Custom, Excise & Service Tax Tribunal
Auto Aircon (India) Ltd vs Commissioner Of Central Excise, Pune ... on 8 March, 2016
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
E/1759/05
- Mum
(Arising out Order-in-Appeal No. P-III/090/05 dated 25.02.2005 passed by the Commissioner of Central Excise (Appeals), Pune III)
For approval and signature:
Honble Shri S.S. Garg, Member (Judicial)
Honble Shri Raju, Member (Technical)
1. Whether Press Reporters may be allowed to see No
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 No CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Yes
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
Auto Aircon (India) Ltd.
Appellant
Vs.
Commissioner of Central Excise, Pune III
Respondent
Appearance:
Shri K.K. Shroff, Advocate with Shri Vipul Bidre, Advocate for the appellant Shri V.K. Shastri, AC (AR) for the respondent CORAM:
Honble Shri S.S. Garg, Member (Judicial) Honble Shri Raju, Member (Technical) Date of hearing : 29-02-2016 Date of decision : 08.03.2016 O R D E R No:..
Per: S.S. Garg:
The present appeal is directed against Order-in-Appeal No. P-III/090/05 dated 25.02.2005 of the Commissioner (Appeals) who upheld the Order-in-Original.
2. Briefly the facts of the case are that the appellant was in the business of manufacturing air conditioning and refrigeration equipment for the transport sector. The appellant claimed exemption in terms of Notification 10/97 dated 01.03.1997 in respect of some clearances to central government customers operating under the control of Ministry of Defence i.e. Research & Development Organisations namely, Vehicle research & Development Establishment (VRDE), Ahmednagar and the Electronic & Radar Development Establishment (LRDE), Bangalore. These establishments were undertaking research and development work on containerized operation theatre complexes for field operations for the Defence Forces. The equipment was supplied by the appellant on the basis of the certificates given by the Head of the Division of the concerned organisation. Thereafter a show-cause notice dated 09.10.2002 was issued denying the exemption to the appellant under the said Notification 10/97 dated 01.03.1997 on the ground air conditioners are not used for scientific and research purposes; moreover the appellants have not complied with the conditions of Notification 10/97 dated 01.03.1997. The appellant filed a reply to the show-cause notice refuting the allegations and claiming that they have complied with the condition of Notification 10/97 dated 01.03.1997 and are entitled to the exemption. Thereafter the Additional Commissioner vide order dated 30.1.2004 confirmed the show-cause notice by denying the benefit of Notification 10/97. Thereafter the appellant filed the appeal before the Commissioner (Appeals)who vide order dated 25.02.2005 upheld the Order-in-Original and denied the exemption to the appellant. Now the appellant has filed the present appeal before the Tribunal.
3. Ld. Counsel for the appellant submitted that ld. Commissioner (Appeals) has failed to appreciate the nature of modification carried out as the result of research and development activities by the customer at their end. He further submitted that the appellant redesigned the air conditioning system to meet the requirement of the customer. The appellant carried out the following modification to suit the requirement of the customer:-
i) Strengthening of the stainless steel housing by modifying the support components and increasing weld areas, laser cutting instead of normal manufacturing method.
ii) Stainless steel spider support for evaporator fan was redesigned & incorporated & welded to blower casing.
iii) Low weight control transformer (which uses latest R core arrangement instead of conventional stacking of multiple steel plates) was incorporated.
iv) Unit mounting & lifting hole positions were modified as per VRDE requirements.
v) Reciprocating Compressor in the original Australian design was replaced by Scroll compressor.
vi) Hot gas by pass arrangement provided in the Australian design was eliminated.
vii) The separate remote type control console was developed and incorporated as per the clients requirements. The main control panel was modified to meet the VRDEs requirement. Original design didnt have such provision.
viii) The power and control connections reoriented as per the VRDEs requirement.
ix) Special polyurethane mounts for compressors were designed and developed instead of hard stainless steel mounts specified by Australian design to meet the vibration levels as per the Mil standards.
x) Refrigeration system was redesigned by incorporating heat exchangers with grooved tubing instead of plain copper tubes.
xi) Support frames for heat exchangers, condenser fan and blowers modified welded to main housing with additional spot welds to achieve required strength and rigidity.
xii) Besides these major changes, many other changes were incorporated to strengthen the unit and improve the performance to meet tests as per military standard.
4. He also submitted that the ld. Commissioner had failed to appreciate letter dated 21.02.1999 received from the CQAE, Controller of Quality Assurance & Engineering Equipment which indicates that the original AC systems had failed the approval tests and had to be re-engineered to meet the Defence requirements. He also submitted that the respondent had failed to appreciate that the standard products failed and the AC systems had to be redesigned for the specialised operations more suited for the defence forces. He also submitted that the appellant Commissioner failed to appreciate that the eligibility certificates were issued by the customers who are R&D establishment of the Ministry of Defence, Government of India. He also submitted that the appellant had handed over the eligibility certificate and claimed exemption in the R 173B declaration filed. He also submitted that the appellant did not suppress any information from the department and they have been informing the department from time to time and has also furnished the duty exemption certificate issued by the customer for claiming exemption under the said notification.
5. On the other hand, ld. AR submitted that the appellant has wrongly availed the exemption of Central Excise duty in clearing excisable goods namely AC under Notification 10/97 dated 01.03.1997. He also submitted that the appellant has not complied with the conditions of the Notification and therefore they are not entitled to any exemption under the said notification. He relied on the following decisions:-
* Sarabhai M. Chemicals vs. CCE 2005 (179) ELT 3 (SC) * CCE vs. H&R Johnson India Ltd. 2008 (232) ELT 466 * Sudhir Engineering Co. Vs. CCE 2004 (164) ELT 211 * Mehra Bros vs. Jt.Commerical officer 1991 (51) ELT 173 (SC)
6. We have heard the ld. Counsel for the parties and perused the entire records carefully. The only question which is to be decided in this appeal is whether the appellant are entitled to claim exemption under Notification 10/97 dated 01.03.1997 and whether the appellant has complied with the conditions for claiming the exemption or not.
7. We find that the Senior stores officer has issued a communication dated 09.11.2001 to the Commissioner of Central Excise justifying the entitlement of the appellant for claiming the exemption and he has also explained in the said letter that the AC system which was purchased from the appellant were required for unique design and technical specification on temperature, humidity, air flow which is the specific requirement of the DRDO. Further, we find that the excise duty exemption certificate issued to the appellant was signed by the major General, who is the Director of VRDE and who is of the designation of the Jt. Secretary, Government of India whereas the authority who is competent to issue exemption certificate under the said notification is only Dy. Secretary to the Government of India. The appellant has also placed on record the certificate certifying that the VRDE, Ahmednagar is a public funded institution under the administrative control of the Department of Defence, Research & Development Organisation of the Government of India and is entitled to avail excise duty exemption in terms of government Notification 10/97 dated 01.03.1997. We also find that in order to claim general exemption 10/97 the following conditions need to be fulfilled.
a) Public funded research institution
b) Institution is registered with the Government of India
c) The goods shall be scientific and technical instruments
d) The goods are requirement for research purposes only
e) Produced the certificate by the competent authority.
In this case, the appellant have complied with all the above stated conditions. The ld. Counsel further placed reliance on the following decision:
i) Godrej Appliances Ltd. vs.CCE 2009 (236) ELT 729
ii) CCE vs. Sunbeam Appliances 2011 (268) ELT 528
iii) Tribunals decision dated 26.02.2016 in Appeal no. E/715/07 in the case of Blue Star Ltd.
8. We also find that the AC system are specially designed and modified for use in specialised mobile operation theatres for use by the Indian Army in the field. We also find the basic design of the Auto Air-conditioning was that of the Australian foreign collaborator and it was modified to suit the requirement of Ministry of Defence. We are of the considered opinion that the appellant are entitled for the exemption under Notification 10/97 dated 01.03.1997 because the institution to whom the appellant has supplied the goods is a public sector institution and they have also furnished the requisite and they are not engaged in any commercial activity and the said goods are required for research purposes. Therefore we are of the considered opinion that the appellant is fully covered by the decision cited above and therefore, we find that the impugned order is not sustainable in law and the same is set aside by allowing the appeal of the appellant with consequential relief, if any.
(Pronounced in Court on ........................) (Raju) Member (Technical) (S.S. Garg) Member (Judicial) //SR 9 E/1759/05