By TIOL News Service

MUMBAI, MAR 14, 2016: THIS is a Revenue appeal against the order of the lower appellate authority allowing exemption to the respondent assessee in terms of Notification 10/97 dated 01.09.1997 on Air conditioning unit, condensing unit, chillers, walk in cold rooms supplied by the respondent to DRDO which is a registered development and research institute as per the certificate issued by them.

The case of the department is that the impugned goods are not directly used for research function etc. and hence not entitled for exemption.

The adjudicating authority had extended the exemption in respect of "Walk in cold room" & "chillers" & thus dropped the CE duty demand of Rs.6,05,811/- but denied the exemption in respect of the other items and confirmed the duty demand for Rs.3,32,105/-.

Against this order, both the Revenue and assessee went in appeal before the Commissioner (A). The assessee succeeded whereas the Revenue lost and, therefore, they are before the CESTAT.

The AR submitted that the goods namely condensing units, chillers, Walk in cold rooms are used for general purposes and, therefore, by no stretch of imagination, can they be held to be scientific and technical instrument, apparatus or parts or accessories thereof and hence exemption is not admissible.

The respondent assessee informed that the question whether air conditioning equipment etc. are eligible for exemption under Notification 10/97-CE has already been considered by the Tribunal in large number of cases and it has been consistently held that the exemption cannot be denied if other conditions are fulfilled. [ Godrej Appliances Ltd. 2008-TIOL-2847-CESTAT-AHM, Sunbeam Appliances 2011-TIOL-697-CESTAT-MUM relied upon.]

The Bench observed -

"7. We find that the Notification 10/97 dated 01.03.1997 grants exemption to certain goods supplied to specific research institutions, provided the institution is a public funded research institution and the goods should be scientific and technical apparatus including computer for research purposes. Apart from this, the institution has to be registered with the Government of India, Department of Scientific and Industrial Research and an officer, not below the rank of Dy. Secretary to the Govt. of India has to certify that the institution is not engaged in commercial activity and the goods are required for research purposes. Further, in this case the respondent has produced the required certificate to claim benefit of Notification 10/97 dated 01.09.1997. The only ground for denial is that the impugned goods are used for the general purposes and are not attached to any scientific instrument and therefore not eligible for exemption. Further, we are of the considered opinion that the respondent's case is fully covered by the decisions of this Tribunal cited above. We also find that the respondent has complied with the Notification 10/97 dated 01.03.1997; therefore we do not find any infirmity with the impugned orders and the same are upheld…"

In fine, the appeal of the revenue was dismissed.

In passing: Vide letter D.O F.No. 334/8/2016-TRU dated 29.02.2016, it is also clarified (Pg. 33) - Representations have been received seeking clarification as to whether engineering goods such as switchboards, switchgears, electrical motors, automation products etc. are covered within the scope of the said notification. It is clarified that the scope of the exemption under notification 10/97-CE covers engineering goods also, subject to fulfillment of other conditions prescribed in the said notification.

(See 2016-TIOL-600-CESTAT-MUM)