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2019 (12) TMI 937 - AT - Central ExciseClassification of goods - Bulk Milk Cooler - whether classified under CETH 84186990 or under CETH 84198990 of CETA - benefit of N/N. 6/2006 CE dated. 01.03.2006 and N/N. 12/2012 CE dated. 17.03.2012 - Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - HELD THAT - The Appellant intimated the jurisdictional authorities on 12.01.2012 vide their letter that they are availing exemption from duty on said goods under notification No. 6/2006 - CE dated 01.03.2006 ( Serial No. 5) and 12/2012 dated 17.03.2012 (Serial No. 232). The Stationary Bulk Mill Cooling equipment were supplied by Appellant to Milk Co-operative Societies for use as cold storing and preserving the Milk along with dairy products. The Appellant along with such Bulk Milk Cooler were also clearing bought out items viz. DG Sets, Solar Panels, Milk Pump, Water Pump, Stabilizer etc. and were cleared as per option of customers. The goods were assembled at the premises of co-operative societies. The goods covered under the exemption were Goods specified in List 7 intended to be used for the installation of a cold storage, cold room or refrigerated vehicle, for the preservation, storage, transport or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat. It is an undisputed fact that Bulk Milk Cooler were supplied for installation of cooling facility for preservation and storage of Milk by cooling by Mechanical Appliances. The goods in question are Stationary Pre-cooling equipment which is also not disputed and the product broucher also shows the same. When the bulk milk cooler are in stationary stage and are used for cooling the milk so as to bring down the temperature to 4 degree centigrade with intention of storage and preservation, it is clear that the goods are for use as cold storage of Milk. The undisputed fact is that the goods were used for intended purposes covered by the Notification. It is coupled with the fact that the Appellant had informed their jurisdictional authorities about the clearance of goods under exemption. In such case when the goods are covered by the exemption notification and there is no dispute about the use of goods, we are of the view that the intended benefit be given to the Appellant. Clearances to interconnected undertaking M/s Krishna Allied Industries Ltd. - HELD THAT - The sale price of said company would be chargeable to duty at the end of Appellant in terms of Section 4 (3) (b) (i), we find that said section is applicable where the goods are sold to or through any related party and the assessable value would be eventual sale price to the actual customer - Thus from the perusal of Rule 9, it is clear that in case of sale to interconnected undertaking the assessable value would be the transaction value to the interconnected undertaking only and the sale price of the interconnected undertaking will not merit any consideration. Time limitation - HELD THAT - From the facts of the case no contumacious conduct of the Appellant is appearing. They had bonafide belief that Bulk Milk Cooler is exempted from payment of duty by virtue of exemption notification. In such case it cannot be said that the Appellant had any intention to suppress the fact. Therefore, the demands are time barred also. The Appellant being eligible for exemption are not liable for duty - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of "Bulk Milk Coolers." 2. Eligibility for exemption under Notification No. 6/2006-CE and Notification No. 12/2012-CE. 3. Compliance with conditions for exemption. 4. Demand for duty on other stainless steel articles and utensils. 5. Valuation of goods sold to interconnected undertakings. 6. Allegation of suppression of facts and time-barred demands. 7. Confiscation of goods. Issue-wise Detailed Analysis: 1. Classification of "Bulk Milk Coolers": The Tribunal examined whether "Bulk Milk Coolers" should be classified under Chapter Heading 8418 or 8419 of the Central Excise Tariff Act (CETA), 1985. The product was initially classified by the appellant under CETH 84186990, claiming it as "Stationary Pre-cooling equipment." The revenue contended that it should be classified under CETH 84198990. The Tribunal referred to the case of Praj Industries and the CBEC Tariff Conference, concluding that "Bulk Milk Coolers" are correctly classifiable under Chapter Heading 8418 as they function as refrigerating equipment, maintaining milk at 4 degrees Celsius through mechanical cooling. 2. Eligibility for Exemption under Notification No. 6/2006-CE and Notification No. 12/2012-CE: The appellant claimed exemption under these notifications for "Bulk Milk Coolers." The exemption was denied by the lower authorities on the grounds that the coolers did not qualify as "Stationary Pre-cooling equipment" and were not used for agricultural produce. However, the Tribunal found that the "Bulk Milk Coolers" are used for cooling milk to 4 degrees Celsius, which qualifies them as stationary pre-cooling equipment. The Tribunal held that the exemption is available as the coolers are used for preserving and storing dairy products. 3. Compliance with Conditions for Exemption: The Tribunal examined whether the appellant complied with the conditions laid down in the exemption notifications, specifically the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. The Tribunal found that the goods were used for the intended purpose, and the appellant had informed the jurisdictional authorities about the clearances. It was held that the exemption could not be denied due to non-compliance with procedural conditions when the intended use was undisputed. 4. Demand for Duty on Other Stainless Steel Articles and Utensils: The appellant claimed SSI exemption for other stainless steel articles and utensils. The duty was demanded on the grounds that the aggregate turnover, including "Bulk Milk Coolers," exceeded the exemption limit. The Tribunal held that since "Bulk Milk Coolers" are exempt from duty, their value should be excluded from the turnover calculation, making the appellant eligible for SSI exemption. 5. Valuation of Goods Sold to Interconnected Undertakings: The Tribunal addressed the issue of valuation for goods sold to interconnected undertakings, specifically M/s Krishna Allied Industries Ltd. The revenue argued that the sale price of the interconnected undertaking should be the assessable value. The Tribunal referred to Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, and concluded that the assessable value should be the transaction value to the interconnected undertaking, not their resale price. 6. Allegation of Suppression of Facts and Time-barred Demands: The Tribunal found no evidence of intentional suppression of facts by the appellant. The appellant had informed the department about the product and exemption claims. The Tribunal held that the demands were time-barred as there was no contumacious conduct or intention to evade duty by the appellant. 7. Confiscation of Goods: The Tribunal addressed the confiscation of goods lying in the factory. It was held that the goods were not offending in nature and could not be confiscated. The Tribunal relied on the Nakoda Enterprises case to support this conclusion. Conclusion: The Tribunal allowed the appeal, holding that the appellant is eligible for the exemption under the subject notifications, not liable for duty on "Bulk Milk Coolers," and eligible for SSI exemption on other goods. The impugned order was set aside, and the appeal was allowed with consequential reliefs in accordance with the law.
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