2019 (4) TMI 722 - AT - Central Excise

Goods manufactured in the factory belonging to State Government and intended for use by State Government - benefit of N/N. 74/93-CE, dated 28.02.1993 - appellant contended that it is an authority constituted by the State of Maharashtra under Section 5 of the Electricity (supply) Act, 1948, as amended and thus, the PSC Poles manufactured by it would be treated as manufactured by a factory of State Government. Held that - The issue arising out of the present dispute is no more res integra, in view of the decision of the Larger Bench of the Tribunal, in the case of Asst. Engineer (Civil) v. CCE, Raipur 2008 (9) TMI 105 - CESTAT NEW DELHI , wherein it has been held that the factory belonging to the Chhattisgarh State Electricity Board did not belong to the State Government and poles are used by themselves for their electrification and thus, the condition of the notification has not been complied with. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Interpretation of exemption Notification No. 74/93-CE regarding Central Excise duty exemption for goods manufactured by the State Government.
2. Whether the appellant, being an authority constituted by the State of Maharashtra under the Electricity Act, qualifies for exemption under the notification.
3. Application of the decision of the Larger Bench of the Tribunal in a similar case involving the Chhattisgarh State Electricity Board to the present case.

Analysis:
1. The case involved the appellant engaged in manufacturing P.S.C poles, cleared at a nil rate of duty under exemption Notification No. 74/93-CE. A show-cause notice proposed a duty demand, which was confirmed by the adjudicating authority. The ld. Commissioner (Appeals) upheld the demand but set aside the penalty. The appellant contended that as an authority constituted by the State of Maharashtra under the Electricity Act, the manufactured poles should be treated as those of the State Government.

2. The key issue was whether the appellant's status as an authority under the Electricity Act qualified it for the exemption under Notification No. 74/93-CE. The Tribunal referred to a decision of the Larger Bench in a similar case involving the Chhattisgarh State Electricity Board. The Larger Bench held that mere ownership by the State Government does not equate the entity to a department of the Government. As the poles were used by the Board itself and not by a State Government department, the conditions for exemption were not met. The Tribunal found this decision applicable to the present case, leading to the dismissal of the appellant's appeal.

3. The Tribunal's decision was based on the precedent set by the Larger Bench, emphasizing the importance of both conditions specified in the notification for claiming exemption. The judgment highlighted that ownership by the State Government alone does not suffice for exemption if the goods are not intended for use by a State Government department. The dismissal of the appeal was a direct consequence of the Tribunal's application of the precedent, reinforcing the significance of compliance with all conditions for claiming exemptions under Central Excise duty notifications.