Custom, Excise & Service Tax Tribunal
Ordnance Factory vs Commissioner Of Central Excise, Nagpur on 19 December, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/1129/04 (Arising out of Order-in-Original No. 8/2004/C dated 21.1.2004 passed by Commissioner of Central Excise, Nagpur-1) For approval and signature: Honble Mr. S.S. Kang, Vice President and Honble Mr. Sahab Singh, 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 :
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Ordnance Factory Appellant Vs. Commissioner of Central Excise, Nagpur Respondent Appearance: Shri Hari Radhakrishnan, Advocate, for appellant Shri S. Dewalwar, Additional Commissioner (AR), for respondent CORAM: Honble Mr. S.S. Kang, Vice President and Honble Mr. Sahab Singh, Member (Technical) Date of Hearing: 19.12.2011 Date of Decision: 19.12.2011 ORDER NO Per: S.S. Kang Heard both sides.
2. The appellant filed this appeal against the impugned order passed by the Commissioner of Central Excise whereby a demand is confirmed after denying the benefit of Notification No. 64/95-CE dated 16.3.1995 in respect of aluminium alloy rods, aluminium alloy flats and aluminium alloy billets manufactured by the appellant and cleared to Indian Space Research Organization.
3. The contention of the appellant is that the goods in question were cleared by availing the benefit of Notification No. 64/95-CE and the requisite certificate from the Controller, Indian Space Research Organization, as required under the Notification was produced. The contention is that the Notification provides exemption from payment of duty if the systems and sub-systems of launch vehicles or satellite projects were cleared to the Indian Space Research Organization and the only condition is that before the clearance of the goods, a certificate from an officer not below the rank of an Assistant Scientific Secretary in the Indian Space Research Organization giving the description and quantity of goods is to be produced. As the goods in question are systems or sub-systems of the launch vehicles hence the appellants are entitled for the benefit of Notification No.64/95.
4. The appellant relied upon the decision of the Tribunal in the case of Andhra Sugars Ltd. vs. CCE, Guntur reported in 2005 (192) ELT 483 (Tri.-Bang.) whereby the benefit of the same Notification was allowed in respect of rocket fuel or fuel for rocket propulsion considering the same as sub-system.
5. The appellant also submitted that subsequently Notification No.6y4/95 has been substituted by Notification No.7/2008-CE dated 1.3.2008 whereby the description of the goods was substituted as components, raw materials for and including systems and sub-systems of launch vehicles and satellite projects. The contention of the appellant is that the entries at serial No.7 of the Notification were substituted, therefore the same is to be given retrospective effect and they have relied upon the decision of the Honble Supreme Court in the case of GOI vs. Indian Tobacco Association reported in 2005 (187) ELT 162 (SC) where the entries are substituted with new entry, whereby the Honble Supreme Court held that the new entry is given retrospective effect.
6. The appellant also pleaded that as they are under the bona fide belief that the goods are entitled for the benefit of the Notification and the requisite certificate was also produced, therefore it is not a case for imposition of any penalty.
7. The Revenue submitted that aluminium alloy rods, aluminium alloy flats and aluminium alloy billets cannot be considered as systems or sub-systems for launch vehicle projects or for satellite projects. The Revenue relied upon the findings of the adjudicating authority in para 20 of the order where the definition of systems and sub-systems as per the Oxford Dictionary and other dictionaries was taken into consideration. The Revenue submitted that the Notification is prospective in nature and relied upon the decision of the Honble Supreme Court in the case of Bombay Oil Industries Pvt. Ltd. vs. UOI reported in 1995 (77) ELT 32 (SC). The contention of the Revenue is also that as the appellant is asking for the benefit of the Notification, therefore the appellant has to show that the goods in question are covered under the provisions of the Notification. The Revenue relied upon the decision of the Honble Supreme Court in the case of Novopan India Ltd. vs. CCE, Hyderabad reported in 1994 (73) ELT 769 (SC).
8. We find that the appellant is seeking the benefit of Notification No.64/95-CE at serial No.7. The Notification provides as under:-
S. Description Conditions No. of goods ---- -------------- ---------------------------------------- 1. .. 2. .. . 3. .. . 4. .. . 5. .. . 6. .. . 7. Stainless steel If, - sheets, systems (i) meant for use in a launch vehicle and sub-systems project or a satellite project of the of launch vehicle Indian Space Research Organization and stainless or the Government of India, Depart- steel sheets, ment of Space; and systems and sub- (ii) the manufacturer produces, before systems of the clearances of the said goods, a satellite Projects certificate from an officer not below the rank of an Assistant Scientific Secretary in the Indian Space Research Organization giving the description and quantity of each type of the said goods for which the exemption under this notification is claimed and certifying that the said goods are intended for use in a project mentioned above.
The Notification provides exemption from payment of duty to systems or sub-systems or launch vehicles or satellite projects if the same are meant for use in the launch vehicles project or satellite project of the Indian Space Research Organization. The goods in question are aluminium alloy rods, aluminium alloy flats and aluminium alloy billets which would be considered as systems or sub-systems. As per the Oxford Dictionary (Tenth Edition), the definition of the term system is a complex whole, a set of things working together as a mechanism or interconnecting network. Similarly, the system is defined in Chambers 20th Century Dictionary as anything formed of parts placed together or adjusted into a regular and connected whole. In view of the above definition of system, we find that the appellant is not clearing any systems or sub-systems as the goods in question are aluminium alloy rods, aluminium alloy flats and aluminium alloy billets, hence the appellant is not entitled for the benefit of the Notification. Further, we find that the Notification was amended on 1.3.2008, i.e. after the period in dispute, whereby the entry at serial No.7 is substituted and components, raw materials, tools, lubricants and propellants for and including systems and sub-systems of launch vehicles and satellite projects were given the benefit of the Exemption Notification. The appellant relied upon the decision of the Honble Supreme Court in the case of Indian Tobacco Association (supra) to say that as the words are substituted, therefore the Notification has retrospective effect. We find that the facts in the case of Indian Tobacco Association are not parallel to the facts of the present case. The Honble Supreme Court has taken into consideration the fact of only an obvious mistake was sought to be removed thereby (para 16 of the judgment). The Honble Supreme Court after taking into consideration the mistake in the earlier Notification held that the Notification in question in the case has retrospective effect. The Honble Supreme Court after taking into consideration the background of facts and doctrine of fairness held in favour of the assessee. There are no such facts on record to show that in the earlier Notification there was a mistake. Further, we find that the Honble Supreme Court in the case of Bombay Oil Industries Pvt. Ltd. (supra) held that the amendment to the Notification is prospective in nature. The Honble Supreme Court was taking into consideration the provisions of the Notification which provides some colour specification, which was deleted by subsequent Notification. The Honble Supreme Court rejected the contention of the assessee that the Notification whereby the colour specification was deleted was retrospective in nature in spite of the fact that the Tribunal held that colour specification was an error and that the error was removed. The Honble Supreme Court held that the colour specification cannot be ignored when it was part of the law. In view of this we find no merit in the contention of the appellant that the subsequent Notification has retrospective effect. For the benefit of the Notification, the Honble Supreme Court in the case of Novopan India Ltd. (supra) held that exemption being in the nature of exception to be construed strictly at the stage of determination whether the assessee falls within its terms or not. A person invoking an exception or exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In the present case, the appellant failed to show how aluminium alloy rods, aluminium alloy flats and aluminium alloy billets can be considered as systems or sub-systems. In these circumstances, we find no infirmity in the impugned order whereby the benefit of the Notification is denied.
9. In respect of the penalty, we find that the appellant obtained the necessary certificate from the competent authority to the effect that the goods in question are entitled for the benefit of the Notification, therefore it cannot be said that the appellant is liable to any penal action. Therefore, the penalty imposed under the impugned order is set aside and the appeal is disposed of as indicated above.
(Operative part pronounced in Court) (Sahab Singh) Member (Technical) (S.S. Kang) Vice President tvu 1 7