1997 (11) TMI 227 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 56/78 regarding concessional rate of duty for air-conditioners.
2. Liability for payment of differential duty between manufacturer and user.

Analysis:
The Appellate Tribunal CEGAT, New Delhi, heard an appeal filed by the Department against an order by the Collector (Appeals), New Delhi. The case involved the respondents, manufacturers of Refrigeration and Air-conditioning appliances, who supplied air-conditioners to U.P.S.E.B. at a concessional rate under Notification No. 56/78. The Assistant Collector observed that U.P.S.E.B. was not entitled to the concessional rate as per the notification. The respondents argued that they were not liable for any differential duty as the duty was paid based on CT-2 certificates issued by the competent authority. The Collector (Appeals) examined whether U.P.S.E.B. was entitled to the concessional rate and who was liable for the differential duty. The Collector (Appeals) agreed that the Microwave Telecommunication sub-station was eligible for the concessional rate but did not address the issue of liability for differential duty.

The main contention was whether the Microwave Station qualified as a factory under the notification. The Tribunal noted that the specified categories eligible for concessional rate did not include Microwave Stations. The Collector (Appeals) erred in considering the Microwave Station as an extension of a factory. The Tribunal highlighted that the substantive aspect of non-use and liability to pay duty was outlined in the notification itself. The liability to discharge duty rested on the receiver of the goods under Chapter X procedure. The Tribunal held that since U.P.S.E.B. was not eligible and did not use the air conditioners for the intended purpose, the order needed to be set aside.

The Tribunal acknowledged that the respondents followed the prescribed procedure under Chapter X for availing the benefit of the notification. The Tribunal emphasized that the establishment where the air-conditioners were installed must be one of those specified in the notification. The Tribunal agreed with the Collector's observations regarding the unique nature of power stations and electricity, qualifying them as factories under the notification. The Room Air Conditioners installed in the Microwave Stations fell under specified establishments, and the prescribed procedure was followed. Therefore, the Tribunal rejected the Department's appeal, affirming the Collector's decision.

In conclusion, the Tribunal upheld the Collector (Appeals) decision regarding the eligibility of U.P.S.E.B. for the concessional rate under Notification No. 56/78. The Tribunal emphasized the importance of adhering to the specified categories in the notification and the liability for duty payment as outlined in the notification itself. The Department's appeal was dismissed, and the Collector's decision was upheld.