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TMI Blog2019 (3) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018-19/09 dated 01.08.2018. BRIEF FACTS OF THE CASE 3. KEI Industries Ltd. (hereinafter also referred to as the "Appellant") is a public limited company incorporated in India and is engaged in the business of manufacturing and supply of various kinds of Power Cables. 4. The issue is the supply of Copper XLPE insulated armoured low tension cables (hereinafter referred to as "electric/power cables") by the Appellant to M/s. Vedanta Ltd. 5. M/s. Vedanta is undertaking petroleum operations under PRE-New Exploration Licensing Policy (PRE-NELP) granted by the Government of India/State Government to Cairn Energy India Pvt. Ltd. in the State of Rajasthan which was vested in Vedanta after the merger of Cairn India Pvt. Ltd. in Vedanta. For carrying out such petroleum operations, it uses various kinds of machines and equipment. Almost all machines and equipment used by Vedanta for petroleum operations run on electricity and thus, electric cables are required for providing electricity to such machines and equipment. 6. M/s. Vedanta issues tender notice for supply of power cables required for its petroleum operations and further selects a supplier who is required to supply power cables i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is evident that Electric cables are not included in any of the entries of goods specified from entry no. 1 to 23 of the List of goods appended to Notification No. 03/2017-CT. ii) Entry no. 24 of List of goods appended to Notification No. 03/2017-CT. restricts accessories, stores, materials or consumables ONLY in relation to the goods specified in the list of goods from entry no. 1 to 23. What Appellant has failed to specify is that "Electrical cables" supplied by him will be accessories, stores, materials and/or consumables to which specific goods as mentioned in entry no. 1 to 23 of the list of goods. iii) Moreover on examination of purchase orders it is found that they too do not specify that electrical cables supplied will be accessories, stores, materials and/or consumables to which specific goods as mentioned in entry no. 1 to 23 of the list. iv) Appellant has mentioned that Electrical Cables so supplied by them 1) are not specific and exclusive to machine used by M/s Vedanta. 2) supplied cables are capable of being used with more than one kind of machine by M/s Vedanta. Thus it can be inferred that: 1) dealer is not aware off and has not clarified that "Electrical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TIFICATION No. 03/2017-CT(RATE) DATED 28.06.2017 The LD. AAR has failed to appreciate the fact that DGH is the sole authority to certify that goods are required for petroleum operations after ascertaining the use of goods and all the other conditions as per the notification number 3/2017. Further an exhaustive procedure is being followed by DGH for issuance of essentiality certificate as DGH is the Indian governmental regulatory body established under the Ministry of petroleum and Natural gas, Government of India. Appellant's understanding: 1 According to the Appellant, the electric cables supplied by the Appellant to Vedanta for supplying electricity to the machines or equipment used in its petroleum operations would qualify as 'material', 'accessories', 'consumables', and/or 'stores' under Sl. No. 1 of Notification No. 03/2017 for running machines listed in the list annexed to that notification. The reasons are furnished herein below: Applicable provisions: Notification No. 03/2017 2 Notification No. 03/2017 provides for exemption to the intra-State supplies of goods, the description of which is specified in column (3) of the Table wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duly authorised officer of the Directorate General of Hydro Carbons in the Minis o Petroleum and Natural Gas, Government of India, to the effect that the goods are required for, (A) Petroleum operations referred to in sub-clause (ii) of clause (a) under the contract referred to in that sub-clause, or 5 Further, Sl. No. 1 of Notification No. 03/2017 provides that the said benefit would be available for the goods provided in List 1 of Notification No. 03/2017. The List of goods appended to Notification No. 03/2017-CT specifies various goods including, "24. sub-assemblies, tools, accessories, stores, spares, materials, supplies, consumables for running, repairing or maintenance of the goods specified in this List" Analysis of the entry 6 On a careful perusal of the above entry, it is clear that the concessional rate benefit would be available to the goods specified in the list to Notification No. 03/2017 provided the goods are used for the activities mentioned in the entry i.e. petroleum operations which are undertaken under the contracts/licenses specified in Sl. No. l. The list of contracts/license provided in Sl. No. are as under: * License or mining leases granted by G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany' has not been defined in Notification No. 03/2017-CT. Moreover, it is also not defined in the CGST or IGST Act. In common parlance, an 'Indian Company' would mean any company who is established and registered in India in accordance with the relevant laws prevailing at that time. 15 To substantiate the same, reference is made to the definition provided in the Income Tax Act, 1961, which defines Indian Company under section 2(26) as under: "(26) "Indian company" means a company formed and registered under the Companies Act, 1956 and includes... ... ... ... ...." 16 In view of the above, it can be concluded that to claim benefit of concessional rate of tax under Notification No. 03/2017, the following conditions are required to be satisfied cumulatively in the instant case: i. The goods must be covered under the list to the Notification No.03/2017; ii. The goods must be supplied in connection with petroleum operations undertaken under specified contracts; iii. The goods are supplied to an Indian company or a foreign company or a consortium or a contractor thereof in connection with the operations undertaken under a contract with the Government of India; an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the goods specified in the certificate are required for the petroleum operations undertaken by Vedanta. Thus, the Appellant supplies the goods to Vedanta only when it produces the requisite certificate. A copy of the certificate issued by the Directorate General of Hydrocarbons dated 18.01.2018 is already enclosed as Annexure-E. It is submitted that fulfilment of Condition No. 4 is also not disputed in the impugned order by the Ld. AAR. 20 The Appellant wishes to place reliance on the decision of Hon'ble Customs, Excise & Service Tax Appellate Tribunal in the case of Focus Energy Ltd. versus Commissioner of Customs (Import), Mumbai reported at 2014(313) E.L.T 231 (Tri. Mumbai) = 2013 (2) TMI 681 - CESTAT MUMBAI . The Hon'ble Tribunal, in relation to identical exemption, i.e. Sl. No. 358 of Customs Notification No. 12/2012-Cus, held that so long as genuineness of Essentiality certificate obtained from Directorate General of Hydrocarbons, certifying the fact that goods were imported for petroleum operations by the Appellant, is not questioned and the goods are used in the process of petroleum operations, benefit of exemption cannot be denied. 21 In the present case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "a person or thing that aids subordinately, an adjunct, appurtenance, accompaniment" The Oxford Advanced Learners Dictionary "an extra piece of equipment that is useful but not essential" (iii) The Collin's Co build English Dictionary for Advanced Learners "accessories are items or equipment that are not usually essential, but which can be used with or added to something else in order to make it more efficient, useful or decorative" (iv) The Chamber's English Dictionary "subsidiary, present along with something more important" 27 Moreover, while determining the meaning of the term 'accessories', the Hon'ble Apex Court in the matter of Annapurna Carbon Industries Co. vs. State of Andhra Pradesh [AIR 1976 SC 1418],= 1976 (3) TMI 156 - SUPREME COURT OF INDIA has relied upon various dictionaries and held as under: "we find that the term "accessories" is used in the schedule to describe goods which may have been manufactured for use as an aid or addition. A sense in which the word "accessory" is used is given in Webster's Third New International Dictionary as follows: "an object of device that is not essential in itself but that adds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y concluded that electric cables supplied by the Appellant to Vedanta qualify as accessories. 33 The above contentions are further supported by placing reliance on various judicial decision, wherein, the meaning and scope of the term 'accessories' has been discussed. 34 Reliance in this regard is placed on the decision of Hon'ble Tribunal in the matter of CC, Bangalore vs. NI Micro Technologies Pvt. Ltd. [2014 (311) ELT 458 Tri - Bang] = 2013 (12) TMI 709 - CESTAT BANGALORE wherein, while deciding that the battery of a cellular phone is an accessory, the Tribunal held as under: "3. After giving careful consideration to the submissions, we find that parts, components and accessories of mobile handsets including cellular phones were chargeable to 'nil' rate in respect of basic customs duty and additional customs duty (CVD) under Sl No. 320 of Customs Notification No. 21/2005 at the time of importation of the subject goods. It is not the case of the appellant that the importer did not satisfy the relevant condition. It is common knowledge that a cellular phone cannot function without a battery. If that be so, the battery has to be considered as accessory, if no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter of CCE, Chandigarh vs. Arihant Spring Mills [2002 (147) ELT 1181]. = 2001 (5) TMI 779 - CEGAT, NEW DELHI In this case, the Tribunal has held that the electric installations including enamelled winding wires, which are used for transmission of electricity to machines, would be eligible to cenvat credit as the same is classifiable as components/accessories/parts of machine. The aforesaid decision stands affirmed by the Supreme Court reported at 2003 (151) ELT A178 = 2001 (9) TMI 1166 - SUPREME COURT 39 Similarly, in the case of Ashoka Synthetics Ltd. vs. CCE, Bhubaneswar [1997 (96) ELT 170 Tri] = 1997 (7) TMI 340 - CEGAT, CALCUTTA it was held that wires and cables which are used for transmission of power are essential for running of machinery and therefore, are accessories of the machinery. Moreover, in the case of Grasim Cement vs. CCE, Raipur [1997 (96) ELT 354 Tri] = 1997 (8) TMI 209 - CEGAT, NEW DELHI the Hon'ble Tribunal had allowed cenvat credit on the wires and cables on the ground that these are accessories of machines and therefore, would be covered by the definition of capital goods. 40 It is to be noted that the issue involved in Arihant Spinnin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or important for carrying out any particular activity. 44 It has already been discussed in the facts above that the machines procured by Vedanta for carrying out petroleum operations run on electricity and therefore, in order to run those machines, electricity would be required. In other words, in the absence of electricity, the machines cannot function and would be rendered useless. The electricity required for functioning of machines is supplied with the help of electric cables and therefore, the electric cables are essential for running the machines. 45 In view of the above discussions, it is abundantly clear that the electric cables supplied by the Appellant are required for a particular purpose i.e. providing electricity to the machines and are essential for the functioning of machines. Therefore, the electric cables so supplied by the Appellant would qualify as material required for running the machines given in the list appended to Notification No. 03/2017. It is to be noted that the Ld. AAR has not disputed this submission of the Appellant. The electric cables supplied by the Appellant also qualify as consumables or stores which are required for running the goods (mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wires and cables are also eligible to qualify as stores or consumables. Therefore, the electric cables supplied by the Appellant in the instant case would also qualify as stores or consumables for running machines specified in the list and would be covered by the entry no. 24 of the list to Notification No. 03/2017. It is to be noted that the Ld. AAR has not disputed this submission of the Appellant. 48 The AAR at Para 9(u) of the impugned ruling has held that it is not rational to consider electrical cables as accessories, stores, materials or consumables for running of the goods mentioned in the list on the basis that electric cables are used for downloading, transmission, distribution of electricity to various points. The impugned ruling further mentions about logic poles, insulators, transformers and other equipment used to ensure flow of electricity. 49 In this regard, it is submitted that the AAR has not considered the dictionary meanings and multiple tribunal decisions cited by the Appellant in its application. On the basis of submissions made above, para 22 - 47, it is submitted that this finding in the impugned order is incorrect. 50 Further, the AAR at Para 9(x) of imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaken by Vedanta and that the electric cables are not diverted to any other use. In view of the above, the Appellant is entitled to the concessional rate of Goods and Service Tax under Notification 3/2017. 54 It is further submitted that the fact that the electric cables are for use with the machines / equipment falling under Entry No. 9 of the list is also certified by the Directorate General of Hydrocarbons in its certificate dated 18.01.2018, enclosed as Annexure-E. In this regard, Annexure A to the certificate, specifically column 3 of the table therein, may be referred. That the certificate was duly submitted before the Ld. AAR, however, the Ld. AAR completely ignored the said certificate and denied the benefit to the Appellant by holding that whether the electric cables are used with machines covered under Entry no I to 23 of the list is not clear. It is submitted that such finding by the Ld. AAR is factually and legally incorrect and therefore, the Impugned ruling should be set aside 55 The AAR at Para 9 of the impugned ruling has given a finding that the Appellant has failed to mention specific machines / equipment, as mentioned in entry no. 1 - 23 of the list, in relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant to Vedanta are covered by the list (entry no. 24) appended to Notification No. 03/2017. Moreover, the electric cables are supplied to Vedanta, an Indian company, against the certificate issued by the Directorate General of Hydrocarbons. As all the conditions prescribed in Notification No. 03/2017 for Sl. No. 1 are satisfied, the Appellant is eligible for the benefit of concessional rate of duty under Notification No. 03/2017. 61 Therefore, the impugned order should be set aside and the Appellant should be provided the benefit under Notification no. 03/2017. 14. Personal hearing was given to appellants on 12.11.2018 and 14.11.2018. Shri Manish Gaur, Advocate, Ms. Jyoti Pal, Advocate and Shri Adarsh Jain, Sr. General Manager of the Appellant appeared for personal hearing. During hearing, they reiterated the submissions already made in the Application made before the AAR and the Appeal memo. During the hearing, a query was raised by the Bench that transaction on which Advance Ruling was sought had occurred earlier to the filing the application for Advance Ruling. In answer to the query, the learned Advocate submitted that this question can not be raised at the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n filed by the Appellant satisfies the definition of 'advance ruling' being in relation to the supply of electric cables being undertaken by the Appellant. 3. Without prejudice, the Appellant also submits that the Appellant regularly enters into similar contracts for supply of identical / similar electric cables to various customers like Vedanta. In fact, there were purchase orders pending also on the date when the Appellant filed the advance ruling application, i.e. on 09.05.2018. A sample copy of such a purchase order is enclosed as Annexure-I to these submissions. It is submitted that the question asked in the advance ruling application should not be restricted to the POs enclosed by the Appellant with the Advance Ruling Application. The POs were only a representative copy for all such contracts that are regularly entered into by the Appellant for supply of identical electric cables in identical situations, i.e. in relation to petroleum operations, against a certificate by Directorate General of Hydrocarbons and satisfying other conditions of the Notification No. 03/2017-CT(rate). The question of maintainability of advance ruling application cannot be re-considered at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t capriciously. We find that refusal to decide the appeal on merits was vitiated by an error of law apparent on the face of the record." ii. PRAKASH CHANDRA GOYAL vs UNION OF INDIA, 2010 (256) E.L.T. 667 (Cal.) = 2010 (3) TMI 488 - CALCUTTA HIGH COURT "12. Ordinarily, this writ application involving questions about alleged sale of goods by the government to a private party should not have been entertained in the writ jurisdiction. But, since the writ has been entertained and it is pending for a period of about three years, now the writ petitioner cannot be relegated to the remedy of a suit." iii. Shahnaz Ayurvedics vs. Commissioner of Central Excise, Noida, 2004 (173) ELT 337 (All.) = 2004 (1) TMI 94 - HIGH COURT OF JUDICATURE AT ALLAHABAD approved by the Hon'ble Supreme Court in the case of Commissioner v. Shahnaz Ayurvedics - 2004 (174) E.L.T. A34 (S.C.) = 2004 (10) TMI 575 - SUPREME COURT "22. Be that as it may, the Hon'ble Apex Court in Union of India v. Ahmedabad Electricity co. Ltd. &Ors., 2003 (158) E.L.T. 3 (S.C.) = JT (2003) 8 SC 153 = 2003 (10) TMI 47 - SUPREME COURT OF INDIA while dealing with the same provisions, has categorically held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention here that department has not filed any appeal against the order of Advance Ruling Authority admitting the application for advance Ruling. It is submitted that in the absence of any appeal by the department, Appellate authority Suo moto cannot raise the issue of maintainability of application before the Advance Ruling Authority. DISCUSSION AND FINDINGS 17. Having gone through the decision of the Authority for Advance Ruling (AAR) and submissions made by the Appellant in written form as well as those made during the course of personal hearing, we find that the Appellant wants the authority to decide whether the benefit of the Notification No. 03/2017-Central Tax (Rate) dated 28.06.2017 is available to them or not. We find from the record that the Appellant has asked for the benefit of this notification with respect to supply of goods mentioned by the DGH in the certificate dated 18.01.2018. We find that the supplies mentioned in the Certificate had been effected in the month of Jan.,2018, actual date of the transactions as per GSTR-1 is 22.01.2018 and 24.01.2018. We also find that the Appellant had applied for the Advance Ruling on 09.05.2018 whether benefit of the notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices or both being undertaken or proposed to be undertaken. This sole provision is enough to pronounce loudly that even decision on maintainability of the issue is not sacrosanct for this forum. 20. The appellant has also contended that, as per Purchase Order, warranty for the supplies undertaken is continued even today, hence , it can't be said that the supplies were completed before they applied for Advance Ruling. They have submitted that the entire transaction is for supply of goods and supply of warranty services and will be completed only on expiry of warranty period. Supply of warranty is in continuation to the supply of goods, which is the principal supply. The contention of the appellant is not tenable. As per Section 95(a) ibid, the advance ruling can only be sought for supplies being undertaken or proposed to be undertaken. In the instant case, supply i.e. Sale of cables stood undertaken upon issue of invoice and movement of the goods on 22.01.2018 and 24.01.2018. Continued existence of the warranty on the date of filing of application i.e. 09.05.2018 does not put the transaction under the category of "supplies being undertaken". Sale of goods (with sale of warran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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