2024 (7) TMI 1586 - AT - Central Excise

Benefit of exemption under N/N.10/1997-CE dated 01.03.1997 for parts of aircraft supplied to specified institutions - Exemption has been denied alleging that the godos cleared by the appellants are only parts of air craft and does not meet the specifications prescribed in the notification and therefore not eligible for the exemption - scope of engineering goods - HELD THAT - The main contention put forward by the appellant is that the Board vide circular dt. 29.2.2016 which has been reproduced above has clarified that the engineering equipments would fall within the items which have been listed for exemption as per Notification No.10/97. It is seen that the Commissioner (Appeals) for subsequent period has considered the very same issue and allowed the exemption observing that the gods which are in the nature of parts of air craft would fall under the category of Engineering Goods . There are no grounds to take a different view. Conclusion - The parts of aircraft can be classified as engineering goods eligible for exemption under N/N.10/1997-CE. The appellant is eligible for the exemption as per N/N.10/1997-CE. Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions presented and considered in this judgment are:

• Whether the appellant is eligible for the benefit of exemption under Notification No.10/1997-CE dated 01.03.1997 for parts of aircraft supplied to specified institutions.
• Whether the parts of aircraft manufactured by the appellant fall under the category of "engineering goods" as clarified by the Central Board of Excise and Customs (CBEC) and are therefore eligible for the exemption.
• Whether the previous decisions and clarifications regarding similar exemptions apply to the appellant's case.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Eligibility for Exemption under Notification No.10/1997-CE

• Relevant Legal Framework and Precedents: The exemption notification provides excise duty exemption for certain goods supplied to specified research institutions, subject to certification and registration conditions. The notification includes scientific and technical instruments, apparatus, equipment, and their accessories, as well as prototypes required for research purposes.
• Court's Interpretation and Reasoning: The court considered the appellant's argument that the parts of aircraft should be classified as "engineering goods," which are covered under the exemption notification as clarified by the CBEC's circular dated 29.02.2016.
• Key Evidence and Findings: The appellant produced certificates indicating that the goods were supplied to National Aerospace Laboratories and Hindustan Aeronautics Ltd., which are recognized research institutions.
• Application of Law to Facts: The court applied the clarification from the CBEC, which expanded the scope of the exemption to include engineering goods, to the appellant's case. The court noted that the Commissioner (Appeals) had previously allowed the exemption for similar goods in subsequent periods.
• Treatment of Competing Arguments: The department argued that the parts of aircraft did not fall under the specified categories in the notification. However, the court found the appellant's reliance on the CBEC's clarification and previous favorable decisions persuasive.
• Conclusions: The court concluded that the appellant is eligible for the exemption under Notification No.10/1997-CE as the parts of aircraft fall under the category of "engineering goods" as clarified by the CBEC.

Issue 2: Application of Previous Decisions and Clarifications

• Relevant Legal Framework and Precedents: The court referred to previous decisions such as Jackson Generators Pvt. Ltd. and Autoprint Machinery Manufacturers (P) Ltd., where similar exemptions were granted under the same notification.
• Court's Interpretation and Reasoning: The court noted that the Commissioner (Appeals) had set aside demands for subsequent periods based on the CBEC's clarification, which was consistent with the appellant's case.
• Key Evidence and Findings: The court considered the appellant's submission of the CBEC's clarification and the favorable decisions for subsequent periods as key evidence supporting their eligibility for the exemption.
• Application of Law to Facts: The court applied the legal principles established in previous decisions to the appellant's case, reinforcing the applicability of the exemption to the parts of aircraft.
• Treatment of Competing Arguments: The department's reiteration of the impugned order's findings was not sufficient to counter the established precedent and the CBEC's clarification.
• Conclusions: The court concluded that the appellant's case aligns with previous decisions and clarifications, supporting their eligibility for the exemption.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "We hold that the appellant is eligible for the exemption as per Notification No.10/1997-CE."
• Core Principles Established: The judgment reinforces the principle that parts of aircraft can be classified as "engineering goods" eligible for exemption under Notification No.10/1997-CE, provided they meet the specified conditions and are supported by appropriate certification.
• Final Determinations on Each Issue: The court set aside the impugned order and allowed the appeal, granting the appellant the benefit of exemption under Notification No.10/1997-CE with consequential relief.

In conclusion, the court's decision underscores the importance of adhering to clarifications issued by the CBEC and previous judicial decisions when interpreting exemption notifications. The appellant successfully demonstrated that their goods fell within the scope of the exemption, leading to a favorable outcome in the appeal.