2017 (1) TMI 599 - AT - Central Excise

Benefit of exemption N/N. 3/2004-CE dated 8.1.2004 - denial on the ground that the project for which pipes were supplied has not fulfilled all the conditions inasmuch as there is no water supply plant and no storage facility of the water - Held that - the water supply plant not only include the plant of demineralization or purification of the water but water supply plant also if any plant which is built for water supply, it is covered by the term water supply plant . There is no dispute that the pumping station is a plant which is used for supply of water. Therefore, the water supply plant i.e. pumping plat very much exists in the project. As regards the issue that whether there is storage facility or otherwise, we find that the water after supply from pumping station from the source point it is supplied to the discharge chamber and thereafter it is released for irrigation purpose in the field. It is our considered view that the discharge chamber is nothing but storage facility. Both the conditions of existence of water supply plant and storage facility are fulfilled - appellants are entitled for the exemption notification No. 3/2004-CE - appeal allowed - decided in favor of appellant.

Summary

Issues:
Exemption denial based on project conditions fulfillment.

Analysis:
The appellant, engaged in PVC pipe manufacturing, cleared goods under an exemption but faced denial by Revenue due to project conditions not met, lacking a water supply plant and storage facility. The appellant argued that pipes supplied met exemption criteria under Notification No. 3/2004, covering water delivery from source to plant and storage. The pumping station was deemed the water supply plant, and the discharge chamber the storage facility, meeting conditions. The appellant obtained a certificate from the District Magistrate, fulfilling the notification requirement. Legal precedents supported the appellant's case. The Revenue reiterated the impugned order findings.

The Tribunal examined whether the project had a water supply plant and storage facility. The Explanation to Notification No. 3/2004 broadened the water supply plant definition to include any plant for water supply, covering the pumping station. The Tribunal concluded that the pumping station qualified as a water supply plant. Regarding storage facility, water was supplied from the pumping station to the discharge chamber, then released for irrigation, indicating the discharge chamber served as a storage facility. Both conditions were deemed fulfilled, supported by the cited legal judgments.

In light of the arguments and analysis, the Tribunal found the appellants entitled to the exemption under Notification No. 3/2004-CE. As a result, the impugned order was set aside, and the appeal was allowed. The judgment was pronounced in court on 20.12.2016.