By TIOL News Service

MUMBAI, JUNE 08, 2017: THIS is a Revenue appeal filed in the year 2006.

The respondent cleared electric parts under Nil rate of duty claiming exemption under notification 6/2002-CE(Sr. No. 237).

Sr. No. 21 of List 9 of the said notification granted exemption to the parts of non-conventional energy/devices/systems specified in List 9 if the parts are consumed within the factory of production of such parts for the manufacture of goods specified at Sr. no. 1 in the List 9.

Respondents claimed the said exemption though the said parts were not consumed within the factory of production for manufacture of non-conventional energy device specified in list 9.

However, the benefit of notification was allowed by the Commissioner(A) and, therefore, Revenue is before the CESTAT.

The AR submitted that the lower appellate authority had wrongly relied on the decision of the Apex Court in the case of East End Paper Mills - 2002-TIOL-379-SC-CX and ShriramVinyle & Chemicals - 2002-TIOL-663-SC-CUS. And the decision of Tribunal in Paharpur Cooling Towers Pvt. Ltd. squarely covers the issue and, therefore, the impugned order needs to be set aside.

The respondent justified the reliance placed by the Commissioner (A) and submitted that they had obtained a certificate from the Non-conventional energy Development Corporation of Andhra Pradesh and Government of Karnataka; that the said projects require the machines specified in the certificate; that the intention of the government is to explore the activity of generation of non-conventional energy and if the benefit is not given, the purpose of such exemption would be defeated. Hyundai Unitech Electrical Transmissions Ltd - 2015-TIOL-322-SC-CX, Teknik Plant & Machinery Mfg. Co. - 2014-TIOL-2402-CESTAT-MUM relied upon.

The Bench extracted the entries in question and observed -

"7. The appellants are claiming the product manufactured by them is a part of sr. no. 16 of list 9 and exemption under Sr. no. 21 of list 9, which reads as follows:-

"(16) Agricultural, forestry, agro-industrial, industrial, municipal and urban waste conversion device producing energy,

(21) Parts consumed within the factory of production of such parts for the manufacture of goods specified at S.Nos. 1 to 20 above."

8. It is seen that there is no dispute that the items manufactured by the appellant are required for use in the products of the nature specified in sr. no. 16 of the Lit 9 of the said notification. Sr. No. 21 of the said notification exempts such parts only when they are consumed within the factory of production of parts for manufacture of goods specified at sr. no. 1 to 20 of List 9. It is apparent that the goods manufactured by the appellant are not used within their factory for production of the items listed in sr. no. 16 of list 9. Thus on plain reading of the said notification it is apparent that the appellants are not entitled for the benefit of such notification."

Distinguishing the case laws cited by the respondent as being delivered in a different context, it was held that the appellants are not entitled to benefit of notification 6/2002-CE.

The appeal of revenue was allowed.

(See 2017-TIOL-1927-CESTAT-MUM)