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2018 (5) TMI 969 - AT - Central ExciseShip stores supplied to Indian Navy - exemption under N/N. 64/1995-CE - exemption on electric motor, which is being supplied to Indian Navy, alongwith certificate from Indian Navy - denial on the ground that since electric motors are not consumed by Navy within a short period and have a long life, they cannot be treated as items meant for consumption on board a vessel. Held that - Tribunal in the case of Essar Steel Ltd. Vs. Commissioner of Central Excise, Surat-I 2008 (3) TMI 275 - CESTAT AHMEDABAD has held that MS plates and sheets supplied to Navy against a certificate issued by them have to be extended the benefit of the notification, as against the Revenue stand that the same are raw material and not covered by the expression stores - Hon ble Supreme Court decision in the case of Commissioner of Central Excise, Surat Vs. Essar Steel India Limited 2014 (6) TMI 345 - SUPREME COURT has observed that once end-use certificate stand issued by the Indian Navy, the doubt entertained by the Customs cannot prevail - benefit allowed - appeal allowed - decided in favor of appellant.
Issues:
1. Exemption under Notification No. 64/1995-CE for goods supplied as ship stores to the Indian Navy. 2. Interpretation of whether electric motors supplied to the Indian Navy qualify as items meant for consumption on board a vessel. 3. Application of precedent decisions and circulars in determining eligibility for exemption. 4. Impact of end-use certificate issued by the Indian Navy on Customs' doubt. Issue 1: Exemption under Notification No. 64/1995-CE for goods supplied as ship stores to the Indian Navy The appellant, a manufacturer of electric motors supplied to the Indian Navy, claimed exemption under Notification No. 64/1995-CE. The Revenue denied the benefit, arguing that electric motors, due to their long life and non-immediate consumption, do not qualify as items meant for consumption on board a vessel. However, the appellant produced a certificate from the Indian Navy supporting their claim. Issue 2: Interpretation of whether electric motors supplied to the Indian Navy qualify as items meant for consumption on board a vessel The Tribunal referred to the case of Essar Steel Ltd. Vs. Commissioner of Central Excise, Surat-I and held that goods supplied to the Navy against a certificate issued by them should be extended the benefit of the notification. The Tribunal cited various precedent decisions and a Board Circular to support this interpretation. Additionally, in the case of Indian Telephone Industries Ltd., it was established that items with a long life, such as telecommunication equipment, can still be considered as store consumption, and benefit cannot be denied solely based on longevity. Issue 3: Application of precedent decisions and circulars in determining eligibility for exemption The Tribunal considered the decisions in Essar Steel Ltd. and Indian Telephone Industries Ltd., along with Circular No. 89/1988-CX.6, to conclude that goods supplied to the Navy against their certificate should be eligible for the exemption. The Tribunal emphasized that the end-use certificate issued by the Navy should prevail over any doubts entertained by the Customs authorities. Issue 4: Impact of end-use certificate issued by the Indian Navy on Customs' doubt Citing the Hon'ble Supreme Court decision in the case of Commissioner of Central Excise, Surat Vs. Essar Steel India Limited, the Tribunal noted that once an end-use certificate is issued by the Indian Navy, any doubts raised by Customs cannot prevail. Consequently, the Tribunal found no merit in the Revenue's case, set aside the impugned orders, and allowed both appeals with consequential relief. This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal CESTAT MUMBAI, providing a comprehensive understanding of the legal reasoning and precedents applied in the decision-making process.
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