2005 (7) TMI 242 - AT - Central Excise

Flanges - Exemption - Demand - Limitation - Suppression of facts - Non-conventional energy devices/systems - HELD THAT - Once tower is accepted and found and held to be part of Wind Operational Electric Generator (WOEG for short) it is to be held that part i.e. flange of this part i.e. tower will be part of the whole i.e. Wind Generated Mill producing electricity from unconventional services. Every devices/systems part in this case having been specifically designed for that purpose in mind. We find the 'flanges' to be a part of WOEG. Classification declarations were filed by the appellant the goods M.S. Forged Flanges (Machined) with the exemption claim under Sr. No. 251 last 5 Remark column having an Entry 'Wind Mills' spares parts (for wind operated electricity generators). We find when the Board has cast an obligation on the department vide Circular No. 124/35/95-CX. to scrutinize the declaration, therefore the finding on suppression as arrived by the Ld. Adjudicator is this order, para 10, of deliberate omission of Sr. No. to involve the Proviso clause lift the bar of limitation cannot be upheld. As the order does not indicate any other objection of the verification if any, done by the officers. Since the appellants belief of the product being covered on different Sr. No. was well founded there was no stipulation of reporting the same. Surely if claim is entitled under alternate Sr. No. the same have to be granted. Suppression of fact cannot be arrived. Same has to be of a fact which would disentitle the claim of exemption, if revealed. No such fact is brought out in the order or pleaded before us. The bona fide belief in view of Boards circular that part of Tower Tower being part of Wind Operated Electricity Generators would favour the appellant with the bar of limitation to be available in his favour in this case. When our findings on merits about eligibility to Notification bar of limitation to be in favour of the appellants, we cannot find any reason to uphold any demands of duty or penalty or interest in this case. The same are set aside. Thus, this appeal is allowed setting aside the impugned order.

Summary

Issues:
1. Eligibility of MS flanges for exemption under Notification 6/2000-C.E.
2. Interpretation of whether MS flanges are parts of Wind Operated Electric Generators (WOEG).
3. Consideration of whether MS flanges were consumed within the factory of production for the manufacture of the tower.
4. Allegations of suppression of facts by the company regarding the classification of MS flanges.

Issue 1: The judgment addressed the eligibility of MS flanges for exemption under Notification 6/2000-C.E. The Appellants claimed exemption under Sr. No. 251 of the notification, which exempted non-conventional energy devices/systems. The issue arose as the MS flanges were used in the erection of Wind Mill Towers, not directly in the manufacture of Wind Operated Electric Generators (WOEG).

Issue 2: The Tribunal analyzed whether MS flanges were integral parts of Wind Operated Electric Generators (WOEG) by considering precedents. It was established that the tower, of which the flanges were a part, was deemed essential for the functioning of WOEG. The judgment relied on previous decisions to support the inclusion of flanges as parts of WOEG.

Issue 3: The judgment delved into whether the MS flanges were consumed within the factory of production for the manufacture of the tower, a requirement for exemption under the notification. It was argued that since the tower was assembled at the site using the flanges, the consumption at the site should also be considered. The interpretation of "consumed in the factory of production" was discussed in detail to determine the eligibility of the flanges for exemption.

Issue 4: The judgment scrutinized the company's actions regarding the classification of MS flanges as 'windmill spares and parts' and the alleged suppression of facts. The company was accused of misleading the department by not accurately declaring the products and omitting relevant information. The Tribunal considered the company's classification declarations and the obligation on the department to scrutinize such declarations.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order, based on the findings that the MS flanges were integral parts of Wind Operated Electric Generators and eligible for exemption. The judgment emphasized the importance of accurate classification declarations and the proper interpretation of exemption criteria under the notification.