M/S. B H E L, Hyderabad vs Commissioner Of Customs &

[Arising out of Order-In-Original No. 1/Commr/CEX/2006 dated 19.1.2006 passed by Commissioner of Customs & Central Excise, Bhopal, Madhya Pradesh ]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

Hon'ble Mr. B Ravichandran , Member (Technical)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. B H E L, Hyderabad Appellants

Vs.

Commissioner of Customs & Respondent

Central Excise, Bhopal

Appearance:

Shri B L Narasimhan & Shri Vipul Agarwal, Advocates for the Appellants

Shri Ranjan Khanna, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Mr. B Ravichandran, Member (Technical)

Date of Hearing /decision: 13.08.2015

FINAL ORDER NO. A/ 52624 /2015-EX(DB)

Per Ashok Jindal :

The appellant is in appeal against the impugned order demanding duty of Rs.43,61,600/- along with interest and imposing equal amount of penalty.

2. The facts of the case are that the appellant is located in Hyderabad which is the unit of BHEL. The appellant received one purchase order from Bhopal unit of BHEL for supply the item namely, Automatic Storage Retrieval System (ASRS). Some items for bring into existence of the complete ASRS, the appellant bought from the market, some of the items from other vendors and directly supplied at site on payment of excise duty and some of items manufactured themselves and cleared on payment of duty. All these items were assembled, erected and installed as ASRS at the site of Bhopal unit by the appellant i.e. Hyderabad unit. The Revenue is of the view that the complete ASRS which was brought into existence at the shop floor of the Bhopal unit is classifiable under Central Excise Tariff Heading 84.26 as capital goods. Therefore, the appellant is liable to pay duty thereon. Consequently, the impugned proceedings were initiated. A show cause notice was issued on 27.10.2004 for the period 1999-2000 and 2000-2001 by invoking extended period of limitation. The show cause notice was adjudicated converting into the impugned demands. Aggrieved from the said order, the appellant is before us.

3. Learned Counsel for the appellant contested the issue on two grounds:

a) As the ASRS is immovable therefore, is not excisable, and

b) if it is considered that it is capital good and liable to duty, in that case the appellant is entitled for benefit of Notification No. 67/95 CE dated 16.3.95. Therefore the goods are not liable to duty.

4. To support this contention, he relied on the decision of Triveni Engineering & Indus. Ltd. vs. CCE [2001 (136) ELT 617 (T) ] which has been affirmed by the Honble Apex Court as reported in [2002 (1390 ELT A 310 (SC)] and ISGEC Covema Ltd. vs. CCE [2002 (147) ELT 368 (T)]. He prayed that impugned order be set aside and the appeal be allowed.

5. On the other hand, learned AR submits that as this ARSR can be dismantled and can be moved from one place to another place, therefore, it is the capital good. Therefore, the appellant is liable to pay duty thereon. On the issue of availment of benefit of notification No. 67/95 ibid, he submits that as availment of said notification has not been examined by the adjudicating authority, therefore, the matter be remanded back to adjudicating authority for denovo consideration.

6. In rejoinder, the learned Counsel for the appellant submits that the appellant is not contesting the issue of movability at this stage and is contesting only the issue of benefit of notification No. 67/95 and same can be raised at the appellate stage as held by this Tribunal in the case of Tambraparani Containers (P) Ltd. vs. CCE [2005 (187) ELT 276 (T)]. Therefore, appeals be decided on merits here itself.

7. Heard the parties. Considered the submissions.

8. As the learned Counsel for the appellant has given up the issue of movability of the impugned good, therefore, we are not going to decide that issue.

9. Now we come to the issue whether the appellant is entitled to benefit of notification No. 67/95 ibid or not.

10. The contention of the learned AR is that as such issue has not been examined by the adjudicating authority, therefore matter be remanded. We are not in agreement with this argument as availment of benefit of notification can be raised at the appellate stage as held by this Tribunal in the case of Tambraparani Containers (P) Ltd. (supra) wherein this Tribunal has observed as under:-

5.?After considering the submissions made by both sides in the appeal of TPCL, we find that it is not in dispute that the fixing of handle to container was done by them in the premises of M/s. APCL and that the latter used the resulting containers for packing their product viz. paints. It appears from the relevant findings of the authorities below that this fact stands accepted by the Revenue. If that be the case, M/s. TPCL were clearly entitled to the benefit of Notification No. 67/95-C.E. in respect of the container-handles inasmuch as the said item was captively consumed by M/s. TPCL and M/s. APCL. It is settled law vide the case law cited by ld. Counsel that, under Notification No. 67/95-C.E., inputs/capital goods could be captively consumed in a given factory by different manufacturers. It is, again, settled law that the benefit of an exemption Notification could be claimed at appellate stage. This is what M/s. TPCL has done in this case. We, therefore, allow the benefit of Notification No. 67/95-C.E. to M/s. TPCL in respect of the container-handles and, accordingly, set aside the demand of duty. It would follow that the penalties on M/s. TPCL cannot be sustained. A benefit will, incidentally, flow from this decision to APCL insofar as the penalty imposed on them under Rule 198 is concerned, and we vacate that penalty also.

Therefore, we reject the argument advanced by the learned AR and are dealing with the appeal on its merits on the issue, i.e. whether the appellant is entitled for benefit of exemption notification No. 67/95 ibid or not. For better appreciation, the relevant provisions of Notification No. 67/95 is reproduced herein as under:

In exercise of the powers conferred  the Central Government  hereby exempts -

(i) capital goods as defined in Rule 57Q (57AA) of the Central Excise Rules, 1944 manufactured in a factory and used within the factory of production;

(ii) .

From the whole of the duty of excise leviable thereon which is specified in the Schedule to the Central Excise Tariff Act, 1985...

11. We also note that the said exemption notification is available for capital goods. Therefore, we have to examine the definition of capital goods from the relevant time which is reproduced as under:

Capital goods is defined in Rule 57AA(a) as all goods falling under chapter 82, chapter 84, chapter 85 and chapter 90 . of the First Schedule to the Central Excise Tariff Act, 1985 . used in the factory of the manufacturer of the final products.

12. We also observe that Revenue has not disputed that impugned goods i.e. ASRS is falling under CTH 84.26 which is specified in the definition of capital goods. Therefore, the short issue remains before us is whether the appellant is entitled for exemption under said notification or not.

13. The said issue came up before this Tribunal in the case of Triveni Engineering & Indus. Ltd.(supra) wherein this Tribunal has observed as under:-

4.?We have considered the submissions of both sides. It is not disputed by the Revenue that issue involved in the first matter which has been decided by the Tribunal was the same regarding excisability of turbine generating sets assembled and erected at site by the appellants. Once the department has come to know about the assembly and erection of turbine generating sets by the appellants, it cannot be alleged by them that facts of such assembly and erection was not known to them and merely because the classification and price list were not filed, the allegation of suppression cannot be levelled against the appellants, It was held by the Tribunal in Kanam Foam Industries case (Supra) that as the department was fully aware of the facts when the first show cause notice was issued, subsequent show cause notice issued clearly after a period of six months is hit by time limit. Following the ratio of this decision, we hold that the extended period of limitation is not invokable in the facts of the present matter Notification No. 67/95-C.E. exempts the Capital Goods as defined in rule 57-Q manufactured in a factory and used in the factory of production. We agree with the learned Advocate that benefit of this notification is available as the generating sets assembled and erected at site of the customers of the appellants has been used within the factory of production. There is no requirement in the notification that Capital goods has to be used by the same manufacturer in his factory. We, therefore, allow the benefit of Notification No. 67/95-C.E. subject to the verification that turbine generating set was of output exceeding 75KVA. With these observations, the appeal filed by the appellants is allowed. Penalty imposed in the impugned order is also set aside.

The said decision was affirmed by the Honble Apex Court cited (supra).

14. The issue was again examined by this Tribunal in the case of ISGEC Covema Ltd. vs. CCE [2002 (147) ELT 368 (T]) wherein this Tribunal has observed as under:

4.?It is clear from the aforesaid decisions of the Tribunal as confirmed by the Supreme Court in the Triveni Engg. case that even if the goods are held to be excisable, they would be exempt under Notification No. 67/95 and no duty demand could be raised in respect of the steam boiler in question.

5.?As the goods, steam boiler in question is exempt under Notification No. 67/95, we hold that the duty demand raised in the adjudication order is not tenable and the same is required to be set aside. No penalty can survive in the absence of duty liability. The penalty was also required to be set aside. Accordingly, we allow the appeal and after setting aside the impugned order with the consequential relief to the appellants. In the facts and circumstances of the case we are not going into the question of excisability.

15. As the issue is no longer res integra in the light of decision of the Honble Apex Court in the case of Triveni Engineering & Indus. Ltd.(supra), therefore, we hold that appellant is entitled for the benefit of Notification No. 67/95 CE dated 16.3.1995. Therefore, the appellants are not required to pay duty on the impugned goods. Consequently, impugned order is set aside. Appeal is allowed with consequential relief, if any.

(operative part of the order pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

( B Ravichandran )

Member(Technical)

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