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2013 (12) TMI 30 - AT - Central ExciseEligibility for Exemption under Notification No. 3/2004 Pipes cleared for water supply Project Held that - What has been done is not a mere pump house but in reality the plant is built to ensure that the water supplied to the plant is of required quality and water inflow & outflow can be regulated - there is a water supply plant and a storage space and therefore the pipes supplied by the appellants are eligible for exemption. The exemption is claimed for pipes for moving water from the source to the distribution point - the principle is that exemption has to be given a strict meaning and it should not be extended - exemption is claimed for movement of water up to from distribution point only from source - appellants have a case on merit on the ground that the pump house can be considered supply plant and cistern a storage point - When a departmental officer has taken a view in favour of the appellant, naturally the question of applying extended period for imposing penalty should not arise Decided in favour of Assessee.
Issues:
Excise duty demand on pipes for water supply projects under Notification No. 3/2004-CE; Eligibility for exemption based on presence of water supply plant and storage facility; Interpretation of "water supply plant" and "storage facility" under the exemption notification; Applicability of exemption to pipes used for moving water beyond the first storage point. Analysis: The judgment revolves around the demand of excise duty amounting to Rs. 5,57,73,384/- imposed on the appellants for pipes supplied for water supply projects, claiming exemption under Notification No. 3/2004-CE dated 08.01.2004. The issue at hand is whether the pipes are eligible for exemption based on the presence of a water supply plant and storage facility as required by the notification. The appellant argued that the pipes were supplied for Lift Irrigation Schemes in Andhra Pradesh, supported by certificates from the District Collector. They contended that the pump house with necessary installations should be considered a water supply plant, and the cistern should be regarded as a storage facility. Additionally, they highlighted previous decisions supporting a broader interpretation of the exemption criteria. On the other hand, the department emphasized strict interpretation of the notification, stating that a mere pump house does not qualify as a water supply plant, and the cistern is not a storage point. They argued against relying on previous decisions related to drinking water supply cases. The Tribunal analyzed the notification's language, noting that it exempts pipes for delivering water from source to plant and then to the storage facility. They delved into the definition of "water supply plant," observing the equipment used in the pump house and the role of cisterns in storing water. The Tribunal concluded that the pump house and cistern could indeed be considered a water supply plant and storage space, making the pipes eligible for exemption. Furthermore, the Tribunal explored an alternative perspective, drawing from a previous decision extending the exemption to pipes beyond the first storage point. They reasoned that the pipes for moving water up to the distribution point should be eligible for exemption, considering it a more deserving case. Ultimately, the Tribunal found merit in the appellant's arguments, determining them eligible for exemption for the pipes supplied. They also considered the Commissioner's decision to drop proceedings for a subsequent period in favor of the appellant, further supporting the appellant's case. In conclusion, the appeal was allowed in favor of the appellant, granting consequential relief in accordance with the law.
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