Custom, Excise & Service Tax Tribunal
M/S Jcb India Ltd vs Cce, Delhi-Iv on 21 December, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SCO 147-148, SECTOR 17-C, CHANDIGARH-160017
DIVISION BENCH
COURT NO.1
Appeal No. E/1063/2008
[Arising out of the Order-in-Original No. 04/PKJ/Adjn/2008 dated 16.04.2008 passed by the CCE (Appeals), Delhi-IV, Faridabad]
Date of Hearing/Decision: 21.12.2016
For Approval & signature:
Honble Mr. Ashok Jindal, Member (Judicial)
Honble Mr. Devender Singh, Member (Technical)
M/s JCB India Ltd. Appellant
Vs.
CCE, Delhi-IV Respondent
Appearance:
Sh. Ravinder Narain, Advocate- for the appellant Sh. Satyapal, AR- for the respondent Coram:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) Final Order No: 61842 / 2016 Per Ashok Jindal:
The appellant is in appeal against the impugned order denying the benefit of Exemption Notification No. 108/95-CE dated 28/08/1995.
2. The facts of the case are that the appellant cleared 25 nos. of machines claiming the benefit of Exemption Notification No. 108/95 dated 28/08/1995 to different contractors for the projects financed by Asian Development Bank. During the course of audit, it was found that the appellant has cleared these machines i.e. Excavator Loaders and Earthmoving Machinery to the contractors and not supplied to the Project Implementing Authority. After completion of the projects, the said machines remained with the contractors, therefore, the appellant is not entitled for benefit of Notification No. 108/95 ibid. In these set of facts, a show cause notice was issued to the appellant to deny the benefit of Exemption Notification No. 108/95. Consequently, to demand duty along with interest and to impose penalty on the appellant. The matter was adjudicated wherein the adjudicating authority held that as the goods have not been supplied to the Project Implementing Authority but to the contractors only, therefore, the appellant is not entitled for benefit of Exemption Notification No. 108/95. Consequently, the demand of duty was confirmed along with interest and equivalent amount of penalty was also imposed. Aggrieved from the said order, the appellant is before us.
3. The ld. Counsel for the appellant appearing before us submits that the impugned order is beyond the allegation in the show cause notice, therefore, the same is to be set aside on this ground. To support this contention, he relied on the decision of the Honble Supreme Court in the case Caprihans India Ltd reported in 2015 (325) ELT 632 (SC).
4. On merits, he submits that the issue is squarely covered by the decision of this Tribunal in the case of Caterpillar India Pvt. Ltd. reported in 2005 (185) ELT 430 (Tri.Del.) which has been affirmed by the Honble High Court of Madras reported in 2013 (297) ELT 8 (Mad.). The said order has been affirmed by the Honble Apex Court in Special Leave Petition No. 4504/2014 vide order dated 01.03.2016, therefore, the impugned order is to be set aside.
5. On the other hand, the Ld. AR opposed the contention of the Ld. Counsel and strongly relied on the decision of this Tribunal in the case of DEE Development Engineers Ltd. reported in 2004 (178) ELT 452 (Tri. Del.) which has been affirmed by the Honble High Court of Punjab and Haryana reported in 2010 (254) ELT 412 (P&H).
6. Heard the parties and considered the submissions.
7. On careful consideration of the submissions made by both the sides, the following issue before us to decide the matter.
(i) Whether in the facts and circumstances of the case, the Adjudicating Authority has gone beyond the scope of the show cause notice or not?
(ii) Whether in the facts and circumstances of the case the appellant is entitled to avail benefit of Exemption Notification No. 108/95 dated 28.08.95 or not?
Issue no. I:
We have gone through the show cause notice, in the show cause notice the only allegation is that after the goods were used for completing the projects, can be further used by the contractors projects. The goods could only be used for project and not any other proposal. The possibility of others works ought to have been intimated by the manufacturers supplier to the excise authority, therefore, the appellant is not entitled to benefit of said notification. In the impugned order, the adjudicating authority has observed as under:
13.4 In the instant case also, I find that the goods have not been supplied to the project and also the goods have not been paid for by the Project Authority. It is the contractors who have been supplied/sold the goods by the notice for which the payments have been made by such contractors and not by the Project Authority.
13.5 The above view is also supported by explanation to Notification No. 108/95-CE introduced in budget 2008 vide Notification NO. 13/2008-CE dated 01.03.2007, which reads under:-
for removal of doubts it is hereby clarified that the benefit under this notification, in the case of good supplied to the projects financed by the United Nations or an International Organization, is available when the goods brought into the project are not withdrawn by the supplier or contractor and the expression goods are required for the execution of the project shall be construed accordingly. This clarification makes it clear that the goods supplied to projects are not to be withdrawn from the projects. This benefit is available where the contractor initially purchases the goods but ultimately supply these goods to the projects. However, if the exempted goods are not the property of the projects and are diverted later on by the supplier or the contractor, the benefit is not available.
13.6 The notice in their defence have referred to the explanation to Notification No. 108/95-CE introduced in Budget, 2008 and have contested that the equipments have not been withdrawn from the project till the completion of the project. I find that explanation nowhere limit that withdrawal of goods during the execution of the project. If the goods are withdrawn at any stage by the contractor from the project, the exemption is not available. Here I note that the explanation introduced in Budget, 2008 only clarifies the position with regard to the scope of the phrase goods are required for the execution of the project. In case the property/ownership of such equipments lies with the project, then there is no scope of any withdrawal or diversion thereof. This also indicates that the intention of the exemption notification is to provide exemption to goods supplied to the projects which become the property of the projects and not to the goods purchased by the contractors without the goods getting finally transferred to the projects, as is in the present case.
13.7 The notice have also contended that this explanation do not have any retrospective effect. I find it difficult to agree with this contention. This explanation is added to clarify the matter and make the intention clear. This explanation does not seek to modify the notification.
And decide the case holding that the goods cleared are not supplied to the projects, therefore, the appellant is not entitled for benefit of Exemption of Notification No. 108/95.
8 As the issue before the Adjudicating Authority was that the goods after completion of the projects remained with contractors but the Adjudicating Authority has held that the goods were not supplied to the projects, therefore, we hold that the adjudication authority has gone beyond the show cuase notice, therefore, in the light of the decision in the case of Caprihans India Ltd. (Supra). The impugned order is not sustainable in the eyes of law wherein this Honble Apex Court observed as under:
6. The findings in these paragraphs by the Tribunal have to be set aside on the simple ground that they are beyond the show cause notice of the Revenue, which accepts the fact that at least in the present case, no new product emerges after printing and consequently, therefore, that cannot be said to be any manufacture. On this ground alone, we asset aside the Tribunals judgment and restore that of the Commissioner, making it clear that the classification of the product remains under chapter 39 heading no. 39.20.
Issue no. II:
We have seen per the Notification No. 108/95, which is reproduce as under:
Exemption to goods supplied to UN or an International Organisation In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise and Salt Act, 1944, ( 1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of special importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said goods) when supplied to the United Nations or an international organisation for their official use or supplied to the projects financed by the said United Nations or an International organisation and approved by the Government of India, from the whole of-
(i) The duty of excise leviable thereon under section 3 of the Central Excises and Salt Act, 1944 (1 of 1944); and
(ii) The additional duty of excise leviable thereon under sub-section (1) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957):
Provided that before clearance of the said goods, the manufacturer produces before the Assistant Commissioner of Central Excise having jurisdiction over his factory, a certificate from the United Nations or an International Organisation that the said goods are intended for official use by the said United Nations or the said International Organisation or are to be supplied to a project financed by the said United Nations or the said international organisation and the said project has duly been approved by the Government of India.
Explanation: For the purpose of this notification, international organisation means an international organisation to which the Central Government has declared, in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947); that the provisions of the Schedule to the said Act shall apply.
9. On going through the contents of the above notification, we find that the appellant is entitled for benefit of Notification No. 108/95, if the goods are supplied to projects financed by United Nations or International Organisation and approved by the Government of India. Admittedly, in the case in hand, the projects have been financed by the International Organisation i.e. Asian Development Bank and the same have been approved by the Government of India. It is also a fact on record, the appellant has produced necessary certificate from the Project Implementing Authority to avail benefit of Exemption Notification. As all the conditions of the Notification have been satisfied by the appellants, therefore, the appellant is entitled for benefit of the above Notification. Merely, on the ground that the goods have been supplied to the contractor directly who has executed the project in question and after the implementation of the products the machine shall remain with the property of the contractor cannot be reasons to deny the benefit of notification as held by this tribunal in the case of Caterpillar India Pvt. Ltd. (supra) wherein this Tribunal has observed as under:
3. It is not the case of the department that the goods have not been supplied to the projects financed by international organisations. The goods were supplied to various sub contractors for the Golden Quadrilateral Project financed by Asian Development Bank. Goods have also been used for the project. The Notification nowhere stipulates that the excisable goods supplied should be directly paid for the organisation financing the project. Since the goods have admittedly been used for the project, the question of misuse of goods for unintended purposes, as noted by the Commissioner, does not arise. The fact that after the projects are implemented, the sub-contractors are entitled to retain the goods supplied to them under the notification cannot result in denial of benefit of exemption under the notification to the appellants. We are supported in our view by the Larger Bench decision of the Tribunal in Toyo Engineering India Ltd. V. CC, Mumbai- 2000 (122) ELT 315 in which it has been held that the mere fact that the construction machinery used in the initial setting up of the specified plant could possibly be used subsequently elsewhere in the setting up of another plant will not debar the importer from the facility of project import. There is also no evidence in the present case that the goods in question were used in any other project after the implementiation of the Golden Quadrilateral Project. There is also no requirement under the Notification that the entire cost shall be borne by the International Organisation, as held by the Tribunal in Nestor Pharmaceuticals Ltd. V. CCE, Delhi-2000 (116) ELT 477.
Which has been affirmed by the Honble Madras High Court has observed as under:
6. considering that the goods had admittedly been used in the project and after the completion of the projects, the goods supplied to the various sub contractors were entrusted to retain the goods supplied could not stand in the way of granting, the exemption under the Notification.
8. We do not find any justifiable ground to interfere with the order of the Cestat based on a factual finding and there was no material placed by the Revenue on the allegations of the possible misuse of the goods for unintended purposes by the sub contractors. Secondly, being the beneficial Notification issued in public interest and the project itself being executed fully by the contractors as per the directions of the project implementing Authority, the fact that the machineries were not given directly to the project implementing authority but given to the agency executing the work in fact cannot go against the assessees claim. Thus ultimately, as the machineries had been put in use by the sub contractors, who were given the job of execution the claim for exemption cannot be denied. The use of the phrase supplied to the projects financed by the said United Nations or an International Organisation and approved by the Government of India clearly shows that the condition for grant of exemption is supply of the goods towards the project and nothing beyond. The extract of the Notification No. 108/95-CE dated 28.08.1995 reads as follows:-
In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise and Salt Act, 1944, ( 1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of special importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said goods) when supplied to the United Nations or an international organisation for their official use or supplied to the projects financed by the said United Nations or an International organisation and approved by the Government of India, from the whole of-
(iii) The duty of excise leviable thereon under section 3 of the Central Excises and Salt Act, 1944 (1 of 1944); and
(iv) The additional duty of excise leviable thereon under sub-section (1) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957):
Thus with all the conditions satisfied, the beneficial Notification applies to the case on hand. In the circumstances, we do not find any justification to introduce any condition or read in a restrictive manner. Consequently, the Revenues appeal fails and hence, the same is dismissed. No costs.
10. We also take note of the fact that the Ld. AR relied on the decision of this Tribunal in the case of DEE Development Engineers Ltd (Supra), the facts of the said case are not applicable to this case as in that case the assessee failed to produce the certificate to avail the benefit of the Notification.
11. We also find that the Adjudicating Authority has relied on the explanation to Notification No. 13/2008 dated 01.03.2008. As all the clearance by the appellant are prior to that, therefore, the said Notification No. 13/2008 ibid is not applicable to this case. In view of the above discussions, the impugned order is set aside as the issue is no more res-integra in the light of the decision of the Honble Apex Court in the case Caprihans India Ltd. (Supra), therefore, we hold that the appellant is correctly taken the benefit of Notification No. 108/95.
12. In view of the above, the appeal is allowed with consequential relief, if any.
(Dictated and pronounced in the open court) Devender Singh Ashok Jindal Member (Technical) Member (Judicial) rt 1 E/1063/2008 M/s JCB India Ltd. Vs. CCE, Delhi-IV