2024 (11) TMI 1179 - AT - Central Excise

Application of exemption under exemption N/N. 12/2013-CE dated 17.03.2012 at Sr. No. 332 read with List 8 - paints applied/coated on wind mills for giving protection to non-conventional energy device - HELD THAT - The parts and component of the main unit namely wind operated electricity generator are those articles which along with others would make up the whole and those were constituents or components or a member of the original unit/goods but paint is something which is applied externally on the whole unit or goods to provide it protection, beauty and perfection. It would be like skin of an organic living being and therefore in the inorganic articles, it acts in the same manner as skin has acted in organic leaving organism. It would be a futile discussion to enter into an argument saying that skin neither helps in pumping the blood in the heart or digesting the food or the like, for which human being can also be considered as a human being without a skin covering its body. In the same manner paints are used to all components as an essential requirement for its protection safety and as an auxiliary requirement to retain its life and beauty. Disallowing exemption to paints , which are applied to exempted goods would be like removal of skin from a human being so as to treat him as skinless individual that can only be possible when he/she is kept in a hospital. The paint is a part and parcel or an essential feature of an element or to say an essential or integral feature of a component as a whole. In a manufacturing industry also, powder coating and painting are used at completion of finishing processes and if the goods are exempted from payment of duty at the time of manufacture, it would also be applied to the goods having colour on it, which could be either an external coating or an internal ingredient and therefore, we consider painted wind mills also as wind operated electricity generator irrespective of its colour to which benefit of exemption notification was all along available and it would be immaterial to bring into it an artificial distinction as to if it is to be treated as component or parts since it is integral to the products itself. The reference made to Hon'ble Bombay High Court order in JOTUN INDIA PRIVATE LIMITED, VERSUS THE UNION OF INDIA THROUGH THE SECRETARY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI, THE STATE OF MAHARASHTRA, THE MAHARASHTRA AUTHORITY FOR ADVANCE RULING FOR GOODS AND SERVICES TAX, MUMBAI, THE MAHARASHTRA APPELLATE AUTHORITY FOR ADVANCE RULING FOR GOODS AND SERVICES TAX MUMBAI, 2022 (12) TMI 1135 - BOMBAY HIGH COURT by learned Departmental Representative for the Respondent-Department, since confined to the limited power available under writ jurisdiction, which is completely different from appellate jurisdiction, it is not required to venture into discussion on the applicability of that judgment to the issue which is extraneous to the issue raised here since Hon'ble Court had refrained itself from giving any finding on the observation of the Authority for Advance Ruling that paint is not a part. The order passed by the Commissioner of Central Excise GST, Pune-I vide Order-in-Original No. PUN-EXCUS-001-COM-022-17-18 dated 24.04.2018 is hereby set aside - Appeal allowed.

Summary

Issues:
Application of exemption notification to "paints" applied/coated on wind mills for giving protection to non-conventional energy device under exemption Notification No. 12/2013-CE dated 17.03.2012.

Analysis:

The appeal involved the interpretation of an exemption notification regarding the application of "paints" on wind mills for protection. The Appellant, a manufacturer of industrial and marine paints, claimed exemption under Notification No. 12/2013-CE for paints supplied to wind mill manufacturers. The Respondent-Department demanded payment of duty amounting to &8377;3,29,33,313/- with a 10% penalty for the period from November 2015 to June 2017, contending that the exemption did not apply.

The undisputed fact was that the Appellant had been availing the exemption for supplying paints to wind mill manufacturers since the relevant notification came into effect. However, the Respondent raised objections in 2016 and issued a show-cause notice in 2017, leading to the confirmation of the duty demand by the Adjudicating Authority, which was challenged in this appeal.

Arguments were presented by both parties citing relevant judicial decisions. The Appellant's Counsel referred to precedents where similar products were considered eligible for exemption under comparable notifications. In contrast, the Departmental Representative relied on a finding that marine paint could not be considered a part of the wind mill. The Appellant argued that the paint was essential for protection, drawing parallels with a Supreme Court decision regarding the classification of a "door" as part of a wind mill.

The Tribunal analyzed the meaning of "part" and "component" in the context of the wind-operated electricity generator. It concluded that paint, akin to the skin of an organic being, provided protection, beauty, and perfection to the entire unit. Disallowing exemption for paints applied to exempted goods would be akin to treating a human without skin. The Tribunal held that paint was an integral feature of the wind mills, essential for protection and safety, and thus eligible for exemption.

The Tribunal distinguished the High Court's order cited by the Departmental Representative, emphasizing the limited scope of writ jurisdiction compared to appellate jurisdiction. Consequently, the Tribunal allowed the appeal, setting aside the Commissioner's order and providing consequential relief.

In conclusion, the Tribunal's detailed analysis centered on the essential nature of paint in providing protection to wind mills, ultimately allowing the appeal and overturning the duty demand imposed by the Commissioner.