2013 (8) TMI 265 - AT - Central Excise

Waiver of pre-deposit Stay application - Exemption under notification No.108/95-CE dt. 28.8.1995 is not available when goods are supplied to contractors executing approved projects Held that - Objection of the Revenue that exemption is not available when goods are supplied to contractors executing approved projects is not sustainable in view of the decision of the Hon. Madras High Court in the case of CCE Vs. Caterpillar India Pvt Ltd- 2013 (7) TMI 244 . Benefit of Notification No.108/95-CE dt. 28.8.1995 - Explanation 2 added to Notification 108/95-CE by Notification No. 13/2008-CE dt. 1.3.2008 Held that - Demand can be confirmed only based on a specific finding that the goods were removed outside the project and not based on a probability that goods can be removed out of the project because the exemption is not with reference to the nature of goods - Explanation 2 is only to the effect that exemption is available to goods which are not withdrawn from the project by the supplier or contractor - Appeal is admitted without any pre-deposit.

Issues:
1. Interpretation of exemption notification for goods supplied to projects financed by specified organizations.
2. Impact of Explanation 2 added to Notification 108/95-CE.
3. Allegations of goods not cleared to project authority and potential withdrawal from projects.
4. Adjudication order confirming duty demand, interest, and penalty.
5. Appeal to Tribunal challenging Commissioner (Appeals) decision.
6. Pre-deposit waiver and stay petition for admission of appeal.

Issue 1 - Interpretation of Exemption Notification:
The judgment revolves around the interpretation of a notification providing exemption from excise duty for goods supplied to projects financed by specified organizations. The appellant, a manufacturer of construction equipment, claimed exemption under this notification by supplying goods to contractors executing projects. The Revenue contended that goods should be cleared only to the project authority, not contractors. The appellant argued that the notification did not specify clearance to the project authority and cited a decision by the Delhi Bench of the Tribunal in favor of the assessee. The Hon'ble Madras High Court recently upheld this decision, supporting the appellant's position.

Issue 2 - Impact of Explanation 2:
The Revenue relied on Explanation 2 added to the notification, stating that goods not withdrawn from the project by the supplier or contractor are eligible for exemption. The Revenue alleged that the impugned goods may eventually be cleared out of the project, making them ineligible for exemption. The Tribunal noted that the demand should be based on specific findings of goods being removed outside the project, not on a mere probability. The Tribunal opined that the exemption does not distinguish between goods integral to the project and those that are not. The effect of Explanation 2 would be examined during the final hearing, leading the Tribunal to admit the appeal without pre-deposit and stay the collection of dues.

Issue 3 - Allegations and Adjudication:
The Revenue issued show cause notices alleging that goods were not cleared to the project authority and might have been withdrawn from projects. Three show cause notices demanded duty on goods cleared during a specific period. The combined order confirmed a demand against the appellant, leading to an appeal to the Commissioner (Appeals) and subsequently to the Tribunal. The appellant argued against the allegations, highlighting ongoing projects and the nature of equipment used, emphasizing that removal post-project completion is natural.

Issue 4 - Adjudication Order and Appeal:
The combined order adjudicated the show cause notices, confirming a demand along with interest and penalty. The Commissioner (Appeals) upheld this decision, prompting the appellant to file an appeal with the Tribunal. The appellant sought a waiver and stay of dues for the admission of the appeal, which was granted by the Tribunal.

This detailed analysis of the judgment showcases the complexities involved in interpreting exemption notifications, the impact of subsequent explanations, addressing specific allegations, the adjudication process, and the subsequent appeal to higher authorities with requests for pre-deposit waiver and stay of dues.

← Previous Next →