2017 (2) TMI 83 - HC - Customs

Whether on the facts and in the circumstances of the case the Customs, Excise and Service Tax Appellate Tribunal was justified in holding that Serial No.26 of N/N. 42/96 dated July 23, 1996 is applicable only to the water treatment plant and cannot be applied to the ductile pipes? Held that - reliance placed in the case of PRATIBHA INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., NHAVA SHEVA 2004 (9) TMI 278 - CESTAT, MUMBAI , where on similar issue, it was held that the appellant shall not be covered by the N/N. 21/2002-Cus., which grants complete exemption from payment of basic excise duty and additional duty falling under Heading 9801 required for drinking water supply project for supply of water for human and animal consumption - appeal dismissed - decided in favor of Revenue-respondent.

Summary

Issues:
Interpretation of Customs Notification Nos. 42/96 and 21/2002 for exemption eligibility on imported ductile iron pipes for water supply projects.

Analysis:
The appeal in question raised a substantial legal issue regarding the entitlement of the appellants to exemption under Customs Notification Nos. 42/96 and 21/2002 for importing ductile iron pipes for water supply projects. The appellants, a partnership firm and one of its partners, claimed exemption based on being the sole selling agent of a foreign entity for a water supply project in Maharashtra. The Customs, Excise and Service Tax Appellate Tribunal concluded that the appellants were not eligible for the exemption based on its interpretation of the relevant documents and the Exemption Notification. The Tribunal reasoned that the units of a water supply project were not covered by the Exemption Notification, which could include various units and water purification systems for making source water fit for human and animal consumption. Consequently, the Tribunal upheld the appeal filed by the respondent-Commissioner, setting aside the earlier order passed by the Commissioner (Appeals) in favor of the appellants.

In a related case involving Pratibha Industries Limited, the Tribunal similarly allowed the appeal of the Revenue, setting aside the Commissioner (Appeals) order. The appellant in that case challenged the Tribunal's decision before the Supreme Court of India, which ultimately dismissed the appeal. The Supreme Court held that the appellant was not covered by Notification No. 21/2002-Cus, which granted exemption for basic excise duty and additional duty for drinking water supply projects. Given the Supreme Court's authoritative pronouncement on the matter, the High Court found that the substantial legal question could not be answered in favor of the assessee but rather in favor of the Revenue. Consequently, the High Court dismissed the appeal, ruling against the appellants and ordering no costs to be paid.

In conclusion, the High Court's judgment emphasized the importance of interpreting Customs Notifications accurately to determine eligibility for exemptions on imported goods for specific projects. The decision highlighted the significance of legal precedents set by higher courts in resolving similar controversies and ensuring consistent application of the law across different cases.