Custom, Excise & Service Tax Tribunal
Cce, Delhi-Iv vs M/S.Dee Development Engineers (P) Ltd on 1 April, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:12.12.2014
Date of Decision:01.04.2015
Excise Appeal No.E/1035/2006-EX(DB) with
E/Cross/235/2006
[Arising out of Order-in-Appeal No.132/CE/Appl/DLH-IV/2005 dated 30.12.2005 passed by the Commissioner of Central Excise (Appeals), Faridabad ]
CCE, Delhi-IV Appellant
Vs.
M/s.Dee Development Engineers (P) Ltd. Respondent
For approval and signature:
Honble Shri Rakesh Kumar, Member (Technical)
Honble Shri S.K. Mohanty, Member (Judicial)
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?
Appearance: Rep.by Shri M.S. Negi, DR for the appellant.
Rep. by Shri Amit Jain, Advocate for the respondent.
Coram: Honble Shri Rakesh Kumar, Member (Technical)
Honble Shri S.K. Mohanty, Member (Judicial).
Final Order No.50999/2015 dated: 1.4.2015
Per Rakesh Kumar:
Facts leading to filing of this appeal by the Revenue and filing of cross objection by the respondent are as under:-
1.1 The respondent manufacture different types of fabricated items like accessories for boilers and tubes and pipes fittings etc. falling under Chapter Heading No.8402.90 and 7307.00 of the Tariff. The period of dispute in this case is from Jan. 2002 to Feb. 2003. The respondent supplied these items to M/s.ISGEC having their factory in Yamunanagar, Haryana, who manufacture boilers for Biomass Energy Producing Systems and supply to various customers. The Respondent during the period of dispute were availing full duty exemption under notification no.6/2002-CE dated 1.3.2002 (S.No.237) which prescribes nil rate of duty for Non-conventional Energy Devices/Systems specified in List 9, falling under any Chapter of Central Excise Tariff. Sl. No.16 of the List 9 of the notification covers, Agriculture/Forestry, agro industrial, industrial, municipal and urban waste conversion devices producing energy and Sl.No.21 of the List No.9 covers, parts consumed within the factory of production of such parts for manufacture of goods specified at Sl.No.1 to 20 above. The Department is of the view that the goods manufactured by the respondent are parts of Biomass Energy Producing Systems but since the same are not consumed within the factory of production of such parts for manufacture of Biomass Energy Producing Systems, the same would not be eligible for exemption. It is on this basis that the Joint Commissioner, Central Excise vide order-in-original dated 18.03.2005 denied the above exemption to the respondent, confirmed duty demands of Rs.13,53,214/- and Rs.18,32,401/- against the Respondent along with interest under Section 11 AB and imposed penalty of Rs.1 Lakh on them under Rule 25 (1)(a) of the Central Excise Rules, 2002. The respondent filed appeal against the above order of the Joint Commissioner before the Commissioner (Appeals). The Commissioner (Appeals) vide order-in-appeal dated 30.12.2005 allowed the appeal on the ground that what is covered under the exemption notification no.6/2002-CE (Sl.No.237) is non-conventional Energy Devices/Systems specified in List 9 of the Notification and that the goods, in question, produced by the Respondent are device as a device is something made for a purpose.
1.2. Against the above order of the Commissioner (Appeals), the Revenue filed this appeal and in respect of the Revenues appeal, the respondent have filed a cross objection.
2. Heard both the sides.
3. Shri M.S. Negi, ld. Departmental Representative, assailed the impugned order by reiterating the grounds of appeal in the Revenues appeal and pleaded that the goods covered by Sl.No.237 of the Table annexed to the notification no.6/2002-CE are Non-conventional Energy Devices/Systems specified in List 9, that while Sl. No.16 of the List 9 covers Agriculture /forestry, agro industrial, industrial, municipal and urban waste conversion device producing energy, Sl.No.21 of the List 9 covers parts consumed within the factory of the production of such parts for manufacture of the goods specified at Sl.No.1 to 20 above, that in view of this, exemption under this notification would be applicable only to those parts which are consumed in the factory of their production for manufacture of biomass energy producing systems, that Biomass energy producing system are manufactured by ISGEC, Yamunagagar, Haryana to whom the parts manufactured by the respondent are supplied, that since the parts of the Biomass Energy Producing Systems are not used within the factory where the same are produced, they are not covered by Sl.No.21 of the List 9 and since the goods are only parts, not complete energy producing systems, the same are also not covered by sl.no.16 of the List 9, that the Tribunal in the case of CCE, Chennai Vs. Binny Ltd. reported in 2001 (136) ELT 1337 (Tribunal-Chennai) while interpreting the similar exemption notification no.205/88-CE, which prescribed nil rate of duty for Agricultural and municipal waste conversion devices producing energy, held that M/s. Binny Ltd. producing roofing structures for Agricultural and municipal waste conversion devices producing energy, which is used with the digester of the bio gas plant being manufactured by another manufacturer, would not be eligible for this exemption, as Sl. No.18 of the notification no.205/88-CE covering parts consumed within the factory of production of such parts for the manufacture of goods specified at sl.no.1 to 17 above, provides exemption only to the parts consumed within the factory of production, while in the case of M/s.Binny Ltd. the parts roofing structures were not consumed within the factory of production, that this judgement of the Tribunal was upheld by the Apex Court vide judgement reported in 2006 (197) ELT 334 (SC), wherein the Apex Court upheld the Tribunals order observing that to claim the exemption notification no.205/88-CE the assessee has to either manufacture the biogas plant or biogas engines as per the Entry No.14 of the exemption notification, or parts thereof which are consumed within the factory and since the assessee is neither manufacturing bio gas plant nor using the manufactured parts used for the manufacture of bio gas plant within the factory premises, he would not be eligible for the exemption, that the ratio of this judgement is squarely applicable to the facts of this case and that in view of this, the impugned order is not correct.
4. Shri Amit Jain, Advocate, the learned Counsel for the Respondent defended the impugned order by reiterating the findings of the Commissioner (Appeals) in it.
5. We have considered the submissions from both the sides and perused the records.
7. The respondent manufacture certain components of boilers of Biomass Energy Producing System. The boilers for Biomass Energy Producing System are manufactured by ISGEC, Yamunanagar, Haryana and the same can be treated as Biomass Energy Producing Devices. The point of dispute is that as to whether the parts of the boilers of Biomass Energy Producing Systems being manufactured by the respondent and which are not consumed within their factory but are used in the factory of ISGEC, Yamunanagar, Haryana, would be eligible for exemption under notification no.6/2002-CE (Sl.No.237).
8. The exemption notification no.6/2002-CE (Sl.no.237) prescribes nil rate of duty for non-conventional energy devices/systems specified in List-9 falling under any Chapter. List 9 of the exemption notification enumerates 21 items and Sl.No.16 of the List covers Agricultural, Forestry, Agro-Industrial, Municipal and Urban Wastes conversion devices producing energy. Sl.No.21 of this List covers, parts consumed within the factory of production of such parts for manufacture of goods specified at Sl.No.1 to 20 above. Other Sl.Nos. of List 9 cover various Non-conventional Energy Devices / Systems. From a bare reading of the List 9, it is seen that it covers various Non-conventional Energy Devices/Systems and also their parts, which are consumed within the factory for manufacture of non-conventional energy devices/systems. Sl.No.237 of the Table annexed to the notification no.6/2002-CE has to be read with List No.9 and its scope would be confined to what is mentioned in the List 9. Since the scope of entry against S.No.237- non-conventional energy device/systems specified in List 9 is confined by what is mentioned in List 9, there is no scope for interpreting the word device in this entry so as to cover parts of non-conventional energy system within this entry. In List 9, since S.No.21 cover parts, the parts of non-conventional energy systems would not be covered by S.No.1 to 20 of the List 9. But S.No.21 covers only those parts which are captively used in manufacture of complete conventional energy systems. Therefore, in our view, the parts of the Non-conventional Energy Devices/Systems would be covered for full exemption duty under this exemption only when such parts are used within the factory in which the same have been manufactured for manufacture of non-conventional energy producing systems. In other words, this exemption notification is applicable only to those parts manufactured in a factory which are captively used for manufacture of non-conventional energy devices/systems. We find that the identical issue has been considered by the Apex Court in its judgement in the case of Binny Ltd. reported in 2006 (197) ELT 334 (SC). In that case, M/s. Binny Ltd. were manufacturing roof structures to be used for roofing of the digester of the biogas plant. But M/s. Binny Ltd. were not manufacturing the biogas plant or its digester but were supplying the roof structure to the manufacturers of the digesters. Their claim for exemption under similar exemption notification no.205/88-CE was rejected by the Apex Court with the following observations:-
The appellant is manufacturing roof structure which is used amongst other things for roofing of the digester. Admittedly, the appellant is manufacturing roof structure which is taken out of the factory and used as a roof of the digester consisting of a larger rectangular tank of civil structure which is covered by stainless steel top, supported by M.S. Roof Structure. The constant move of the effluent inside the tank is maintained by pumping system and the bacterias added at the commencement of the project is the cause for action inside the tank. There is no dispute on the question that the digester comes into existence at the site when it is placed on civil construction carried out at the site. To claim exemption under the exemption notification , the appellant has to either manufacture biogas plant or biogas engine as per Entry 14 or parts therefore which are consumed within the factory. The appellant is neither manufacturing biogas plants nor using the manufactured parts used for the manufacture of biogas plants within the factory premises.
8. In our view, the above judgement of the Apex Court on this issue is binding on this Tribunal, more so, when the facts of the case of M/s. Binny Ltd. are identical to the facts of this case. We find that the same view has been taken by the Tribunal in its earlier judgement in the case of Maharashtra Safety Glass Works Ltd. Vs. CCE, Pune reported in 1999 (108) ELT 459 (Tribunal ).
9. In view of the above discussion, the impugned order is not sustainable. The same is set aside and the order passed by the Joint Commissioner is restored. The Revenues appeal is allowed. The cross objection filed by the Respondent also stands disposed of.
[order pronounced on 1.4.2015].
(Rakesh Kumar) Member (Technical) ( S.K. Mohanty) Member (Judicial) Ckp 7