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TMI Blog2006 (7) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... May 15, 2006 (8) CE(20)7/R-V/KDH-I/Exemp.Notfn/2006-07/38 dated May 19, 2006 (9) CE(20)7/R-V/KDH-I/Exemp.Notfn/2006-07/41 dated May 22, 2006. 2. All such reference pertain to supply of Pipes by the appellants to their customers, mainly, Govt. Organizations/Municipal Organizations/Semi Govt. Organizations working under Govt. approved Schemes etc., by availing exemption vide Notification No. 6/2002, as amended and 6/2006, as amended. In some cases, the appellants were directed to clear the goods on payment of duty on the ground that the relevant certificates were not in conformity with the conditions of the notification(s), as it existed during the material period, inasmuch as certificates showed that Pipes shall be used for delivery of water from its source to the plant and from there to the last storage facilities i.e. the same are to be used in more than one storage places instead of being used up to the first storage place, as required under the notification. In other cases, the appellants have been informed that they can avail benefit of the exemption, only if they produce certificate confirming that Pipes shall not be used beyond first storage place, and failure to do so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 6/06, and, therefore, pipes used from first storage point to another storage point would not be eligible for exemption. In the said Trade Notice, another condition has also been imposed, requiring an assessee to produce the requisite certificate in the proforma prescribed therein for availing exemption under Notification No. 6/06, and as per the said proforma, it has to be certified that once the treated water is stored in the first storage point, such pipes will not be used for transporting the water from one storage (sump) to another storage (sump). In such premises, the appellants have contended that the expression, form there to the storage facility appearing in the exemption notifications would mean and include all pipes which are used for carrying the treated water from the water treatment plant to the storage place(s) from where it would be further supplied for consumption. Even the Board s Circular, while clarifying the scope of the notifications, has mentioned that the duty concession would not be available for pipes required to supply the treated water from the storage place(s) to the place of consumption. Therefore, it is clear that the duty exemptions are availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Superintendent, Range-V, Khardah-I Division, Kol-III appeared for hearing and he submitted a written submission, which has been taken on record. In the said submission, it has been mainly contended that reading of the notification makes it clear that the pipes are required to be used only up to the first storage facility and there is no exemption beyond the first storage facility. Citing some case laws, it has been argued that if an expression in the notification is used in plain and meaningful language, there is no scope for assuming a ambiguity. In the Board s Circular, dated 6-9-2002, it has been clarified that the words storage facility would mean the first storage place and not beyond that. In the case of C.C. v. Rupa Co. Ltd. [2004 (170) E.L.T. 29 (S.C.)], the Apex Court has observed that an exemption notification has to be construed strictly but that does not mean that the object and purpose of the Notification is to be lost sight of and wordings used therein is ignored. In C.C.E. v. Himalayan Coop. Milk Products Union Ltd. [2000 122 E.L.T. 327 (S.C.)], it has been held that exemption notification is meant for the purpose and policy behind it. In the instant case, by u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Shah v. CCE, 1982 (10) E.L.T. 902 (Cal. HC)]. CESTAT almost consistently has taken this position that whenever an order by an authority lower in rank than Commissioner affects rights of parties it is appealable before Commissioner (A). In Venkatesh Patra Udyog v. CCE (Appeals), [2002 (139) E.L.T. 135 (CEGAT)] it was held that appeal against demand issued by the Supdt. will lie with Commissioner (Appeals). In Hyderabad Industries v. CCE, [2002 (145) E.L.T. 463 (CEGAT)] it was held that appeal can be filed with Commissioner (Appeals) against letter of Supdt. asking the assessee to pay short duty without following any procedure for recovery. In Multi Organics v. CCE, [2003 (157) E.L.T. 191 (CEGAT)] it was held that appeal can be filed even if the standard preamble is not there. In Coco Foam Industries v. U.O.I, [2004 (178) E.L.T. 93 (AH)] Allahabad High Court held that Supdt. s order asking to take out licence, to submit certain information, to observe C.Ex. procedures and to clear the goods on payment of duty is an appealable order under Sec. 35 of C.Ex. Act, 1944. In CCE v. Radha Ballabh Silk Mills Pvt. Ltd., [2004 (169) E.L.T. 165 (T)-CESTAT] held that an order on classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 6/2006 allowed the exemption in identical wording under Sl. No. 7 and condition 4. 8. The exemption was clarified by a numbered Circular No. 659/50/2002-CX as follows :- Subject : Exemption from Customs and Central Excise Duty to Water Treatment Plants. 9. Notification 91/2002-Cus., 92/2002- Cus., 93/2002- Cus. and 47/2002 - C.E., all dated 6th September, 2002 have been issued to extend exemption from Customs and Central excise duties in respect of water treatment projects for supply of drinking water for human and animal consumption. 10. On the Customs side, such projects have been notified for the benefit of assessment as project import under Heading 98.01 of the First Schedule to the Customs Tariff Act, 1975. The duty applicable to such projects has been fully exempted. They would attract nil basic duty and nil additional duty. Consequently, they would be exempt from Special Additional Duty as well. As these projects would be assessed under Heading 98.01, the benefit would be available to all items of machinery, including instruments, apparatus and applliances, auxiliary equipment and their components/parts require for the initial setting up of the project as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption on granted for pipes used in water treatment/supply plants - Clarification regarding. Pipes needed for delivery of drinking water or water for agricultural or industrial use from its source to the water treatment/supply plant and from there to the storage facility are exempted from central excise duty vide Notification No. 6/2002-Central Excise dated 1-3-2002, S. No. 196A. Board s Circular No. 659/50/2002-CX clarified, inter alia, that the exemption from excise duty is available for pipes required for obtaining untreated water from its source to the water treatment plant and from the plant to the storage place. It was also clarified that the duty concession would not be available for pipes required to supply the treated water from its storage place to the place of consumption. It has been brought to the notice of the Board that exemption from central excise duty in respect of pipes for delivery of water from its source to the water treatment/supply plant and from there to the storage facility is being misused by some manufacturers by obtaining exemption for pipes used for delivery of water from one storage point to another storage point. The notification provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... storage would also not be eligible for the said exemption. Provided a CERTIFICATE is to be issued (in the enclosed Proforma) regarding fulfilment of all the aforesaid intended use, by the Collector/District Magistrate/Deputy Commissioner of the District in which such water - treatment plant is to be set up, is produced to the Deputy/Assistant Commissioner of Central Excise, having jurisdiction. Enclo: Proforma of the CERTIFICATE Authority : Notification No. 6/2006-CE, dated 1st March 2006 and Board Circular No. 659/50/2002-CX dated 6-9-2002. Trade Notice had the following enclosure as the Proforma Certificate - This is to certify that the pipes will be used for delivery of water from its source to water treatment plant and from there to storage facility. This is to further certify, that once the treated water is stored, that is the first storage point, these pipes will not be used for further distribution, i.e. from one storage (sump) to another storage(sump). Collector/District Magistrate/Deputy Commissioner, of the District. (District of location of water treatment plant to be set up) 14. The first question is whether a reference to storage facility in the Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mill v. CCE, 1989 (43) E.L.T. 183 (S.C.) the Hon ble Supreme Court held that in trying to understand the language used by exemption notification, one should keep in mind two important aspects (a) the object and purposes of the exemption, and (b) the nature of the actual process involved in the manufacture of the commodity in relation to which exemption was granted. It must be kept in view that the object and purpose of the exemption has to be culled out from the express language of the notification. In K.R. Steel Union v. Commissioner of Customs, 2001 (129) E.L.T. 273 (S.C.) the Hon ble Supreme Court agreed with its earlier judgments in Oblum Electrical Industries v. CCE, 1997 (94) E.L.T. 449 (S.C.) that Wording in the notification have to be construed keeping in view the said object and purpose of the exemption. In Shriram Vinyl v. Commissioner of Customs, 2001 (129) E.L.T. 278 (S.C.) the Hon ble Supreme Court observed Notification is to be construed reasonably and rationally and not in a manner which deprives the benefit thereof . The notification has not distinguished between first storage point and the subsequent ones. The purpose is clear in its language :- Processes to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial to meet certain flow dynamics as well as for the maintenance of water distribution system so as to achieve quality, quantity and reliability of the water supply. Hence the treated water has to be stored in several tanks and there is no meaning in classifying first storage, subsequent or another storage etc. 18. However, the storage tank(s)/Reservoir(s), up to the last storage tank(s)/reservoir(s) from where the distribution pipe lines are laid up to the consumer point are constructed, operated and maintained by the Public Utilities , whereas the storage tank(s)/reservoir(s) at the place of consumption are constructed, operated and maintained by the respective owners/ beneficiaries. It is thus clear that unless storage facility-cum-treatment facility points until the supply for consumption starts is given the benefit of the notification the purpose of the notification i.e., supply of water fit for human consumption is defeated. 19. Although the impugned order of the Superintendent is a non-speaking order, the Superintendent himself appeared for personal hearing and submitted detailed arguments which should now be examined. He cited Hon ble Supreme Court judgments in Rupa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harmaceuticals Ltd. v. CCE, Madras said There is no Board Circular under Sec. 37B but it was only a Trade Notice which was distinguishable. Delhi High Court in Faridabad Iron Steel Traders Association v. U.O.I., 2004 (178) E.L.T. 1099 (Del.) said According to the spirit of Section 37B circulars or directions can be issued in order to achieve the object of uniformity and to avoid discrimination, such circulars bind the officers only when they act in their administrative capacity. The review appeal against this judgment was dismissed by Supreme Court. The Hon ble Supreme Court in CCE v. Tullow India Operations Ltd., 2005 (189) E.L.T. 401 (S.C.) rejected the contention that by reason of a public notice issued by a Custom House, the effect and purport of statutory notification can be taken away. It also ruled It is also well settled that the Legislature always intends to avoid hardship. In a situation of this nature, the exemption notification cannot be construed in a way which would prove to be oppressive in nature. Since I am not deviating from the Sec. 37B Circulars I do not have to quote from the Supreme Court judgments on the subject, like Dhiren Chemicals, Kalyani Packagi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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