2010 (5) TMI 781 - AT - Central Excise

Supply of goods to Ministry of defence - N/N. 63/95-C.E., dated 16-3-1995 - denial of benefit on the ground that the notification exempts the goods when they are supplied directly to the Ministry of Defence by the companies named therein and in the notification, the appellant s name was not included in the names of the companies - Held that - the Tribunal while deciding in favor of the appellant, took note of the circular issued by the Board in respect of N/N. 184/86, which is precedent notification to N/N. 63/95. In Circular vide F. No. 213/18/91-C.Ex.6, Circular No. 5/92, dated 19-5-1992 and another letter from Ministry of Finance F. No. IV/16/4/2003, dated 7-11-2003, it has been clarified that the exemption will be extended to all job workers and vendors supplying inputs required by BEML for manufacture of finished goods supplied to Ministry of Defence - the appellant is eligible for benefit of this notification - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for exemption under Notification No. 63/95-C.E.
2. Interpretation of supply conditions under the notification.
3. Applicability of circulars and letters issued by the Board and Ministry of Finance.
4. Precedence of previous court decisions on similar matters.

Detailed Analysis:
1. The appellant cleared gear boxes availing exemption under Notification No. 63/95-C.E. Lower authorities denied the exemption as the appellant's name was not included in the list of companies specified in the notification. A duty amount and penalty were imposed. The appellant cited a precedent case in their favor.

2. The Respondent argued that the Supreme Court decision in Leader Engineering Works v. CCE, Chandigarh, stated that even if the supply is made through ship builders or to ship builders, the exemption would not apply. The notification specified BEML for supply to Ministry of Defence, and the appellant supplied to BEML. This raised questions on the direct supply requirement.

3. The Tribunal considered circulars and letters issued by the Board and Ministry of Finance regarding similar notifications. The circular clarified that exemption would be extended to all job workers and vendors supplying inputs required by BEML for goods supplied to the Ministry of Defence. The Tribunal relied on a Supreme Court decision and deemed the circular binding on the department.

4. The Respondent pointed out a different Supreme Court decision in M/s. Ratan Melting & Wire Industries case, where it was observed that departmental officers could appeal if a circular contradicted the law. However, since the department did not appeal in this case, the Tribunal found the circular and letter from the Board and Ministry of Finance to support the appellant's eligibility for the notification.

In conclusion, the Tribunal allowed the appeal, considering the circular and letter from the Board and Ministry of Finance, which clarified the eligibility of the appellant for the exemption under Notification No. 63/95-C.E. The judgment highlighted the importance of interpreting supply conditions and the relevance of past court decisions in similar matters.