2005 (7) TMI 129 - AT - Central Excise

Tower and lattice masts - Demand of duty - Limitation - Penalty - tower material manufactured by the appellants can be considered to be a part of wind operated electricity generator - Whether the parts of Tower and Lattice Masts with accessories stubs and cleats are entitled to exemption under the provisions of Notification 6/2000 - HELD THAT - Admittedly, Serial No. 265 of Notification No. 5/99, dated 28-2-99 read with Serial No. 13 of List No. 4 appended to the said Notification granted exemption to Wind Mill and parts thereof. Serial No. 251 of subsequent Notification No. 6/2000, dated 1-3-2000 read with Serial No. 13 of List No. 5 appended to the said Notification granted exemption to wind operated electricity generators, their components and parts thereof. Following the ratio of Tribunal in the case of Bharat Heavy Electricals Ltd 1999 (4) TMI 149 - CEGAT, NEW DELHI having held that the tower is a part of wind operated electricity generator, ratio of the above decision of the Tribunal squarely applies to the facts of the present case. Undisputedly, the goods manufactured by the appellants and cleared by them were meant for wind operated electricity generator, being tower material and, as such, were entitled to the benefit of Notification 6/2000. Apart from the facts that Serial No. 13 and 14 of the earlier Notification No. 5/99 specified that Wind Mills and wind operated electricity generators separately, so as to effectively clarify the items for the exemption, which was available to all non-conventional energy device/system, we find that in any case the tower materials being a part of wind operated electricity generator as appearing in subsequent Notification No. 6/2000 would earn exemption as the same is also a part of the wind operated electricity generators. Thus, we hold that the exemption was rightly claimed by the appellants. We note that proviso to Section 11A invoking longer period of limitation is applicable only when an assessee mis-states or suppresses any fact from the department with an intention to evade payment of duty. Having placed all the facts before the Revenue by way of filing a classification list, it cannot be said that any material was suppressed by the appellants, so as to justifiably invoke longer period of limitation. It is well settled that claiming of exemption notification by itself cannot amount to any mis-statement or suppression. Surprisingly all the relevant information on the basis of which the show cause notice has been issued in the year 2003 has been gathered by the Revenue from the appellant's own documents and records. What they could do in 2003, could have been done by them within the period of limitation also. If the department was of the view that the notification is not applicable, they could have raised the demand within the normal period instead of waiting for three years to do the needful. Thus, appellants succeed on merits as also on limitation. Accordingly, we set aside the confirmation of demand of duty as also imposition of personal penalties upon both the appellants. In a nutshell, both the appeals are allowed with consequential relief to the appellants.

Summary

Issues:
1. Duty confirmation on parts of Tower and Lattice Mast under Notification No. 6/2000
2. Imposition of personal penalties on the company and Chief Manager
3. Challenge on merits and limitation by the appellants

Analysis:
1. The Commissioner confirmed a duty of Rs. 1,03,31,791 on Tower and Lattice Mast parts cleared by the appellants under Notification No. 6/2000. The appellants claimed exemption based on a certificate from the buyer, but the Revenue contended that the parts were not entitled to exemption as they were not components of wind operated electricity generators. The Tribunal found that the tower materials were indeed part of wind operated electricity generators, entitling them to the benefit of the notification. The Commissioner's interpretation of the notifications was deemed incorrect, and the exemption was upheld.

2. Personal penalties were imposed on the company and the Chief Manager under various provisions of the Central Excise Act. However, the Tribunal ruled in favor of the appellants, setting aside the penalties along with the duty demand. The issue of penalties was closely tied to the main issue of duty confirmation, and since the duty demand was overturned, the penalties were also deemed unjustified.

3. The appellants challenged the duty confirmation on merits and on the grounds of limitation. The Tribunal found that the demand was time-barred as the Revenue had not raised it within the normal period. The appellants had provided all necessary information in their classification lists, and there was no intention to evade duty. The Tribunal emphasized that claiming an exemption notification does not constitute misstatement or suppression. The reliance on a decision by a Larger Bench was deemed irrelevant in this context. Ultimately, the Tribunal allowed the appeals, providing relief to the appellants on both merit and limitation grounds.