2005 (6) TMI 436 - AT - Central Excise

Summary

Issues:
Entitlement of exemption under Notification No. 64/95-CE for supply of goods to ISRO.

Analysis:
The appeals were against the order-in-original passed by the Commissioner of Central Excise, Guntur, regarding the entitlement of exemption under Notification No. 64/95-CE for supplying goods to ISRO. The goods in question were Mono Methyl Hydrazine (MMH), Unsymmetrical Dimethyl Hydrazine (UDMH), and Ultra Hydrazine (Z5), which are fuels for Rocket Propulsion. The issue revolved around whether these goods qualified for the exemption under the mentioned notification.

A careful examination of Notification No. 64/95-CE revealed that systems and sub-systems of launch vehicles and satellite projects were eligible for exemption subject to specific conditions. The conditions required certification from an officer of a certain rank in ISRO confirming the intended use of the goods in the mentioned projects. For UDMH, an exemption certificate from ISRO was presented, clearly stating the use of UDMH as fuel in the propulsion system of PSLV.

Similar certificates were issued for the other two products as well. The appellants had a history of clearing goods under a similar exemption notification for a long time until the Department contested the eligibility of the goods as systems or sub-systems for Satellite Projects, leading to a duty recovery demand.

The advocate highlighted a clarification issued by the Government of India regarding the classification of certain items as integral parts or sub-systems of avionics systems, emphasizing that rocket fuel should be considered a sub-system for launch vehicle projects based on the operational significance and nature of the goods. The clarification supported the view that the fuel for rocket propulsion is an essential sub-system, and the certificates issued by competent authorities, like ISRO, should be accepted unless blatantly unreasonable.

In light of the clarification and legal precedent, the Tribunal found no merit in the Department's position and allowed the appeals with consequential relief. The Tribunal emphasized the importance of accepting certificates from competent authorities and the binding nature of such documents, citing a relevant case law to support their decision.

In conclusion, the Tribunal ruled in favor of the appellants, highlighting the critical role of rocket fuel as a sub-system for launch vehicle projects and the validity of certificates issued by competent authorities like ISRO in determining eligibility for exemption under the relevant notification.