2015 (5) TMI 54 - AT - Central Excise

Denial of Duty exemption under notification no.6/2002-CE (Sl.No.196 A) as amended by notification no.47/2002-CE dated 6.9.2002 - Held that - Both the sides agree that the present issued stands decided by the Tribunal in favour of the appellant in the case of CCE, Kolkata-III Vs. Electrosteel Casting Ltd. reported in 2008 (10) TMI 424 - CESTAT, KOLKATA and the Revenue's appeal against this order was dismissed by the Apex Court vide judgement reported in 2009 (8) TMI 1123 - SUPREME COURT . Even otherwise also, since the exemption notification exempts the pipes needed for delivery of water from its sources to the water treatment plant and from there to the storage facility and since in this case, on account of hilly area between the water source and the water treatment plant, the water had to be carried to a temporary storage facility on the hill by booster pumps, the temporary water facility on the hill cannot be treated final storage facility and the benefit of the exemption notification can not be confined only to the pipes need for the supply to the temporary storage facility on the hill. In view of this, the impugned order is not sustainable - Decided in favour of assessee.

Summary

Issues:
Interpretation of central excise duty exemption notification for pipes used in water delivery system.

Analysis:
The appellant, a manufacturer of pipes, cleared a certain quantity of pipes to Kerala Water Authority at nil rate of duty under a central excise duty exemption notification. The dispute arose when the department objected to the appellant's eligibility for exemption on the pipes used beyond a certain point in the water delivery system. The department contended that the exemption should only apply to the pipes used for carrying water up to a specific storage tank on the hill. A duty demand was raised against the appellant by the Assistant Commissioner, which was upheld by the Commissioner (Appeals) leading to the current appeal.

Upon hearing both sides, it was noted that a similar issue had been decided in favor of the appellant by the Tribunal in a previous case. The Tribunal held that the exemption notification covers pipes needed for delivering water from its source to the water treatment plant and then to the storage facility. In this case, due to the hilly terrain, water had to be temporarily stored on the hill before reaching the final storage facility. The Tribunal concluded that the temporary storage facility on the hill cannot be considered the final storage facility, and therefore, the exemption should not be limited to the pipes supplying water only to the temporary storage facility. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.