2014 (4) TMI 53 - AT - Central Excise

Benefit of Notification No.10/97-CE dated 1.3.97 - Production of requisite certificate - Held that - Respondents cleared the goods by availing the benefit of Notification NO.10/97-CE. As per the Notification, the manufacturer has to produce necessary certificate issued by the office not below the rank of Dy. Secretary to the Government of India at the concerned department at the time of clearance of the goods. In the present case, necessary certificate was not produced at the time of clearance of the goods. In the invoice, the respondents specifically mentioned that the goods are cleared by availing the benefit of Notification NO.10/97-CE. During investigation, when the Revenue found that the respondents are not having the necessary certificate the respondents applied for the certificate. Show-cause notice was issued in September, 2001 demanding duty by denying the benefit of Notification. Thereafter, the respondents produced the certificate issued by the Project Director, ISSA, DRDO, Ministry of Defence. The facts shown that at the time of clearance of the goods even the respondents have not applied for the necessary certificate and claimed the benefit of Notification by suppressing the material fact. As the condition of the Notification was to produce the necessary certificate from the competent authority at the time of clearance of the goods, the respondents applied for the certificate after start of investigation. Further, we find that the applicants are manufacturers of optical fibre & optical fibre cables and they supplied the same in the running length of approximately 88 km. The Notification provides exemption to scientific and technical instruments, apparatus, equipment including computers and also to accessories and spare parts of the above mentioned goods. The optical fibres and cables in running length cannot be considered as accessories and spare parts of the goods specified in the Notification - Decided in favour of Revenue.

Summary

Issues Involved:
1. Benefit of Notification No.10/97-CE dated 1.3.97 in respect of optical fibres and optical cables.
2. Production of necessary certificate as per the conditions of the notification.
3. Time-barred demand and suppression of material facts.
4. Compliance with conditions of the Notification.
5. Classification of optical fibres and cables as accessories or spare parts.

Issue 1: Benefit of Notification No.10/97-CE
The Revenue appealed against the Commissioner (Appeals) order granting the benefit of Notification No.10/97-CE for optical fibres and cables. The Revenue argued that the necessary certificate was produced after the show-cause notice, not by the required authority. They contended that the cables, running up to 88 kms, did not qualify as accessories or spare parts under the Notification. The Revenue also cited the decision of the Supreme Court in Eagle Flask Industries Limited vs. CCE, Pune 2004 to support their position.

Issue 2: Production of Necessary Certificate
The respondents claimed that the certificate was produced after the show-cause notice was issued, stating that the cables were for a turn-key solution. They argued that even though the certificate was late, the benefit of the Notification should not be denied. The respondents also raised the issue of the demand being time-barred and refuted the allegation of suppression of facts.

Issue 3: Time-barred Demand and Suppression
The respondents applied for the certificate after receiving the show-cause notice. They relied on a Tribunal decision where the benefit of a similar Notification was allowed despite the late production of the certificate. However, the Tribunal found that the respondents had not applied for the necessary certificate at the time of clearance, and thus, suppressed material facts. Consequently, the demand was not considered time-barred.

Issue 4: Compliance with Notification Conditions
The Tribunal emphasized strict compliance with the Notification conditions, noting that the necessary certificate should have been produced at the time of clearance. As the certificate was applied for after the investigation began, the benefit of the Notification was rightly denied. The Tribunal highlighted that the optical fibres and cables did not qualify as accessories or spare parts under the Notification.

Issue 5: Classification of Optical Fibres and Cables
The Tribunal upheld the Revenue's appeal, citing the Supreme Court's stance on strict compliance with Notification conditions. The Tribunal concluded that the optical fibres and cables, running over 88 kms, did not fall under the category of accessories or spare parts specified in the Notification. Therefore, the impugned order was set aside, and the department's appeal was allowed.

This detailed analysis of the judgment addresses the key issues involved in the legal dispute regarding the benefit of Notification No.10/97-CE for optical fibres and cables, highlighting the arguments presented by both parties and the Tribunal's reasoning in arriving at its decision.