2007 (10) TMI 180 - AT - Central Excise

Appellants manufactured parts of Vibration Isolation Systems and claimed exemption u/not.. 6/2002, Entry No. 21. - impugned item can be considered as parts of waste convention devices producing energy so original authority denied the exemption - item 21 of list 9 of not. 6/02 indicates that the exemption is available only for captive consumption tribunal cannot ignore such condition stipulated in notification so exemption not available

Summary

Issues:
1. Denial of exemption on parts of Vibration Isolation Systems under Notification No. 6/2002.
2. Interpretation of "consumed within the factory of production" for exemption eligibility.
3. Comparison of Tribunal's decision on similar notification with the present case.
4. Application of the principle of strict construction of notifications.
5. Exemption eligibility for parts supplied to other units for Non-Conventional renewable energy projects.

Analysis:
1. The appeal was filed against the denial of exemption on parts of Vibration Isolation Systems under Notification No. 6/2002. The original authority demanded duty and imposed a penalty, which was upheld by the Commissioner (Appeals). The appellants contended that the exemption should not be denied based on where the parts were consumed. They relied on a Tribunal decision that considered the tower of a wind mill, emphasizing that parts used in production should be considered part of the whole system. The Tribunal found the 'flanges' to be part of the Wind Operational Electric Generator (WOEG) and upheld the exemption.

2. The issue of "consumed within the factory of production" was crucial for exemption eligibility. The Revenue argued that since the goods were not consumed within the factory but cleared to another unit, the exemption condition was not fulfilled. They cited a Supreme Court decision emphasizing strict construction of notifications. The appellant supplied goods for a Non-Conventional renewable energy project, claiming exemption under item 21 of the notification. However, the condition that parts should be consumed within the factory of production posed a challenge for exemption eligibility, leading to the dismissal of the appeal.

3. A comparison was drawn with a Tribunal decision on a similar notification, where the benefit of the exemption was not denied based on consumption within the factory. However, in the present case, the Tribunal found that the condition of consumption within the factory of production was a crucial factor for exemption eligibility, leading to the dismissal of the appeal.

4. The principle of strict construction of notifications was applied, emphasizing that exemptions should not be liberally construed to enlarge their scope. The Revenue's argument was supported by the strict interpretation of the notification's conditions, leading to the dismissal of the appeal based on the specific requirement of consumption within the factory of production.

5. The eligibility for exemption for parts supplied to other units for Non-Conventional renewable energy projects was discussed. While the impugned goods were meant for such projects, the condition of consumption within the factory of production limited the exemption to captive consumption only. The Tribunal upheld the impugned order, emphasizing that the exemption was not available for parts supplied to other units, ultimately leading to the dismissal of the appeal.