2004 (2) TMI 240 - AT - Central Excise

Extension of exemption under Notification No. 205/88-C.E. as amended by Notification No. 57/95-C.E., dated 16-3-95 available to turbines for hydroelectric equipment of a capacity not exceeding 15 MW - Assessment of the turbines - demands levy of penalty - HELD THAT - It is to be noted that the board vide their Section 37B/Order No. 4/92, dated 19-5-1992 issued under Section 37B of the Act have prescribed guidelines as to how the provisions of Notification No. 205/88-CE or its predecessor Notification No. 120/81-C.E., dated 15-5-1981 have to be administered. The Commissioner in his order after referring to the said 37B order is holding that, the components/assemblies manufactured and cleared by their party did not form a complete hydraulic turbine either in a knocked down/unassembled or disassembled condition at the time of clearance (emphasis ours). This reading of the instruction is totally misplaced. The fact that the components/sub-assemblies have to be removed in different convoys and not in a single convoy is a practical reality. It is not possible for anyone to remove all components/parts and sub-assemblies together in one single convoy, leave alone in a single transportation. The instructions in the circular also do not provide that at the point of clearance from the factory of the manufacturer all these assemblies/sub-assemblies have to move out together. There is no dispute or contrary evidence to show that the components/assembly/sub-assemblies cumulatively cleared from the appellant's factory do not form a turbine for hydraulic electric equipment for capacity not exceeding 15MW. We however note that there is some discussion in the order of the Commissioner about the certificates produced from the electricity Boards. It is claimed that the certificates did not indicate the supplies of complete turbine instead, they talked about supply of sub-assemblies. We have perused the various invoices presented in the appeal papers and it is noted that the invoice do talk about supply of turbines. The contract is also for supply of turbines. Perhaps on reading of a certificate in isolation that such an impression can be formed. For e.g. a certificate from the Executive Engineer, Electric Project Divisions, Jammu, indicates that they have received from the appellants all the sub-assemblies of hydraulic turbines 3 Nos. 3.0 MW capacity at their site in terms of Contract No. CE/EC/3/1007-10, dated 12-3-93, and on referring to the contract it is possible to gather that the contract was for supply of complete turbines. Therefore, the objection that only sub-assemblies have been supplied is factually incorrect. Accordingly, we hold that on merit, in terms of end use certificate obtained by the appellant, the despatches effected would qualify for duty exemption in terms of Notification No. 205/88-C.E., as amended on 57/95, dated 16-3-95. Since the appeal succeeds on merit, it is not necessary to discuss the other aspects, namely limitation, and penalties and interests as demanded in the impugned order. Accordingly, the appeals succeeds, the same are allowed in toto and the impugned order is set aside.

Summary

Issues involved: Assessment of turbines for hydroelectric equipment of capacity not exceeding 15MW, demands confirmed against the company, levy of penalties, interpretation of exemption notifications, classification of goods, applicability of Board's circulars, extension of duty exemption, compliance with statutory powers.

Summary:

Assessment of Turbines and Demands:
The dispute involved the assessment of turbines for hydroelectric equipment of a capacity not exceeding 15MW, with demands confirmed against the company and penalties imposed. The period in question was from 16-3-95 to Nov. 1998, with the first demand covering the period from 16-3-95 to 9-2-98.

Interpretation of Exemption Notifications:
The appellants claimed a concessional rate of duty under Notification No. 205/88-C.E., as amended by notification 57/95-C.E., relying on various orders and judgments supporting their claim for duty exemption.

Classification of Goods and Applicability of Circulars:
The Commissioner held that the parts/components cleared by the appellant did not form a complete hydraulic turbine at the time of clearance, leading to classification as parts of hydraulic turbines. The Commissioner also noted a change in nomenclature by the party to take advantage of duty exemptions.

Extension of Duty Exemption and Compliance:
The Tribunal observed that turbines for hydroelectric equipment of capacity up to 15MW cannot be cleared as a single piece and must be assembled on-site. The appellants' actions were found to align with guidelines for duty exemption, and the Tribunal emphasized the practical application of statutory powers in granting exemptions.

Compliance with Board's Instructions:
The Tribunal highlighted the binding nature of the Board's instructions, emphasizing the need for evidence that cleared goods form part of a complete device. The Tribunal found no evidence to suggest that the components cleared did not form a turbine for hydroelectric equipment of capacity not exceeding 15MW.

Conclusion:
Based on the evidence and end-use certificates, the Tribunal ruled in favor of the appellants, qualifying their dispatches for duty exemption under the relevant notifications. As the appeal succeeded on merit, other aspects such as limitation, penalties, and interests were not discussed, and the impugned order was set aside.