2018 (7) TMI 418 - AT - Central Excise

Benefit of N/N. 06/2002-CE as amended vide N/N. 47/2002-CE - MS Pipes supplied to various local Government Authorities - it was alleged that pipes were not used for delivery of water for use at Palla to water treatment plant and instead those were used to delivery water for the use of Sewage Treatment Plant at Narela - Held that - The Ld. Commissioner has not substantiated with any valid reasons as to how he has come to the conclusion that the location of reservoir being at Narela STP would fall outside the purview of exemption. In respect of goods supplied to the Kolkata Municipal Corporation for various water supply projects and in view of various certificates issued by the District Magistrate North 24 Parganas, it is observed that the pipes were laid up to the point of proposed new Pressure Station. In case of Kalighat Booster Pumping Station the pipe lines were laid along Rasbehari Avenue Doverlane junction and there after Satish Mukherjee road and finally to Andul Raj road. It is the settled principle of law that a notification cannot be read in a narrow manner so as to defeat the object of the notification. It has to be considered reasonably and rationally - It is now settled by various decisions of the Hon ble Apex Court that if any certificate is required to be issued, as a condition for availing the benefit under said notification and once such certificate is issued by the competent authority, the Revenue cannot go beyond such certificate and deny the benefit of exemption under the notification. The pipelines cleared by the appellant are covered under the Clause -1 of the relevant entry of the Notification - appeal allowed - decided in favor of appellant.

Summary

Issues:
Eligibility of exemption under Notification No.06/2002-CE for MS Pipes supplied to local Government Authorities.

Analysis:
The case involved the appellant clearing Electric Resistant Welded (ERW) and Spirally Welded (SW) Pipes without paying duty to local Government bodies under an exemption. The Adjudicating Authority confirmed the demand for Central Excise duty, interest, and imposed a penalty. The appellant argued that the exemption was valid as the pipes were used for carrying drinking water for human and animal consumption. The appellant relied on specific certificates issued by competent authorities to support their claim. The Revenue, however, supported the findings in the impugned order.

The main issue was the eligibility of the benefit of Notification No.06/2002-CE for the MS Pipes supplied to various local Government Authorities. The appellant contended that the pipes were used for delivering water for human and animal consumption, meeting the conditions of the exemption. The appellant provided detailed explanations regarding the specific projects where the pipes were used and the locations involved. The appellant argued that the denial of exemption was not warranted once the required certificates were produced.

The Tribunal analyzed the submissions and evidence presented. It noted that the pipes were used for laying pipelines between storage points and booster pump stations, facilitating water supply to remote locations. The Tribunal emphasized that an exemption notification should be interpreted reasonably and rationally to fulfill its object. It cited established legal principles that once a certificate is issued by a competent authority, the Revenue cannot deny the exemption based on other grounds. The Tribunal concluded that the appellant had satisfied the conditions of the notification and was eligible for the exemption. Consequently, the impugned order demanding duty, interest, and penalty was set aside, and the appeal was allowed.

In the judgment delivered by the Tribunal, it was emphasized that the strict eligibility criteria of an exemption notification should be interpreted in terms of its language, while the exemption clause may be construed liberally. The decision highlighted the importance of certificates issued by competent authorities in determining the eligibility for exemption under specific notifications. The judgment provided a detailed analysis of the projects involved, the usage of the pipes, and the relevance of the exemption criteria, ultimately ruling in favor of the appellant based on the fulfillment of the conditions specified in the notification.