2007 (6) TMI 369 - AT - Central Excise

Tubes - Welded Austenitic Stainless Steel Tubes - Exemption - Held that - The Tribunal, in the case of Automatic Electric Ltd. v. CCE, Mumbai 2004 (8) TMI 242 - CESTAT, MUMBAI , has held that the benefit of exemption under N/N. 108/95-C.E. is available to a sub-contractor when M/s. BHEL is the main contractor of an approved project. The fact that there was a contract between the main contractor and the sub-contractor will ensure that supplies made eventually reach the project site - appeal allowed.

Summary

Issues:
1. Interpretation of exemption notification for excisable goods supplied against International Competitive Bidding.
2. Validity of demand for Central Excise duty, interest, and penalties imposed by Adjudicating Authority.
3. Challenge to the impugned order by the appellants.

Interpretation of Exemption Notification:
The appellants, manufacturers of Welded Austenitic Stainless Steel Tubes, cleared goods to M/s. BHEL under NIL rate of duty, claiming exemption under Notification No. 6/2002-C.E. and its amendment. The Revenue contended that NIL duty is only for supplies against International Competitive Bidding. The Adjudicating Authority demanded duty, interest, and penalties. The appellants argued that as sub-contractors of BHEL, who won the project through International Bidding, they qualify for the exemption. They cited a previous case where a sub-contractor was granted exemption when the main contractor participated in International Competitive Bidding. The Tribunal agreed, emphasizing that the goods supplied to BHEL, the main bidder, meet the exemption condition, even if the sub-contractor did not bid directly. The Tribunal set aside the impugned order, granting relief to the appellants.

Validity of Demands:
The Adjudicating Authority imposed a demand of Rs. 1,82,53,464/- as Central Excise duty, along with interest and penalties under the Central Excise Act, 1944. The appellants challenged this order, leading to the appeal before the Tribunal. The Tribunal, after considering the arguments and relevant precedents, found in favor of the appellants, ruling that they qualify for the exemption as sub-contractors supplying goods to the main contractor participating in International Competitive Bidding. Consequently, the demands for duty, interest, and penalties were set aside.

Challenge to Impugned Order:
The appellants strongly contested the Adjudicating Authority's order, leading them to seek relief from the Tribunal. The learned Advocate for the appellants presented arguments regarding the conditions of the exemption Notification, highlighting the role of the main contractor in International Competitive Bidding projects. After hearing both sides, the Tribunal analyzed the case, emphasizing that the appellants, as sub-contractors supplying goods to the main bidder, qualify for the exemption under the Notification. The Tribunal allowed the appeals, providing consequential relief to the appellants, if any.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Bangalore, showcases the issues involved, the arguments presented, and the ultimate decision rendered by the Tribunal in favor of the appellants based on the interpretation of the exemption notification and the validity of the demands imposed by the Adjudicating Authority.