2024 (2) TMI 905 - AT - Central Excise

Clearance of goods in the nature of ceramic fiber board and ceramic fiber twisted rope - goods are used for insulating the furnaces /Kilns - benefit of N/N. 33/2005-CE dated 08.09.2005 denied - HELD THAT - It is seen that the main reason for denying the benefit of Notification is that these goods do not have any direct role in power generation - the said view cannot be endorsed upon. The Ceramic Fiber Board and Ceramic Fiber Twisted Rope are required for making the insulation on the furnace and without such insulation the heat cannot be controlled and so also the safety around the furnace cannot be ensured. These form essential part of the boiler and therefore are eligible for the benefit of Notification. The Tribunal in the case of CHEMPLAST SANMAR LTD. VERSUS COMMISSIONER OF C. EX., TIRUCHIRAPALLI 2006 (8) TMI 51 - CESTAT, CHENNAI had observed that these materials are eligible for credit as capital goods as these form part of the furnace and pipeline used in the factory. Again it is to be stated that as per the exemption Notification, all items which are used for setting up of the project for generation of power using non-conventional materials is eligible for the benefit of exemption. The demand cannot sustain. The impugned order is set aside - Appeal allowed.

Summary

Issues involved:
The issue involved in this case is whether the goods in the nature of ceramic fiber board and ceramic fiber twisted rope are eligible for exemption under Notification No. 33/2005-CE dated 08.09.2005.

Comprehensive Details:

Issue 1: Eligibility for Exemption under Notification No. 33/2005-CE

The appellant, engaged in manufacturing ceramic fiber products, procured an order for supply of ceramic fiber board and twisted rope for a power generation project. The Department alleged that these goods were not eligible for the exemption under Notification No. 33/2005-CE as they were used for insulating furnaces and kilns, not directly related to power generation. The Adjudicating Authority and Commissioner (Appeals) upheld this view. The appellant argued that the insulation provided by these materials was essential for controlling heat, ensuring safety, and maintaining temperature in the boiler and power project. Citing a previous case, the appellant contended that such materials are eligible for credit as capital goods.

Decision: The Tribunal disagreed with the view that these goods did not play a direct role in power generation. It noted that the ceramic fiber board and twisted rope were crucial for insulation in the furnace, ensuring heat control and safety, thus forming an essential part of the boiler. Referring to the exemption Notification, which covers items used for setting up power projects using non-conventional materials, the Tribunal allowed the appeal, setting aside the demand for duty, interest, and penalties.

Conclusion: The appeal was allowed with consequential relief, if any, as per the law.