2022 (4) TMI 1155 - AT - Central Excise

Exemption from Central Excise Duty - module mounting structures - supplied to suppliers of solar power water pumping systems for irrigating agriculture fields - eligibility for benefit of notification dated 17.03.2012 - HELD THAT - The Principal Commissioner has rightly concluded that the serial number 10 of List 8 refers to solar power generating system and not to module mounting structures manufactured by the appellant and only parts consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20 of List 8 are exempted from payment of central excise duty. The Principal Commissioner has also correctly appreciated the effect of the amendment made on 11.07.2014 to the aforesaid notification dated 17.03.2012. According to the Principal Commissioner, prior to the amendment only parts consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20 of List 8 were exempted, but after the said amendment the exemption is also available to parts of goods specified at serial numbers 1 to 20 of List 8 in a situation where it is consumed not only within the factory of production for the manufacture of goods specified in List 8 but also when used elsewhere than in the factory of production, subject of course to the condition that the procedure laid down in the relevant rules has been followed - It is, therefore, not possible to accept the contention of learned counsel for the appellant that the module mounting structures should be granted exemption from payment of excise duty in terms of the notification dated 17.03.2012 and not the solar power generating system . An exemption notification has to be strictly construed, as was observed by the Supreme Court in COMMNR. OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND ORS 2016 (5) TMI 185 - SUPREME COURT and in M/S LARSEN TOUBRO LTD. ANOTHER, ECC CONSTRUCTION GROUP VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD 2015 (10) TMI 612 - SUPREME COURT - The distinction sought to be drawn by the learned counsel for the appellant between devices and systems is not of relevance to the present case because both non-conventional energy devices or systems specified in List 8 are covered by the description of excisable goods. There is, therefore, no infirmity in the impugned order passed by the Principal Commissioner - Appeal dismissed.

Summary

Issues Involved:
1. Eligibility for exemption under the notification dated 17.03.2012.
2. Interpretation of "non-conventional energy devices or systems" and "parts" in List 8.
3. Applicability of serial number 332 and 332A of the notification.
4. Validity of the demand for central excise duty, interest, and penalty.

Detailed Analysis:

1. Eligibility for Exemption Under the Notification Dated 17.03.2012:
The appellant, M/s Raydean Industries, claimed exemption from central excise duty under serial number 332 of the notification dated 17.03.2012, arguing that "module mounting structures" are part of a "solar power generating system," which is listed under serial number 10 of List 8. The Principal Commissioner, however, confirmed the demand for central excise duty, asserting that the exemption applies to "non-conventional energy devices or systems" specified in List 8, and not to individual components like "module mounting structures."

2. Interpretation of "Non-Conventional Energy Devices or Systems" and "Parts" in List 8:
The appellant argued that the notification exempts components of the systems listed in List 8, including "module mounting structures" as part of the "solar power generating system." The Principal Commissioner and the Tribunal concluded that the exemption under serial number 332 applies to the entire "solar power generating system" and not to individual components unless they are consumed within the factory of production, as specified in serial number 21 of List 8.

3. Applicability of Serial Number 332 and 332A of the Notification:
The notification was amended on 11.07.2014, omitting serial number 21 from List 8 and inserting serial number 332A, which provided exemption for parts consumed within the factory of production for the manufacture of goods specified in List 8. The Principal Commissioner noted that after the amendment, the exemption also applied to parts used elsewhere than in the factory of production, subject to compliance with the relevant rules. The appellant's "module mounting structures" did not meet these conditions for exemption.

4. Validity of the Demand for Central Excise Duty, Interest, and Penalty:
The demand for central excise duty was based on the interpretation that "module mounting structures" are not exempt under the notification. The Tribunal upheld this view, dismissing the appellant's contention that the exemption should apply to components of the "solar power generating system." The Tribunal also referred to the Supreme Court's stance that exemption notifications must be strictly construed, further supporting the Principal Commissioner's decision.

Conclusion:
The Tribunal confirmed the Principal Commissioner's order, stating that "module mounting structures" are not exempt from central excise duty under the notification dated 17.03.2012. The appeal was dismissed, and the demand for central excise duty, interest, and penalty was upheld. The Tribunal emphasized the need for strict interpretation of exemption notifications and found no merit in the appellant's arguments.