2011 (12) TMI 401 - AT - Central Excise

Demand is confirmed after denying the benefit of Notification no. 64/95-CE dated 16.03.1995 - 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 - Held that the Notification was amended on 1.03.2008 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 - 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 - Decided against the assessee

Summary

Issues:
- Interpretation of Notification no. 64/95-CE regarding exemption for aluminium alloy products supplied to Indian Space Research Organization.
- Retrospective effect of the substitution of goods description in Notification 64/95-CE.
- Applicability of penalty for non-compliance with Notification requirements.

Analysis:
1. Interpretation of Notification no. 64/95-CE:
The appellant contended that the goods supplied to Indian Space Research Organization qualified for exemption under Notification no. 64/95-CE. They argued that the goods were systems or sub-systems for launch vehicles, meeting the conditions of the Notification. However, the Revenue disagreed, citing definitions of systems and sub-systems from dictionaries and previous legal precedents. The Tribunal analyzed the Notification's language and definitions of systems. It concluded that aluminium alloy rods, flats, and billets did not qualify as systems or sub-systems under the Notification's criteria. Therefore, the appellant was not entitled to the exemption.

2. Retrospective effect of goods description substitution:
The appellant claimed that a subsequent amendment to Notification 64/95-CE in 2008, substituting the goods description, should have retrospective effect. They relied on a Supreme Court case to support their argument. However, the Tribunal found that the facts of the cited case did not align with the present situation. The Tribunal also referenced another Supreme Court judgment regarding the prospective nature of amendments to notifications. It emphasized the need for strict interpretation of exemption provisions, requiring clear establishment of eligibility. As the appellant failed to demonstrate how their products fell under the revised description, the Tribunal rejected the argument for retrospective application of the amendment.

3. Applicability of penalty:
Regarding the penalty imposed on the appellant, the Tribunal considered that the appellant had acted in good faith by obtaining a certificate supporting their belief in entitlement to the Notification's benefit. As a result, the Tribunal deemed the penalty unwarranted and set it aside. The appeal was disposed of accordingly, with the Tribunal upholding the denial of the Notification's benefit due to the goods not meeting the specified criteria, but relieving the appellant of the penalty.

This detailed analysis of the legal judgment from the Appellate Tribunal CESTAT, Mumbai provides a comprehensive overview of the issues involved and the Tribunal's reasoning behind its decision on each aspect of the case.