2022 (3) TMI 1101 - AT - Central Excise

Valuation - ball and roller bearing - related party transactions or not - entire goods are sold through SKF India Limited - benefit of N/N. 6/2006-CE dated 01.03.2006 - HELD THAT - On careful consideration of the submissions made by learned Authorised Representative, although the order of this Tribunal has been challenged before the Hon ble Apex Court but no stay has been granted by the Hon ble Apex Court till date. Moreover, the matter has come before the Hon ble Apex Court on four occasions in the past. In these circumstances, without obtaining stay of operation of the order of this Tribunal, we decline the request of keeping the matter pending, made by learned Authorised Representative. Therefore, the issue is proceeded to be decided. The appellant and SKF India Limited cannot be treated as related parties. Therefore, the transaction value between the appellants and SKF India Limited is the correct value for the purpose of assessment. Further, the appellant is entitled for the benefit of exemption Notification No. 6/2006-CE dated 01.03.2006 as claimed for the clearances made for generating electricity for wind mills. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Whether the appellants and another party are related persons for excise duty purposes.
2. Whether the appellants are entitled to the benefit of exemption under Notification No. 6/2006-CE for bearings sold for generating electricity from wind.

Analysis:

1. The first issue revolved around determining if the appellants and another party were related persons for excise duty purposes. The Revenue contended that the two entities were related as per the Central Excise Act, asserting control by a holding company and shared costs. However, the Tribunal found that the loan transaction between the entities was a business transaction, not creating an interest in each other's business. The Tribunal also highlighted that shared staff costs and marketing arrangements were normal business transactions, not indicative of a related party relationship. Ultimately, as no evidence was produced to establish a related party status, the Tribunal allowed the appeal on this count, accepting the transaction value between the parties for assessment purposes.

2. The second issue focused on whether the appellants were eligible for the exemption under Notification No. 6/2006-CE for bearings used in wind-operated electricity generators. The Revenue argued that only parts of generators were exempted, not windmill parts. However, the Tribunal referenced a circular specifying items used by wind-operated generators that were exempt from excise duty, including towers, nacelles, rotors, and controllers. The Tribunal emphasized that the entire windmill constituted a wind-operated electricity generator, not just the generator component. Additionally, a precedent decision supported the appellants' case regarding specific parts being considered as part of the tower. The Tribunal concluded that the bearings used in various components of the windmill fell under the exemption notification, rejecting the Revenue's narrow interpretation. Consequently, the Tribunal allowed the appeal, holding that the appellants were entitled to the benefit of the exemption for bearings used in wind energy generation.

In the final order, the Tribunal set aside the impugned orders, allowing the appeals with consequential relief. The decision was based on the findings that the appellants and the other party were not related for excise duty purposes and that the appellants were entitled to the exemption under Notification No. 6/2006-CE for bearings used in wind-operated electricity generators.