Custom, Excise & Service Tax Tribunal
M/S. Teknik Plant & Machinery ... vs Commissioner Of Central Excise, Pune-I on 30 July, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/2515/2006-Mum. (Arising out of Order-in-Appeal No. PI/59-60/06 dt.17/02/2006 passed by the Commissioner of Central Excise (Appeals), Pune-I ) For approval and signature: Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. P.S. Pruthi, 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?
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 Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
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M/s. Teknik Plant & Machinery Manufacturing Co.Pvt. Ltd.
:
Appellant
VS
Commissioner of Central Excise, Pune-I
:
Respondent
Appearance
Shri M.P.Kulkarni, Consultant for Appellant
Shri Rakesh Goyal Addl. Commr. (A.R) for respondent
CORAM:
Mr. Ashok Jindal, Member (Judicial)
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 30/07/2014
Date of decision : /2014
ORDER NO.
Per : P.S. Pruthi
The appellants are in appeal against the order-in-appeal No.PI/59-60/06 dt. 17.2.2006, which upheld the order-in-original whereby duty demand of Rs.3126756 was confirmed and penalties of Rs.5000/- each on appellant, Chairman of appellant and M/s. Balrampur Chini Mills Ltd. (BCML) was imposed.
2. The brief facts of the case are that M/s. Teknik Plant & Machinery Manufacturing Co. Pvt. Ltd., Pune (appellants) manufactured Fuel and Ash Handling System (goods) falling under Chapter 8428.90 of Central Excise Tariff Act, 1985. The appellants supplied the goods to M/s. BCML without payment of duty under Annexure-I Certificate under Procedure laid in Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule 2001, claiming exemption under Serial No. 237 of Notification No. 6/2002 on the basis that the goods are used for non-conventional renewable source bagasse based cogeneration plant which is a waste conversion device producing energy. The appellants cleared the goods under various consignments under A.R.3A documents, which were duly received back with completed re-warehousing certificate countersigned by Central Excise Authorities have jurisdiction over M/s. BCML. Revenue raised the demand on the basis that the goods are ineligible for exemption under the said notification; further that the procedure under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule 2001 was wrongly followed as the notification at serial no. 21 of list -9 annexed to Serial No. 237 of Notification No.6/2002 CE dt. 1.3.2002 exempts parts of the energy producing device (bagasse based cogeneration plant) only when consumed within the factory of their production.
3. Heard both sides.
4. The Ld. Consultant Shri M.P. Kulkarni argued that the jurisdictional Central Excise authorities of M/s. BCML issued the Annexure-I to their jurisdictional Assistant Commissioner Central Excise, Division-V, Akurdi, Pune for removal of goods from the premises of the appellant without payment of duty. It was also contended that under Serial No. 16 of List-9 annexed to Sr. No.237 of Notification No. 6/2002-CE dt. 1.3.2002, following non-conventional energy devices/system are exempted.
(16) Agricultural, forestry, agro-industrial, industrial, municipal and urban waste conversion device producing energy According to him, the fuel and ash handling system supplied by them is very much an integral part of the bagasse based electricity generation system that is the waste conversion device producing energy manufacturing in M/s. BCML because without the ash handling system the boiler and steam generator which convert energy cannot function and it is the ash handling system which moves the bagasse to the boiler.
5. Learned A.R. reiterated the grounds taken in the Commissioners order confirming the demand of duty. He stated that the ash handling system is not a conversion device which produces energy and, therefore, the goods are not eligible for exemption under Notification No.6/2002-CE dt. 1.3.2002. He further emphasised that even if the goods are considered as parts of the device producing energy, exemption under Serial No.21 of List-9 attached to Sr. No.237 of notification provides for exemption to parts only if they are consumed within the factory of the production of such parts for the manufacture of conversion device producing energy.
6. We have carefully considered the submissions made by both sides.
There are two issues to be decided
(i) whether the fuel and ash handling system manufactured by the appellant are eligible for exemption under Notification No.6/2002-CE dt.1.3.2002
(ii) whether the demand of duty is justified in view of the fact that Annexure I granting exemption was issued by Assistant Commissioner having jurisdiction over M/s. BCML to the Assistant Commissioner having jurisdiction over the appellants factory.
7. As regards issue (i), it is noted that Notification No.6/2002-CE dt. 1.3.2002 grants exemption at Sr. No. 237 to non-conventional energy device/system specified in List-9 attached to the Notification and List-9, at Sr. No. 16, specifies the following goods.
(16) Agricultural, forestry, agro-industrial, industrial, municipal and urban waste conversion device producing energy Further, Sr. No.21 of List-9 grants exemption to parts consumed within the factory of production of such parts. The appellant has taken the plea that the fuel ash handling system manufactured by them feeds biomass/bagasse to the boiler which generates steam. The steam from the boiler is conveyed to the steam generator which generates electricity. It is quite clear that the ash handling system only feeds the boiler with the biomass. By no stretch of imagination can this system be called waste conversion device that produces energy. What produces energy is the steam turbine generator or atmost, the boiler and the steam generator taken together. The word which is used at Sr. No.16 of List-9 is Device. The word used is not Plant in which case the ash handling system could be considered as part of the plant. Therefore, the goods namely ash handling system are not eligible for exemption. Even if this system is considered as part of the waste conversion device for which exemption is available at Sr. No. 21 of List-9, we note that the exemption is available only for parts which are consumed within the factory of production. In this case the parts are not consumed within the factory of production, rather they are sold to M/s. BCML. Therefore, the goods manufactured by the appellants are not eligible for exemption under Notification No. 6/2002-CE dt. 1.3.2002.
8. Coming to the next issue (ii) regarding Annexure I. It is seen that the Annexure has been signed by the appellant and then issued by the jurisdictional Central Excise authority at the end of M/s. BCML to the Assistant Commissioner of Central Excise-V, Akurdi, Pune, who has jurisdiction over the appellants. The Annexure clearly grants exemption to fuel and ash handling system used for the specified purpose of Non-Conventional renewable source Bagasse/Biomass based Cogeneration Plant. In the Annexure the appellant undertakes to follow the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule 2001. The jurisdictional Central Excise Officer has certified that the appellants have executed bond for Rs.45,00,000/- (Rupees forty five lakhs only). The appellants have dispatched their goods namely fuel and ash handling system under a series of invoices over a period of time and have stated that the A.R. 3A documents supporting the invoices were received back duly acknowledged and with duly completed re-warehousing certificates countersigned by the Central Excise authorities at the end of M/s. BCML. Such copies of A.R.3As duly certified after re-warehousing were continuously submitted to their Superintendent of Range-V, Pune. It is to be noted that these facts are not disputed by Revenue. It is also stated by the Ld. Consultant that Annexure-I is still live and has not been cancelled by the Central Excise authorities. The Commissioner (Appeals) in her order acknowledges that the Annexure has been signed by the AC/DC Central Excise but has not raised the question of cancellation of Annexure I. In fact the Commissioner (Appeals) states that Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule 2001 procedure is not applicable but at the same time does not go into the question of validity of Annexure-I or the cancellation of Annexure-I.
9. As mentioned above, Annexure-I is stated to be live. Revenue does not controvert this fact. It is, therefore not understood how the show cause notice could be issued demanding duty without proposing to cancel the Annexure-I . At no stage of the proceedings from the time of issue of show cause notice to adjudication to the Commissioner (Appeals) order, the Annexure I is proposed to be cancelled. This Annexure-I allowed the party to clear the goods without payment of duty. The Ld. Consultant have relied on the judgment of Honble High Court of Madras in the case of Madurai Power Corpn. (P) Ltd. Vs. Deputy Commr. Of C. Ex. Madurai-I. The judgement dealt with a case where show cause notices were issued without challenging the validity of Annexure or without cancellation of the Annexure . It was held by the Honble High court of Madras:
In our opinion, there is no nexus between Section 11A and Section 35E. Section 11A does not indicate that the legislature intended to override Section 35E. Both sections have to be read harmoniously. In the present case, Annexure-I certificate has been issued in favour of the petitioners from time to time on executing B-8 security bond and on furnishing a bank guarantee. The department has to follow the procedure under Section 35E for setting aside the Annexure-I certificate. Unless, the Annexure-I certificate is cancelled or rejected by the competent authority, by following the procedure under Section 35E, it is not permissible for the respondents to invoke Section 11A of the Act. Therefore, we are of the considered opinion that the issuance of show cause notices are without jurisdiction and liable to be struck down. In the case of the appellants also we find that Annexure-I which clearly granted exemption to the appellants has not been cancelled. Therefore, the demand of duty against the appellants and imposition of penalty is not legal.
10. The adjudication order is set aside and the appeal is allowed.
(Pronounced in court on )
(Ashok Jindal)
Member (Judicial)
(P. S. Pruthi)
Member (Technical)
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