2017 (7) TMI 436 - AT - Central Excise

Benefit of N/N. 6/2002-CE dated -1.03.2002 - clearance of control panel and bus duct - Revenue is of the view that the control panel and bus duct has been cleared for the purpose of controlling and distribution of power and are not used for devise or for a system of non-conventional energy as mentioned in the notification - Held that - The appellants have furnished the certificate issued by the Non-conventional Energy Development Corporation of AP Government, wherein it has stated that it is required for the power project of the said corporation. It is well clear from the certificate itself that the goods are intended to be used for non-conventional energy devise. The adjudicating authority has denied the benefit merely holding that the control panel and bus ducts cannot produce energy independently and therefore, is not eligible for the benefit of exemption under N/N. 6/2002. The Commissioner Appeals has rightly analyzed that if this interpretation is to be accepted then the benefit of notification can be claimed only by those manufacturers who are capable of manufacturing the entire non-conventional energy system by themselves. This would not be practically or logically possible that the word device producing energy is not to be interpreted in such a manner to deny the benefit. Appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of Notification No. 6/2002-CE for exemption eligibility based on the use of specific goods in non-conventional energy devices/systems.

Analysis:
The appellants were involved in manufacturing various items falling under Chapter 85 of the Central Excise Tariff Act, 1985, and claimed full exemption under Notification No. 6/2002-CE. The notification granted exemption to goods used in non-conventional energy devices/systems specified in list-9 appended to the notification. The appellants provided a certificate from the Non-Conventional Energy Development Corporation of the Government of Andhra Pradesh, stating that the items were required for a power project. The department issued a Show Cause Notice, contending that the goods were used for controlling and distributing power, not for non-conventional energy systems. The original authority upheld the demand and imposed a penalty, which was later set aside by the Commissioner (Appeals), leading to the current appeal.

The key issue revolved around the interpretation of the notification regarding the eligibility for exemption based on the use of goods in non-conventional energy devices/systems. The appellants' certificate from the Non-Conventional Energy Development Corporation indicated the necessity of the items for a power project, aligning with the requirement of the notification. The Commissioner (Appeals) referenced a Circular by the CBEC, emphasizing that the benefit of the notification extends to machinery, components, equipment, etc., even when cleared in certain conditions, as long as they are part of a complete system. The argument that the goods were merely parts of a system was countered by the Circular, which supported the eligibility for exemption. Additionally, the certification from the specialized agency established by the Government of Andhra Pradesh for non-conventional energy projects further validated the requirement of the goods for the project. The adjudicating authority's denial of the benefit based on the goods' inability to produce energy independently was refuted by the Commissioner (Appeals), who highlighted the impracticality of such an interpretation, as it would restrict the exemption to manufacturers capable of producing entire energy systems independently.

Ultimately, the Tribunal agreed with the Commissioner (Appeals), dismissing the appeal as lacking merit. The decision emphasized the logical and practical interpretation of the notification to ensure that manufacturers utilizing goods in non-conventional energy projects could avail the exemption, even if the goods themselves did not independently produce energy.