1996 (10) TMI 163 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 405/86 and 267/87 for excise duty exemption on specific resin grade used in Satellite Launch Vehicle project.

Detailed Analysis:

Issue 1: Interpretation of Notification for Excise Duty Exemption
The Appellants manufactured Phenol Formaldehyde Resin, including IVAREZ ISRO grade, seeking exemption under Notification No. 405/86 and 267/87. The Notification exempts systems/sub-systems of launch vehicles and satellite projects for ISRO from excise duty. The resin was claimed to be used in the nozzle sub-system of a Satellite Launch Vehicle. The certificate provided by the Appellants indicated the resin's use for the specified purpose. However, lower authorities contended that the resin was a raw material for the nozzle sub-system, not a sub-system itself, thus denying the exemption.

Issue 2: Legal Arguments
The Appellants argued that the certificate issued by a competent authority should be conclusive, and technical aspects should be assessed by experts in space technology. They cited precedents where certificates were held binding. The Department, on the other hand, maintained that the resin was not a sub-system based on the certificate's description and its actual use in the nozzle sub-system, as clarified in the classification list.

Issue 3: Tribunal's Decision
The Tribunal agreed with the Revenue's stance, emphasizing that the resin was a raw material, not a sub-system, as per the certificate and actual usage. The Notification granted exemption only to systems/sub-systems, not raw materials or component parts. The Tribunal dismissed the Appeal, stating that the lower authorities' decision was correct. The Tribunal found the Appellants' reliance on previous judgments irrelevant to the case's specifics, as the resin did not qualify as a sub-system under the Notification's terms.

In conclusion, the Tribunal upheld the Revenue's decision, denying excise duty exemption to the resin grade in question. The judgment highlighted the distinction between sub-systems and raw materials, emphasizing that the Notification applied to complete systems or sub-systems, not individual components.