2017 (3) TMI 990 - AT - Central Excise

Benefit of N/N. 3/2004-CE dated 8th January 2004 - denial on the ground that the four projects were not in conformity with the criteria contained in the said notification including the later rescinding of the certificates - whether the exemption from excise duty is linked solely, and exclusively, with the furnishing of the prescribed certificates or whether, as proposed by Revenue, the actual usage of the pipes clinches the eligibility for exemption? Held that - It is for the very reason that such projects undertaken in public interest prescribes certification by responsible public authorities. Undoubtedly, interpretation of exemption notifications cannot be left to the hands of authorities that are not created by or acknowledged in the relevant taxing statutes. However, the nature of the project to which the exemption is extended, if certified by the authority specified in the notification, cannot also be questioned by taxing authorities that are not conversant with such projects. Thus, where certificates are the qualification for exemption, it is not open to the central excise authority to overrule that certification - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for availment of exemption under notification no. 3/2004-CE dated 8th January 2004 based on certificates issued by District Collector for water supply projects.

Analysis:
The dispute in this appeal revolves around the eligibility of M/s Jain Irrigation Systems Ltd for availing exemption under notification no. 3/2004-CE dated 8th January 2004. The order-in-original by the Commissioner of Central Excise & Customs, Nashik confirmed a demand for a differential duty, interest, and penalty against the appellant. The main issue pertains to the eligibility criteria for availing the exemption based on certificates issued by the District Collector for water supply projects involving PVC pipes and fittings supplied by the appellant.

The appellant contends that they supplied pipes based on valid certificates issued by the appropriate official and should not be held responsible for monitoring the end-use of the supplied materials. They argue that the certificates were canceled by central excise authorities but were reissued subsequently. The central question for determination is whether the exemption from excise duty is solely linked to the submission of prescribed certificates or if actual usage of the pipes is crucial for eligibility, as argued by the Revenue.

The adjudicating authority noted that the projects for which certificates were initially issued, withdrawn, and reissued were not implemented by the societies involved. The interpretation of the Central Board of Excise & Customs' clarification emphasized the necessity of the pipes for linking the water source to the plant and storage. The appellant relied on the Supreme Court's decision in Commissioner of Central Excise, Surat v. Essar Steel India Ltd, which upheld the acceptance of certificates issued by competent authorities.

The Tribunal considered the precedent set by the Supreme Court in State of Haryana v. Dalmia Dadri Cement Ltd, emphasizing that the intention behind the exemption notification is crucial. The Tribunal concluded that manufacturers availing the exemption are not required to monitor the end-use of supplied materials, and denying supplies based on such grounds would defeat the purpose of the notification. The Tribunal set aside the impugned order and allowed the appeal, emphasizing that certification by responsible public authorities for projects in public interest cannot be overruled by central excise authorities when certificates are the qualification for exemption.

In conclusion, the Tribunal's decision highlights the importance of adhering to the certification requirements specified in exemption notifications and prevents central excise authorities from questioning the nature of projects certified by relevant authorities. The judgment provides clarity on the eligibility criteria for availing exemptions under specific notifications and ensures that manufacturers are not unduly burdened with monitoring end-use beyond the prescribed certification requirements.