2018 (5) TMI 662 - AT - Central Excise

N/N. 6/02-CE dated 1st March 2002 - clearance of 30 nos volume bottle valued at ₹ 63,30,000/- to M/s Dresser Rand (I) Ltd, Ahmedabad - Held that - It is not in dispute that the volume bottles were supplied for a project which was being executed for M/s ONGC and that the said project had been awarded by M/s ONGC in an international competitive bidding process - volume bottle is not an integral part of the compressor which is manufactured but, even so, is indispensable for installation of the compressor facility at the project site. Hence, the impugned goods are undoubtedly accessories - As notification no. 21/2002-Cus dated 1st March 2002 enables exemption from duties of customs for accessories of compressors, the benefit of duty free clearance envisaged at serial no. 301 read with condition no. 64 in notification no. 6/2002-CE, is available to the appellant. Denial of exemption also on the ground of non-participation in international competitive bidding process - Held that - the decision of Tribunal in Toshniwal Industries Pvt. Ltd 2017 (5) TMI 387 - CESTAT NEW DELHI relied upon, where it was held that exemption cannot be denied for the reason that sub-contractor did not take part in International Competitive Bidding - The ineligibility for non-participation in bidding process, will also not sustain. Appeal allowed - decided in favor of appellant.

Summary

Issues:

1. Denial of benefit of notification no. 6/02-CE dated 1st March 2002 on clearance of volume bottle.
2. Eligibility for exemption under the notification for specific goods required for project execution.
3. Interpretation of goods as accessories or parts of a temperature control system.
4. Requirement of participation in international competitive bidding process for exemption eligibility.

Issue 1: Denial of benefit of notification no. 6/02-CE:

The appellant, M/s Patel Airtemp (India) Pvt. Ltd., appealed against the denial of benefit under notification no. 6/02-CE dated 1st March 2002 on the clearance of volume bottles to M/s Dresser Rand (I) Ltd. The lower authorities held that the volume bottles were not covered by the notification and that eligibility was restricted to participants in international competitive bidding. The appellant argued that the goods were essential for the compressor facility assembly, citing technical literature and previous tribunal decisions. The Tribunal examined the evidence and found that the volume bottles were indeed accessories critical for the compressor facility, making the appellant eligible for the exemption.

Issue 2: Eligibility for exemption under the notification:

The Authorized Representative contended that the goods in question were not accessories but parts of a temperature control system, thus rendering them ineligible for the exemption. However, the Tribunal analyzed the nature of the goods and concluded that the volume bottles were accessories required for the compressor facility, as confirmed by technical evidence and project details. The Tribunal referenced specific provisions in the notification to establish the appellant's eligibility for duty-free clearance of the goods.

Issue 3: Interpretation of goods as accessories or parts:

The dispute centered on whether the volume bottles were accessories or integral parts of the compressor facility. The evidence presented by M/s Dresser Rand (I) Ltd. clarified that the volume bottles were essential for the installation of the compressor facility at the project site, making them accessories. The Tribunal emphasized the critical role of the pulsation suppression device in reciprocating compressors, supporting the classification of the volume bottles as accessories under the relevant notification.

Issue 4: Requirement of participation in bidding process for exemption:

The lower authorities based their decision on the requirement of participation in an international competitive bidding process for exemption eligibility. However, the Tribunal referred to a previous judgment that clarified the exemption criteria, stating that it was not mandatory for the manufacturer supplying goods to have participated in the bidding process. As long as the goods were supplied for the project awarded through international competitive bidding and installed at the project site, the exemption was applicable. The Tribunal overturned the impugned order, ruling in favor of the appellant based on the evidence and legal interpretations presented.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, emphasizing the eligibility of M/s Patel Airtemp (India) Pvt. Ltd. for the benefit of the exemption notification on the clearance of volume bottles essential for the compressor facility assembly.