2005 (11) TMI 6 - AT - Central Excise

Ship stores goods supplied for construction of ship/vessels and not for consumption on board a vessel of Indian Navy/Coast Guard - benefit of exemption notification no. 64/95

Summary

Issues:
1. Eligibility for exemption from payment of duty for goods supplied for consumption on board a vessel of the Indian Navy.
2. Interpretation of Notification 64/95-CE dated 16.3.1995.
3. Applicability of modvat credit benefit.

Analysis:

The appeals revolve around the eligibility for exemption from payment of duty for goods supplied for consumption on board a vessel of the Indian Navy as per Notification 64/95-CE dated 16.3.1995. The department contended that the supply was for ship construction, not for consumption on board, necessitating duty payment on control panels. The Tribunal referred to a precedent where exemption was denied for goods supplied for ships under construction, despite certificates. The Tribunal rejected the respondents' reliance on a different case and emphasized the lack of evidence that the control panels were not for ships under construction as required by the notification. Consequently, the respondents were deemed ineligible for exemption. However, the Tribunal acknowledged the cum duty price principle based on a Supreme Court ruling and granted abatement if not already applied. The Tribunal also allowed modvat credit, subject to duty paying document verification.

Regarding the interpretation of Notification 64/95, the Tribunal remanded the case for redetermination of duty liability considering the cum duty price principle and verifying the modvat credit claim. The Tribunal declined the Revenue's plea for restoring a penalty, deeming it unfit in this case. Ultimately, the appeals were partly allowed, with the respondents not penalized.

In conclusion, the Tribunal clarified the ineligibility for exemption under Notification 64/95, directed a reassessment of duty liability, acknowledged the cum duty price principle, allowed modvat credit, and rejected the restoration of the penalty.