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TMI Blog2017 (1) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... boiler - demand of CENVAT credit on the inputs sent for job-work by Babcock is not sustainable. Liability of duty - whether Thermax is liable to pay duty on the parts manufactured on job-work basis and cleared to the principal Babcock is liable for duty? - Held that: - in the said notification, there is a condition that job-worked goods should be used in the manufacture of final products of the principal and the principal, on the final products so manufactured out of the job-worked intermediate goods, should pay duty on the final product. In the present case, the principal cleared the final products i.e. boiler without payment of duty under exemption Notification No.3/2001-CE dated 01/03/2001. Therefore, even if Notification No. 214/86-CE dated 25/03/1986 is not applicable, it is very clear that any manufacturer, whether on job-work basis or otherwise, manufactures any goods, being the manufacturer of such goods, is liable to pay duty. Payment of duty can only be avoided only when there is an exemption notification on the said goods. In the appellants case, the parts of boiler manufactured by the job-worker undoubtedly dutiable goods. When the principal manufacturer is not disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable. The exemption Notification is applicable to boiler and not to the parts. There was also proposal for disallowance of CENVAT credit in respect of inputs sent for job-work under Rule 4(5)(a) to Thermax. Demand on this ground was also confirmed. The adjudicating authority confirmed the demand both on Babcock as well as on Thermax. Therefore, both of them are in appeal before us. 2. Shri Gajendra Jain, Learned Counsel appearing on behalf of both the appellants submits that Babcock is engaged in the manufacture and supply of boiler. In the present case, they have cleared three boilers in CKD condition but all the parts constitute a complete boiler. Therefore, even if the boiler was cleared in unassembled form but constitute a complete boiler, exemption available under the Notification is admissible. He submits that this very same issue came up in appellant s own case reported as Commissioner of Central Excise, Pune v. Thermax Babcock Wilcox Ltd 2005 (182) ELT 336 (Tri.) . In the said judgment the issue was that pressure parts of the boiler removed in several consignments which was held to be regarded as also in complete form and held classifiable as boiler. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings of the impugned order. He submits that the appellant Babcock admittedly cleared from their factory, parts of the boiler. Therefore, the goods as presented is parts and not boiler. Therefore, exemption which is available only to boilers cannot be extended to parts. He placed reliance on the decision of this Tribunal in the case of Commissioner of Central Excise, Bangalore v. BPL Sanyo Utilities Appliances 2004 (177) ELT 722 (Tri.-Bang.). As regards disallowance of MODVAT credit on the input sent by Babcock to Thermax for job-work under Rule 4(5)(a) he submits that the boiler is admittedly exempted. Therefore, the CENVAT credit availed by Babcock is not admissible. As regards Thermax, in respect of parts manufactured on job-work basis and subsequently used in the manufacture of boiler, he submits that Thermax is an independent manufacturer even though they manufactures the parts under Rule 4(5)(a) but the excise duty liability is on the manufacturer, in the present case, it is Thermax. Though job-worker can be exonerated from payment of duty only in a case where the job-worker is carrying out the work under Notification 214/86 dated 25/03/1986. The said notification is ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the device is thing made for a particular purpose and since chimney being an integral part of the biomass fired boiler can be treated as a device for non-conventional energy devices/systems, the exemption under this Notification would be available to the chimneys. We agree with the view of the Commissioner (Appeals), as rightly observed by the Commissioner (Appeals), the device is a thing made for a particular purpose and as such the chimney meant for biomass fired boiler has to be treated as non-conventional energy device. 6. In the case of Shree Venkateswara Engineering Corporation (supra) this Tribunal has passed the following order: 6. After hearing both sides and on perusal of the submissions made by the appellant and on going through the records, we find that, the following facts are relevant. It is seen from the copy of the Purchase Order received by the appellants from M/s. Fashion Syncrotex Pvt. Ltd., that the order is for Agro based fired Steam Generator. It is pertinent to note here that the said exemption notification admittedly does not refer to any particular description of the device. Sl. No. 16 of the list 9 of the said notification which is releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cover each individual item which is cleared in Knocked Down Condition as the description covers all devices meant for the ultimate purpose. While giving a finding as above we have taken into consideration the broad description of the device as shown in Sl. No. 16 of List 9 of the said notification and we have not taken into consideration the individual identity which may or may not be there of the goods cleared. When a description is very wide without excluding any specific category of items it would not be permissible to deny the benefit of exemption based on individual description which is not mentioned in the notification. In the case of Hemraj Gordhandas v. CC - 1978 (2) E.L.T. J 350 (S.C.) , Wherein it was held that, it is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax-payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the notification o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals), the device is a thing made for a particular purpose and as such the chimney meant for biomass fired boiler has to be treated as non-conventional energy device. The Tribunal has come to a similar conclusion under similar circumstances under the very same notification. Relying on the above reasons, we allow the appeal with consequential relief. Miscellaneous applications disposed. 7. In the case of Metalfab Hightech (P) Ltd (supra), the Division Bench of this Tribunal has taken the following views: 6. On consideration of the submissions made by both sides and perusal of the records, we find that the issue involved in this case is about the eligibility for the benefit of exemption Notification No.6/2000-CE from payment of Central Excise duty. We find that as pointed out by learned Advocate, an identical issue has been decided by this Tribunal in the case of CCE v. Rachitech Engineers Pvt. Ltd. (supra) In that case also the appellants were clearing chimneys to M/s. ISGEC John Thompson who were manufacturing boilers. 7.1 The Bench after considering the submissions made by both sides has discussed the issue in para 5 which is reproduced as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondition do not contribute for the conversion of the waste into energy. The appellants had produced the diagram to substantiate that all the individual items supplied in knocked down condition would contribute to the ultimate product namely a boiler/generator which could not be supplied in one lot. As it has already been observed above, the description in list 9 to the said notification being very wide cannot be given a restricted meaning that it could not cover each individual item which is cleared in knocked down condition as the description covers all devices meant for the ultimate purpose. While giving a finding as above we have taken into consideration the broad description of the device as shown in Sl No 16 of list 9 of the said notification and we have not taken into consideration the individual identity which may or may not be there of the goods cleared. When a description is very wide without excluding any specific category of items it would not be permissible to deny the benefit of exemption based on individual description which is not mentioned in the notification. In the case of Hemraj Gordhandas Vs. CC - 1978 (2) E.L.T. J 350 (S.C.), Wherein it was held that, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the levy of duty of excise on boilers, designed for agricultural or municipal waste a s also conventional fuel, and in exercise of the powers conferred under Section 37B of the Central Excise Aalst Act, 1944 (1 of 1944), the Board hereby orders that - (a) Benefit of the notification No. 205/88-CE dated 25/5/88 (earlier Notification No. 120/81-CE dated 15/5/81) will be available to such goods, even when these are cleared in CKD, ISKD conditions, provided that evidence is produced that goods cleared, form part of a complete device, and the evidence is also produced for supply of such a device to the buyer. (b) The said goods is designed for converting agricultural and municipal waste for producing energy though conventional fuel can be used. 4. The Board further direct that a copy of this order be sent to all Principal Collectors of Central Excise and Collectors of Central Excise for being observed and followed by all other manufacturers similarly placed and for being made available as required to all other persons employed in the execution of the Central Excise Salt Act, 1944, and for issue of Trade Notices. 9. From the above clarification it can be seen tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provider of output service. 12. From the plain reading of the above rule it can be seen that Rule 4(5)(a) only provides for movement of the inputs on which CENVAT credit is availed for the purpose of job-work. Rule 4(5)(a) is not the authority to grant any exemption to the job-worker from payment of duty if it arises on the manufacture of goods by the manufacturer. Generally the duty liability on the part of the job-worker remains exempted under Notification No. 214/86-CE dated 25/03/1986. However, in the said notification, there is a condition that job-worked goods should be used in the manufacture of final products of the principal and the principal, on the final products so manufactured out of the job-worked intermediate goods, should pay duty on the final product. In the present case, the principal cleared the final products i.e. boiler without payment of duty under exemption Notification No.3/2001-CE dated 01/03/2001. Therefore, even if Notification No. 214/86-CE dated 25/03/1986 is not applicable, it is very clear that any manufacturer, whether on job-work basis or otherwise, manufactures any goods, being the manufacturer of such goods, is liable to pay duty. Payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved that the Tribunal has held that only if the inputs supplied by the principal to the job-worker under Rule 57F(4), the job-worker on the job-worked goods is not required to pay any duty. 15. The other issue as to whether there is any provision for exemption from payment of duty in the case of job-worker under Rule 57F(4) or otherwise was not discussed in the aforesaid decision. As already mentioned, Rule 4(5)(a) only provides for removal of input on which CENVAT credit was availed for the purpose of job-work and return thereof. The rule does not make any provision as regards the payment of duty. Therefore, merely on the basis of Rule 4(5)(a) or erstwhile Rule 57F(4) of Central Excise Rules 1944 exemption cannot be granted. Therefore, the above decision of Mukesh Industries Ltd (supra) does not appear to be legal and correct. As regards the decision of M.Tex D.K Processors (supra) , in the majority decision, it was held that job-worker is not required to pay duty. The said decision was mainly based on the additional clause (i) in Rule 57F(4). However, in Rule 4(5)(a) which is the relevant provision in the present case, no such similar clause exists. Therefore, ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, where the principal manufacturer i.e. Babcock has not cleared their final product i.e. boiler on payment of duty and admittedly cleared under exemption Notification No. 3/2001-CE. Since there are contrary views on the issue as to dutiability on the job-worker, for resolving the conflict it is desirable to refer the particular issue to the Larger Bench. We, therefore, refer the following question to the Larger Bench for resolution: In the facts and circumstances of the present case, when the principal manufacturer (Babcock) clears the final product without payment of duty by availing exemption under a notification, whether the job-worker M/s Thermax, who manufactures intermediate parts of boiler on the inputs sent by Babcock under Rule 4(5)(a) and returns the same to the principal manufacturer M/s Babcock, is liable for payment of duty when Notification No. 214/86-CE is not available on the manufactured goods at the said job-worker s (Thermax) end. 18. Registry is directed to place the matter before the Hon ble President for constituting a Larger Bench to answer the above mentioned question. (Operative part Pronounced in Court on 02/12/2016) - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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