Notification no. 108/95-CE is available to project and not to company.

PJ/Case Laws/2012-13/1261

Case:-CABLE CORPORATION OF INDIA LTD V/S COMMISSIONER OF CENTRAL EXCISE, MUMBAI-V

Citation: - 2012-TIOL-1270-CESTAT-MUM

Brief Facts:- The appellant is engaged in manufacture of insulated electric wire cables classifiable under Chapter 85 of the Central Excise Tariff. The appellant cleared certain quantity of wires and cables by claiming the benefit of Notification No.108/95-CEfor setting up small hydro project at Hemavathy, Hassan District, Karnataka. The benefit ofthe Notification is denied on the ground that the appellant had supplied the goods to M/s. Sulzer Flovel Hydro Ltd. and not to the hydro project.

Appellant’s contention:- The appellant contended that the wires and cables supplied to M/s. Sulzer Flovel Hydro Ltd., supplier of electro mechanical equipment to the hydro project. As the wires and cables are for the hydro project therefore entitled for the benefit of the Notification. The hydro project was allotted to M/s. Sandur Manganese & Iron Ore Ltd. and is financed by World Bank. It is also submitted that M/s. Sandur Manganese & Iron Ore Ltd. has been allotted the contract for completion of mini hydro project and the World Bank had issued No Objection Certificate for awarding the contract for supply of electro mechanical equipment to M/s. Sulzer Flovel hydro Ltd. As the wires and cables manufactured by the appellant are used in the manufacture of electro mechanical equipment, which is further supplied to the hydro project, hence the benefit of the Notification has been wrongly denied.

Respondent’s Contention:-The respondent-revenue relied upon the decision of the Tribunal in the case of Bird Machines vs. CCE, Delhi-IV reported in 2011 (263)ELT 82 (Tri.-Del.) = (2010-TIOL-1566-CESTAT-DEL) and the decision of the Hon'ble Punjab & Haryana High Court in Dee Development Engineers Ltd. vs. UOI reported in 2010(254)ELT 412 (P&H) = (2010-TIOL-491-HC-P&H) and submit that in the above decisions while interpreting the provisions of Notification No.108/95-CE, it has been held that in case the goods were not directly supplied to the specified projects, the benefit of the Notification is not available.

Reasoning of Judgment: - The Hon’ble CESTAT held that Notification No.108/95-CE provides exemption from payment of central excise duty and additional duty of excise in respect of the goods supplied to project that has been approved by the Government of India and financed by an International Organisation listed in the annexure, a certificate from an officer not below the rank of Deputy Secretary to the Government of India in the Ministry of Finance that the said goods are required for the execution of the said project and the said project has been duly approved by the Government of India.

Further, in the appeal filed by the appellant-manufacturer they find that as per the provisions of the Notification, the goods are supplied to a project financed by the International Organisation and the provisions of this Notification were interpreted by the Hon'ble Punjab & Haryana High Court in Dee Development Engineers Ltd. (supra) where in a similar situation, the benefit of the Notification was denied. The Tribunal in the case of Bird Machine (supra) also, while interpreting the provisions of the same Notification, held that the exemption under the Notification clearly requires that the goods to be supplied to the project financed by the International Organisation and approved by the Government of India. In case the goods were not supplied to the specified project, the benefit of the Notification is not available. In the present case, the goods were not supplied to the specified project. The goods were supplied to M/s. Sulzer Flovel Hydro Ltd., therefore no infirmity was found in the impugned order whereby the benefit of the Notification is denied.

In the appeal filed by the Revenue, the only challenge is that the Commissioner (Appeals) has wrongly allowed the benefit of cum-duty price, in view of the Hon'ble Supreme Court decision in the case of CCE, Delhi vs. Maruti Udyog Ltd. reported in 2002(141) ELT 3 (SC) = (2002-TIOL-34-SC-CX), as the review petition is pending before the Hon'ble Supreme Court. In this regard, they findthat the Hon'ble Supreme Court has already dismissed the review petition in the case of Maruti Udyog Ltd. (supra), reported as 2005(179)ELT A102 (SC). Thus, the appeals are not tenable.

Decision: - Appeals dismissed.

Comment:- Notification 108/95 allows the exemption of a specified project financed by listed international organizations. But the exemption will be available when the goods are supplied directly to project and not to company who is supplying the goods to such projects. This decision has relied upon the Punjab and Haryana High Court. But this is forfeit the complete purpose of the notification. It is meant to give exemption to project of public welfare so that the cost of the same is not increased. It is normally taken by a company which further gives orders to various suppliers. If the exemption is not granted to these suppliers then ultimately add to the cost of project. The board should amend the notification in this regard.

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PJ/Case Laws/2012-13/1261

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