1996 (10) TMI 248 - AT - Central Excise

Summary

Issues: Classification and eligibility for exemption of Coal Fired Boiler under Exemption Notification No. 120/81-C.E.

In this case, the appeal filed by the Revenue concerns the classification and eligibility for exemption of a Coal Fired Boiler under Exemption Notification No. 120/81-C.E. The appellants initially paid excise duty under Tariff Item 68 for the Boiler but later claimed a refund, asserting that it was an Agricultural and Municipal Waste Conversion Device Producing Energy eligible for exemption. The Assistant Collector rejected the refund claim, stating that the Boiler was designed for coal, not agricultural waste. However, the Collector of Central Excise (Appeals) overturned this decision, deeming the appellants eligible for exemption as the Boiler could use agricultural waste.

The main argument presented by the Revenue was that the Coal Fired Boiler, primarily designed for coal, did not qualify as an "Agricultural and Municipal Waste Conversion Device Producing Energy." The Revenue contended that the capability of using agricultural waste did not automatically render the Boiler eligible for exemption unless it was specifically designed for such operation.

Upon careful consideration, the Tribunal observed that the Boiler in question was designated and cleared as an Enpak Energy Coal Fired Boiler IBR, specifically engineered for coal operation. The fact that it could potentially utilize agricultural and municipal waste did not alter its primary design for coal usage. The Tribunal noted that no evidence was provided to demonstrate that the Boiler was specially designed for agricultural and municipal waste operation.

The Tribunal distinguished a previous Trade Notice involving a rice husk-fired boiler, emphasizing that specific design for a particular fuel source determines classification. Referring to the Supreme Court case of Eskayef Limited v. CCE, the Tribunal highlighted that the use of a product for alternative purposes does not alter its classification. As the Coal Fired Boiler was not specifically designed for agricultural and municipal waste operation, it could not be classified as an Agricultural and Municipal Waste Conversion Device Producing Energy, thus rendering it ineligible for the exemption under Notification No. 120/81-C.E.

Consequently, the Tribunal set aside the decision of the Collector of Central Excise (Appeals) and reinstated the original order, allowing the appeal filed by the Revenue. The Tribunal concluded that the Boiler's primary design for coal operation precluded it from qualifying for the exemption under the relevant notification.