2017 (12) TMI 281 - AT - Central Excise

Benefit of N/N. 5/99-CE dt. 28.2.99, 6/2000-CE dt. 1.3.2000, 3/2001-CE dt. 1.3.2001 and 6/2002-CE dt. 1.3.2002 - various parts/machinery of boilers - goods supplied in the CKD/SKD form - Held that - the goods supplied in the CKD/SKD form also eligible for exemption N/N. 3/2001-CE dt. 1.3.2001 - even if some parts of the entire boiler procured by the appellant from outside, the goods manufactured by the appellant and supplied in CKD/SKD is correctly classifiable as boiler under Chapter Heading 8402.10 and eligible for exemption N/N. 3/2001-CE. - reliance placed in the case of Commissioner of Central Excise, Delhi-IV Versus Rachitech Engineers Pvt Ltd 2015 (6) TMI 823 - CESTAT NEW DELHI , where it was held that even supply of a part of the non-conventional Energy System i.e. Chimney was also extended the benefit of pari materia N/N. 6/2002-CE dt. 1.3.2002. Time limitation - Held that - the appellant have bonafidely declared the goods manufactured by them in their classification list filed in 1995, thereafter they were issuing invoices for clearance parts of boiler as a piecemeal of complete boiler under chapter heading No.8402.10 - no suppression of fact can be alleged against the appellant - demand is also hit by limitation in absence of any suppression of fact on the part of the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of goods as boilers or parts of boilers.
2. Eligibility for exemption under various Central Excise Notifications.
3. Invocation of extended period for demand.
4. Allegation of suppression of facts by the appellant.

Detailed Analysis:

1. Classification of Goods as Boilers or Parts of Boilers:
The primary issue was whether the goods cleared by the appellant should be classified as boilers or merely parts of boilers. The appellant argued that they manufactured the main parts of the boilers and procured some parts from vendors, clearing them in CKD/SKD form. They contended that the goods, when assembled, constituted a complete boiler, thus falling under Chapter Heading 8402.10, which pertains to boilers. The appellant maintained that their contracts with buyers were for the supply and installation of complete boilers, not just parts.

The tribunal found that the major parts of the boilers were indeed manufactured by the appellant, and the entire boiler was supplied in CKD/SKD form. The tribunal held that the goods supplied by the appellant qualified as non-conventional energy devices/systems, specifically biomass-based boilers, and thus should be classified as boilers under Chapter Heading 8402.10.

2. Eligibility for Exemption Under Various Central Excise Notifications:
The appellant claimed exemptions under Notification No. 5/99-CE, 6/2000-CE, 3/2001-CE, and 6/2002-CE, which provide exemptions for non-conventional energy devices/systems. The appellant argued that the boilers they supplied, even when cleared in CKD/SKD form, met the criteria for these exemptions.

The tribunal agreed with the appellant, stating that the objective of the exemption notifications was to promote non-conventional energy devices/systems. The tribunal referred to Section 37B Order No. 4/92, which clarified that exemptions are available even when goods are cleared in CKD/SKD conditions, provided evidence is produced that the goods form part of a complete device. The tribunal found that the appellant had fulfilled these conditions and thus was eligible for the exemptions.

3. Invocation of Extended Period for Demand:
The adjudicating authority had invoked the extended period for demand, alleging that the appellant had suppressed facts. The appellant argued that they had declared the goods in their classification list since 1995 and had issued invoices showing the parts of the boiler under Chapter Heading 8402.10. They contended that there was no suppression of facts, and the department had all the necessary information.

The tribunal found that the appellant had indeed declared the goods and their classification, and the department had sufficient information to raise any queries. Therefore, the tribunal held that there was no suppression of facts and that the extended period for demand was not justified. The demand for the period beyond one year was deemed time-barred.

4. Allegation of Suppression of Facts by the Appellant:
The department alleged that the appellant had suppressed facts by not disclosing that some parts of the boilers were procured from vendors. The appellant countered this by stating that they had declared the goods and their classification in their invoices and classification lists.

The tribunal found that the appellant had disclosed all relevant information, including the classification of the goods and the fact that some parts were procured from vendors. The tribunal held that there was no suppression of facts and that the demand was not sustainable on this ground.

Conclusion:
The tribunal concluded that the goods supplied by the appellant qualified as boilers under Chapter Heading 8402.10 and were eligible for exemption under the relevant notifications. The tribunal also found that the extended period for demand was not justified due to the lack of suppression of facts. Consequently, the demand was set aside, and the appeal was allowed.