2014 (9) TMI 741 - AT - Central Excise

Exemption under Sl. No. 7 of the Notification No. 6/2006-CE - MS Pipes cleared for Water supply scheme - Certificate of intended use - Held that - appellant is a job-worker - no excise duty is chargeable in the facts and circumstances of the case under the provisions of Notification No. 6/2006-CE on MS Pipes etc. cleared to Nagpur Municipal Corporation for water supply scheme, Pune-IV from it sources to the plant and from there to start point and also satisfied the other condition being pipes of outer diameter exceeding 10 cm when such pipes are integral part of the water supply project stipulated at Sr. No.1 of the Notification is satisfied. Further, the appellant satisfied the condition No. 4 of the said Notification which requires for production of a certificate issued by Collector/District Magistrate/Development Commissioner of the District in which the plant is located, is produced to the Dy. Commissioner / Addl. Commissioner of Central Excise, having the jurisdiction, to the effect that such goods are cleared for the intended use specified in column No. 3 of the table. We further hold that such certificates have to be issued only post supply made by the District authority, as the said condition requires certificate to the effect that such goods are cleared for the intended use . Thus, we also hold that the Commissioner has misconceived the condition by observing in the impugned order that such certificate is required to be obtained prior to clearance of the concerned goods/pipes - matter remanded back - Decided in favour of assessee.

Summary

Issues Involved:
1. Determination of whether the appellants are manufacturers or job-workers.
2. Eligibility for exemption under Notification No. 6/2006-CE.
3. Compliance with procedural requirements for availing exemption.
4. Imposition of duty, interest, and penalties.

Detailed Analysis:

1. Determination of Whether the Appellants are Manufacturers or Job-Workers:
The appellants argued that they are job-workers for the principal manufacturer, a Joint Venture between M/s China Railway Shisigu Group Corporation Ltd. (CRSGC) and M/s SEW Infrastructure Ltd., and not manufacturers. They claimed that the Joint Venture provided the premises and principal raw materials (MS sheets), while the appellants provided machinery, labor, and other consumables. The Commissioner held that the appellants were manufacturers as they had all necessary infrastructure. The Tribunal, however, concluded that the appellants acted as job-workers, as evidenced by the work orders and the nature of the agreements.

2. Eligibility for Exemption under Notification No. 6/2006-CE:
The appellants claimed exemption under Sl. No. 7 of Notification No. 6/2006-CE for MS Pipes used in water supply projects, based on certificates obtained from the District Magistrate. The Commissioner denied the exemption, stating that the required certificates were not obtained before the production or clearance of goods. The Tribunal held that the appellants satisfied the conditions of the notification, including the requirement for pipes of outer diameter exceeding 10 cm being integral to the water supply project. The Tribunal found that the certificates were valid and did not need to be obtained prior to clearance.

3. Compliance with Procedural Requirements for Availing Exemption:
The Commissioner argued that the appellants failed to comply with procedural requirements, specifically obtaining and submitting certificates before clearance. The appellants contended that the notification did not specify that certificates had to be obtained before clearance. The Tribunal agreed with the appellants, stating that the notification required certificates to be produced to the jurisdictional excise authorities, but did not mandate their submission before clearance. The Tribunal cited the Supreme Court ruling in Commissioner of Central Excise Vs. Mahaan Dairies, emphasizing that adding conditions to a notification is not permissible.

4. Imposition of Duty, Interest, and Penalties:
The Commissioner imposed a duty of Rs. 7,10,38,280/- along with equal penalties and interest, based on the alleged non-compliance with the notification. The appellants argued they were under a bona fide belief that they were job-workers and entitled to exemption. The Tribunal found that the appellants acted in good faith and met the conditions for exemption. Consequently, the Tribunal set aside the impugned orders, negating the duty, interest, and penalties imposed by the Commissioner.

Conclusion:
The Tribunal concluded that the appellants were job-workers and not liable for excise duty under Notification No. 6/2006-CE. The appellants met the conditions for exemption, and the procedural requirements were misinterpreted by the Commissioner. The Tribunal set aside the impugned orders and allowed the appeals with consequential benefits.