2011 (6) TMI 642 - AT - Central Excise

Whether restriction regarding the requirement of minimum 20 cm. diameter contemplated under sub-clause (3) of Clause 7 in the table of the Notification No. 6/2006-C.E., dated 1-3-2006 as amended by the Notification Nos. 25/2006-C.E. dated 20-3-2006, applies to the pipes specified under sub-clause (2) of Clause 7 of the said table of the said notification also - Commissioner rejected the contention of the appellants that all the three sub-clauses of Clause 7 are to be read independently and thereby confirmed the demand pertains to the present appeal Held that - pipes required for delivery of water from its source to the plant and/or from the plant to the first storage point are necessarily to be bigger in diameter then the diameter of the pipes for further delivery of the water. Indeed it appears to us that there could not be any such case because the size of the pipes carrying the water beyond the storage point would essentially depend upon the requirement of supply of water. Being so, the interpretation which the learned Commissioner has sought to give to sub-clause (2) does not appear to be correct. The condition in sub-clause (3) cannot be read sub-clause (2) of Clause 7 of the Table, appeal allowed

Summary

Issues:
Interpretation of sub-clauses of Clause 7 in Notification No. 6/2006-C.E. regarding the minimum diameter requirement for exemption on AC Pressure Pipes.

Analysis:
1. Background: The appeal concerned whether the minimum 20 cm diameter restriction under sub-clause (3) of Clause 7 in Notification No. 6/2006-C.E. applied to pipes specified under sub-clause (2) of the same notification. The appellants manufactured AC Pressure Pipes and AC coupling seeking exemption benefits under the notification despite the pipes having a diameter less than 20 cm.

2. Legal Dispute: The dispute revolved around the interpretation of sub-clauses of Clause 7 of the notification. The Commissioner rejected the appellants' contention that the sub-clauses should be read independently, leading to the issuance of a show cause notice and subsequent appeal.

3. Notification Amendments: Notification No. 6/2006-C.E. exempted machinery and pipes for water treatment plants. The notification was amended, and under Notification No. 6/2007-C.E., pipes for water delivery were specified under sub-clause (2) and a 20 cm diameter requirement was added under sub-clause (3) for integral pipes in water supply projects.

4. Certificate Requirement: To claim duty exemption, a certificate from the relevant authority confirming the intended use was necessary. The appellants had provided the required certificate as per the conditions of the notifications.

5. Judgment Analysis: The Tribunal found that the Commissioner's interpretation, applying the 20 cm diameter requirement to all sub-clauses of Clause 7, was incorrect. Sub-clause (2) exempted pipes for water delivery without specifying a diameter limit, unlike sub-clause (3) for integral pipes in projects.

6. Conclusion: The Tribunal held that the Commissioner's decision was flawed as sub-clause (3) did not apply to sub-clause (2) and the diameter requirement was not universal across all sub-clauses. Consequently, the appeal was allowed, the impugned order was set aside, and the appellants were granted relief from the demand raised by the department.