2019 (3) TMI 944 - AT - Central Excise

Supply of Expansion Bellow which is used as joints for the pipes from the source of water to water treatment plant - N/N. 3/2004-CE dated 08.01.2004 - case of the department is that since the Expansion Bellow is not part of water treatment plant nor it is pipe and the same is used for jointing the pipes while laying the pipeline, therefore it is not covered under the said notification - Held that - There is no dispute between the assessee and the Revenue inasmuch as the goods namely Expansion Bellow was used as joints while laying pipeline from source of water to water treatment plant. From the notification, it is clear that either the goods should be water treatment plant and its instrument, parts apparatus and appliances, auxiliary equipment and components/parts of water treatment plant and as per the description at serial No. 2, pipelines for delivery of water from its source to the plant. However, in the present case, Expansion Bellow is not part of water treatment plant and therefore, it is not covered in description serial No. 1 and it is also not a pipe which can be covered under serial No. 2 - thus, the Expansion Bellow which is neither part of the water treatment plant nor it a pipe, it is therefore, not eligible for exemption. Penalty - Held that - Since the issue relates to interpretation of the notification, there is no malafide on the part of the appellant - penalty set aside. Benefit of cum-duty price - Held that - Since exemption has been denied, the duty should be recomputed considering the cum-duty benefit as held by the Hon'ble Supreme Court in the case of CCE, Delhi vs. Maruti Udyog Limited 2002 (2) TMI 101 - SUPREME COURT . Therefore, the Adjudicating Authority should re-calculate the duty by considering the benefit of cum-duty. Appeal allowed in part and part matter on remand.

Summary

Issues:
Interpretation of Notification No. 3/2004-CE regarding exemption for Expansion Bellow used in water treatment plant components.

Analysis:
The case involved a dispute regarding the classification of Expansion Bellow used in laying pipelines from the water source to a water treatment plant under Notification No. 3/2004-CE. The appellant argued that the Expansion Bellow should be considered a component of the water treatment plant and thus exempt from duty under the said notification. The department contended that the Expansion Bellow was not part of the water treatment plant or a pipe, making it ineligible for the exemption.

The appellant relied on several judgments to support their claim, emphasizing that the Expansion Bellow's connection to the water treatment plant should qualify it for the exemption. However, the Revenue maintained that the exemption only applied to water treatment plant components or pipes for water delivery, excluding the Expansion Bellow in question.

Upon reviewing the submissions and the notification's entry, the Tribunal observed that the Expansion Bellow did not fall under the specified categories for exemption. It was noted that the Bellow was neither a part of the water treatment plant nor a pipe for water delivery, rendering it ineligible for the exemption provided in the notification. The Tribunal concluded that the judgments cited by the appellant were not directly relevant to the current case.

Regarding the penalty imposed, the Tribunal found no malafide intent on the appellant's part, attributing the issue to an interpretation of the notification. Consequently, the penalty was set aside. Additionally, the Tribunal directed the Adjudicating Authority to recalculate the duty considering the cum-duty benefit, in line with a precedent set by the Hon'ble Supreme Court.

In the final decision, the Tribunal partially allowed the appeal by modifying the impugned order to reflect the exemption denial for the Expansion Bellow and directing the recalculation of duty with the cum-duty benefit. The judgment highlighted the importance of aligning goods with the specific criteria outlined in the exemption notification for a successful claim.