Whether exemption admissible to various fabricated items of Chapter 73.08 of CETA, 1985 supplied to mega power projects?

PJ/Case Law/2013-14/1947

Case:- VRINDA ENGINEERING PVT. LTD. Vs COMMISSIONER OF C. EX., HALDIA

Citation:-2013 (295) E.L.T. 401 (Tri. - Kolkata)

Brief facts:-The application was filed seeking waiver of pre-deposit of duty of Rs. 1.45 crores and equal amount of penalty imposed under Section 11AC of CEA, 1944.The applicants were engaged in the manufacture of various fabricated items falling under Chapter 73.08 of CETA, 1985 which were supplied to various mega power projects after availing exemption from payment of duty against Sl. No. 91 of Notification No. 6/2006-C.E., dated 1-3-2006.

Appellant’s contentions:- The ld. Sr. Advocate submitted that there was no dispute that various fabricated items falling under Chapter 73.08 of CETA, 1985 were supplied to various mega power projects and necessary certificates from the competent authority as required under the Notification No. 21/2002-Cus., dated March 1, 2002 had been obtained. The ld. Advocate submitted that the adjudicating authority had erred in not considering the fact that the fabricated structures supplied by them to various mega power projects were used as components and parts of the said projects. For example, the fabricated items supplied to M/s. Bharat Heavy Electricals Ltd. in respect of their Kuderma Thermal Power Projects, were used as parts and components of boilers. Therefore, these goods were classifiable under Sub-Heading No. 98.01 as components or raw materials for the manufacture of the various items listed in the said Tariff heading. The ld. Advocate had referred to a recent Circular No. 964/07/2012-CX., dated April 2, 2012 issued by C.B.E. & C., wherein, it had been clarified that various components used in the boilers, including structural components, had been considered as part of boiler. He also relied upon the order of this Tribunal in the case of Ramsarup Utpadak, Unit-IIv. Commr. of Central Excise, Kolkata-III - 2012 (283)E.L.T.425 (Tri.-Kolkata)wherein in the similar circumstances, this Tribunal had granted unconditional stay relating to goods viz. TMT bars falling under Chapter 72 of CETA, 1985 and used in Mega Power Projects.

Respondent’s contentions:-The respondent contented that the principal reason for denial of the benefit of the said exemption Notification was that the fabricated items cleared by them fall under Chapter Sub-Heading 73.08 of CETA, 1985 and could not be classifiable under Chapter Sub-Heading 98.01 of CETA, 1985.

Reasoning of judgment:- Heard both sides and perused the records the Bench found that the fabricated items manufactured by the Applicant were undisputedly supplied to various mega power projects and used in such projects. The only dispute for denial of the benefit of Notification No. 6/2006-C.E., dated 1-3-2006 was that the fabricated items supplied to these mega power projects being classified under Chapter heading 73.08 of CETA, 1985 and accordingly not classifiable under CSH 98.01 of CTA, 1975, hence would not be eligible to the benefit of Notification No. 21/2002-Cus., dated 1-3-2002 and consequently the condition No. 19 of the said Notification No. 6/2006 was not satisfied. This Tribunal in M/s. Ramsarup Utpadak’s case (supra) after detailed discussion of various aspects of the case,prima facie, observed that TMT bars cleared to various mega power projects, even if falls under Chapter Heading 72 of Central Excise Tariff Act, 1985 would be eligible to the benefit of Notification No. 6/2006-C.E., dated 1-3-2006. In these circumstances, following the observation in the said case, they found that the applicant could able to make out a prima facie case in their favour for waiver of pre-deposit of dues. Accordingly, pre-deposit of dues adjudged was waived and its recovery was stayed during pendency of the appeal.

Decision:- Stay petition allowed.

Comment:-The essence of this case is that fabricated items falling under Chapter 73.08 of CETA, 1985 which are supplied to various mega power projects are eligible for exemption under the notification no. 6/2006-C.E. even if they are not classifiable under chapter 98.01 as they were used as parts and components of the boilers used in the said mega power projects. This reasoning was backed by the decision given by the Tribunal in Ramsarup case.

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PJ/Case Law/2013-14/1947

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