defence only in respect of the organizations/manufacturers enlisted in the Notification. Therefore, the goods manufactured and supplied by other than the enlisted organizations/manufacturers are not eligible for the benefit of exemption under Notification No. 63/1995-CE. Hence, in view of the judgment of the Apex Court in M/s. Dilip Kumar and Company (Supra), the appellant is not entitled for the benefit of Notification No. 63/1995-CE dated 16.03.1995.
7. Heard both sides and perused the records.
8. The dispute in this appeal is whether benefit of Notification No. 63/1995-CE dated 16.03.1995 is available to the vendors, who supply goods to the enlisted companies/organisations in the Notification. We find that the appellant contends that they have been clearing the goods availing the exemption in view of the letter issued by the Commissioner of Central Excise, Bangalore dated 07.11.2003.
9. We find that the Tribunal in the case of Vulcan Gears Vs. Commissioner of C. Ex. reported in 2014 (306) ELT 655 (Tri- Ahm.) held that:-
"3. We have considered the submissions made by both sides. In this case, the Tribunal while deciding in favour of the appellant, took note of the Circular issued by the Board in respect of Notification No. 184/86, which is the precedent Notification to Notification No. 63/95-CE. In Circular vide F. No. 213/18/91- C.Ex.6, Circular No. 5/92, dated 19-5-1992 and another letter from Ministry of Finance F. No. IV/16/4/2003, dated 7-11-2003, it has been clarified that the exemption will be extended to all job workers and vendors supplying inputs required by BEML for Page 5 of 8 Excise Appeal No. E/26481/2013 manufacture of finished goods supplied to Ministry of Defence. Tribunal had relied upon the decision of Hon'ble Supreme Court in the case of Dhiren Chemicals as reported in 2002 (139) ELT. 3 (S.C.), and had taken a view that the Circular issued by the Board is binding on the department. The learned SDR submitted that this has been overruled by Hon'ble Supreme Court in the case of M/s. Ratan Melting & Wire Industries case - 2008 (231) E.L.T. 22 (S.C.). We find that since in M/s. Ratan Melting Industries case, the Apex Court only observed that the departmental officers are not precluded from filing an appeal, if the Circular issued by the Board is contrary to the law. In this case, it is seen that the department is not in appeal. Further, the decision of Hon'ble Supreme Court in the case of Leader Engineering Works-2007 (212) E.L.T. 168 (S.C.) was in the case of exemption Notification No. 64/95, which is a totally different notification."
In this case the appeal filed by the Revenue before the Hon'ble Apex Court was dismissed.
10. Further in the case of PSG & Son's Charities Metallurgy & Foundry Divisions Vs. CCE, Coimbatore - 2011 (267) ELT 270 (Tri.-Cehn), wherein it is held that:-
"2. We have heard both sides. We find that an identical issue had arisen before the Tribunal in the case of Tata Electronic Development Services v. Commissioner of Central Excise, Bangalore [1999 (107) E.L.T. 86 (Tribunal)], wherein the Bench extended the benefit of exemption under Notification No. 184/86- C.E. (predecessor to Notification No. 63/95-C.E.) to the appellant who was neither a job worker and who also did not clear the Page 6 of 8 Excise Appeal No. E/26481/2013 goods directly to the Ministry of Defence but through their Unit. In the present case also, the appellants were not job workers and had cleared the goods to Ministry of Defence through BEML. The ratio of the judgement cited supra is therefore applicable on all fours to the facts of the present case and following the same, we hold that the appellants herein are eligible to the benefit of exemption in terms of Notification No. 63/95-C.Ε., dated 16-3-1995, set aside the impugned order and allow the appeal as above with consequential relief."
11. Further in the appellant's own case vide Final Order No. 1449- 1500 of 2004 dated 20.09.2004, this Tribunal has allowed the benefit of Notification to the appellant.
12. We find that the appellant has relied on the case laws mentioned (supra), wherein it is held that the beneficial Notification should be given effect retrospectively and oppressing Notification should be given effect, prospectively. We find that the appellant has paid duty on the goods supplied to BEML from November 2009, after the issue of clarification by the Board Vide Circular F. No. 110/32/2009-CX-32 dated 27.10.2009. The appellant contended that the period involved in this case is from June 2009 to October, 2009 i.e., before the issue of the clarification by the Board, hence they have contended that they are eligible for the benefit of Notification No. 63/1995-CE, in view of their above submissions and the decisions of the Hon'ble Apex Court and the Tribunals.
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13. In view of the above discussion and following the decision taken by the Hon'ble Apex Court and the Tribunals the impugned order is untenable and liable to be set aside.
14. Accordingly, the appeal is allowed with consequential relief, if any, as per law.
(Order Pronounced in Open court on 11.02.2025) (P. Dinesha) Member (Judicial) (Pullela Nageswara Rao) Member (Technical) Sasi Page 8 of 8