Whether doors of towers of windmills treated as part of windmill and eligible for exemption?

PJ/CASE LAW/2014-15/2295

Case:- GEMINI INSTRATECH PVT. LTD. VERSUS COMMISSIONER OF C. EX., NASHIK

Citation:- 2014 (300) E.L.T. 446 (Tri. - Mumbai)

Brief facts:-The appellant filed this appeal against impugned order dated 9-7-2007 passed by the Commissioner of Central Excise, Nashik, whereby the benefit of Notification No. 3/2001-C.E., dated 1-3-2001 at Sl. No. 254 and for the subsequent period, the benefit of Notification No. 6/2002-C.E., dated 1-3-2002 at Sl. No. 237 is denied in respect of Windmill doors manufactured by the appellant.
The appellants were engaged in the manufacture of current transformers, voltage transformers, windmill door, electrical boxes, etc. During the period June, 2001 to May, 2005 the appellant claimed benefit of above mentioned notifications in respect of windmill doors. Two show cause notices were issued demanding duty by denying the benefit of notification. The adjudicating authority denied the benefit of notifications and confirmed the demand of Rs. 1,32,75,126/- and of Rs. 55,85,513/- along with interest. A penalty of Rs. 2 lakhs was also imposed under Section 25 of the Central Excise Rules.

Appellant’s contentions:- The contention of the appellant is that the appellants are manufacturing doors which was specifically designed to be used for wind operated electricity generators. The doors are used with the tower on which the wind operated electricity generators are installed. The contention of the appellant is that the notification in question provides exemption in respect of wind operated electricity generators, its components and parts thereof. The tower which is part of wind operated electricity generators and the Revenue is not denying the benefit of notification in respect of tower, hence the doors which is part of tower cannot be denied the benefit of above mentioned notifications. The applicant relied upon the order dated 28-2-2005 passed by the Commissioner of Central Excise, Raipur, whereby the Commissioner has allowed the benefit of Notification No. 6/2002-C.E., dated 1-3-2002, which is under consideration in the present case also, in respect of towers. The Commissioner of Central Excise held that the towers support the propellers/rotors which are essential components of the wind operated electricity generators and the towers manufactured by the assessee are part of the wind operated electricity generators. Hence, entitled for the exemption provided under Notification No. 6/2002-C.E., dated 1-3-2002. The appellants also relied upon another decision passed by the Commissioner of Central Excise (Appeals), Raipur, dated 10-12-2003 whereby the benefit of Notification No. 6/2000 was allowed in respect of the tower of the wind operated electricity generators.

The contention is that as the Revenue not denying the benefit of notification in question in respect of the tower of wind operated electricity generators, the doors which are part of tower are also entitled for the benefit of notification.

The appellant also relied upon the decision of the Tribunal in the case of Hyundai Unitech Electrical Transmission Ltd.v. CCE, 2005 (187)E.L.T.312 (Tri.-Mumbai)whereby the benefit of Notification No. 6/2000 was allowed in respect of tower and lattice masts. The appellant also relied upon the decision of the Tribunal in the case of Pushpam Forgingv. CCE, 2006 (193)E.L.T.334 (Tri.-Mumbai)whereby the benefit of notification was allowed in respect of flanges as part of wind mill tower on the ground that wind mill tower is part of wind operated electricity generators, hence the flanges are entitled for the Notification No. 6/2000-C.E.

Respondent’s contentions:-The Revenue relied upon the decision of the Hon’ble Supreme Court in the case of Nicco Corporation Ltd.v. CCE, Calcutta, 2006 (203)E.L.T.362 (S.C.).

The contention of the Revenue is that the Hon’ble Supreme Court denied the benefit of Notification No. 205/88-C.E., dated 25-5-1988 in respect of wires and cables. The Hon’ble Supreme Court held that the wind mill is complete in itself without electric cables, although wind mill may not be able to function without these cables and as such, the benefit of Exemption Notification No. 25/88-C.E. would not be available in respect of wires and cables as part of wind mill.

The contention is that as wires and cables cannot be considered as part of wind mill therefore, the doors in question cannot be considered as part of wind operated electricity generators.

Reasoning of judgment:- The hon’ble court find that in the impugned order, the benefit of Notification No. 3/2001-C.E., dated 1-3-2001 as well as for subsequent period the benefit of Notification No. 6/2002-C.E., dated 1-3-2002 was denied. For ready reference, relevant part of the Notification is reproduced below :
“The Notification No. 3/2001-C.E., dated 1-3-2001 Sl. No. 254 reads as - “Non-conventional energy devices/systems specified in the List 5” and Sl. No. 13 of the list 5 read as - “Wind operated electricity generator, its component and parts thereof”.

Under Notification No. 6/2002-C.E., dated 1-3-2002 Sl. No. 237 covers all the goods used in non-conventional energy devices/systems specified in list 9 and the .said product is placed at item No. 13 in the list No. 9 which read as - “Wind operated electricity generator, its components and parts thereof including rotor and wind turbine controller”.

The Revenue relied upon the decision of the Hon’ble Supreme Court in Nicco Corporation Ltd. case (cited supra) whereby the Hon’ble Supreme Court denied the benefit of Notification No. 205/88-C.E., dated 25-5-1988 in respect of wires and cables. They find that the Notification No. 205/88-C.E., at Sl. No. 12 provides exemption from payment of Central Excise duty in respect of wind mill and specifically devices which run on the wind mill. In these situation, the Hon’ble Supreme Court held that wires and cables are not entitled for the benefit of notification. The wordings of the notifications which are under consideration before us are different. The Notification No. 3/2001-C.E. & No. 6/2002-C.E. provides exemption from payment of Central Excise duty in respect of wind operated electricity generators and its components and parts thereof. As the benefit of notification is available to the components and parts thereof, which not in the case before the Hon’ble Supreme Court in the case of Nicco Corporation Ltd. (supra). Therefore, ratio of the above decision is not applicable in the facts of the present case.

The Revenue has not denied the benefit of notification in respect of the tower of the wind operated electricity generators as held by the Commissioner of Central Excise, Raipur, vide order dated 28-2-2005 and the Commissioner (Appeals) vide order dated 10-2-2003 allowed the benefit of notification in question in respect of towers of wind operated electricity generators. The Revenue has not produced any evidence to show these orders are challenged by the Revenue. As the benefit of Notification No. 6/2002-C.E. is allowed to the tower of wind operated electricity generators, therefore, the door which is part of tower is also entitled for the benefit of notification which provides exemption from payment of Excise duty to wind operated electricity generators and its components and parts thereof.
In view of the above, the impugned order is set aside and the appeal is allowed.

Decision:- The appeal is allowed.

Comment:- The analogy of the case is that when the benefit of Notification No. 6/2002-C.E. is allowed to the tower of wind operated electricity generators, the door which is part of tower is also entitled for the benefit of notification which provides exemption from payment of Excise duty to wind operated electricity generators and its components and parts.

Prepared by: Monika Tak

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PJ/CASE LAW/2014-15/2295

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