2015 (1) TMI 128 - AT - Central Excise

Whether the fuel and ash handling system manufactured by the appellant are eligible for exemption under Notification No.6/2002-CE dt. 1.3.2002 - in the nature of non-conventional energy device/system as specified or not - Held that - Notification No. 6/2002-CE dt. 1.3.2002 grants exemption at Sr. No. 237 to non-conventional energy device/system specified in List-9 attached to the Notification - Sr. No. 21 of List-9 grants exemption to parts consumed within the factory of production of such parts. The appellant has taken the plea that the fuel ash handling system manufactured by them feeds biomass/bagasse to the boiler which generates steam. The steam from the boiler is conveyed to the steam generator which generates electricity. It is quite clear that the ash handling system only feeds the boiler with the biomass. By no stretch of imagination can this system be called waste conversion device that produces energy. What produces energy is the steam turbine generator or atmost, the boiler and the steam generator taken together. The word which is used at Sr. No. 16 of List-9 is Device . The word used is not Plant in which case the ash handling system could be considered as part of the plant. - Exemption denied. Whether the demand of duty is justified in view of the fact that Annexure I granting exemption was issued by Assistant Commissioner having jurisdiction over M/s. BCML to the Assistant Commissioner having jurisdiction over the appellants factory - Held that - The appellants have dispatched their goods namely fuel and ash handling system under a series of invoices over a period of time and have stated that the A.R. 3A documents supporting the invoices were received back duly acknowledged and with duly completed re-warehousing certificates countersigned by the Central Excise authorities at the end of M/s. BCML. Such copies of A.R. 3As duly certified after re-warehousing were continuously submitted to their Superintendent of Range-V, Pune. It is to be noted that these facts are not disputed by Revenue. It is also stated by the Ld. Consultant that Annexure-I is still live and has not been cancelled by the Central Excise authorities. The Commissioner (Appeals) in her order acknowledges that the Annexure has been signed by the AC/DC Central Excise but has not raised the question of cancellation of Annexure I . In fact the Commissioner (Appeals) states that Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule 2001 procedure is not applicable but at the same time does not go into the question of validity of Annexure-I or the cancellation of Annexure-I. It is, not understood how the show cause notice could be issued demanding duty without proceedings from the time of issue of show cause notice to adjudication to the Commissioner (Appeals) order, the Annexure-I is proposed to be cancelled. Annexure-I which clearly granted exemption to the appellants has not been cancelled. Therefore, the demand of duty against the appellants and imposition of penalty is not legal - Decided partly in favour of assessee.

Summary

Issues:
1. Eligibility for exemption under Notification No.6/2002-CE dt. 1.3.2002
2. Validity of Annexure "I" granting exemption

Analysis:

Issue 1:
The case involved the appeal against an order confirming duty demand and penalties imposed on the appellant and related parties. The appellant supplied Fuel and Ash Handling System to another party under an exemption claim under Notification No. 6/2002. The dispute arose regarding the eligibility of the goods for exemption under the said notification. The appellant argued that the system was an integral part of a waste conversion device producing energy. However, the Tribunal found that the system did not qualify as a waste conversion device producing energy as per the notification's criteria. Even if considered as part of the device, the exemption was only applicable if the parts were consumed within the factory of production, which was not the case here. Therefore, the goods were deemed ineligible for exemption under Notification No. 6/2002-CE dt. 1.3.2002.

Issue 2:
Regarding the validity of Annexure "I" granting exemption to the appellant, the Tribunal observed that the Annexure was issued by the jurisdictional Central Excise authority at the end of the receiving party, not the appellant's jurisdiction. The Annexure allowed the appellant to clear goods without duty payment for a specific purpose. The Tribunal noted that the Annexure remained valid and had not been canceled by the authorities. Citing a relevant judgment, the Tribunal emphasized that unless the Annexure was canceled following proper procedure, demanding duty without challenging the Annexure's validity was not permissible. As the Annexure granting exemption to the appellant was still in force, the demand of duty and penalties were deemed unjustified. The Tribunal set aside the adjudication order and allowed the appeal in favor of the appellant.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both sides, and the Tribunal's reasoning leading to the final decision in the case.