TMI Blog2019 (12) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... o be used for the installation of a cold storage, cold room or refrigerated vehicle, for the preservation, storage, transport or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat. It is an undisputed fact that Bulk Milk Cooler were supplied for installation of cooling facility for preservation and storage of Milk by cooling by Mechanical Appliances. The goods in question are Stationary Pre-cooling equipment which is also not disputed and the product broucher also shows the same. When the bulk milk cooler are in stationary stage and are used for cooling the milk so as to bring down the temperature to 4 degree centigrade with intention of storage and preservation, it is clear that the goods are for use as cold storage of Milk. The undisputed fact is that the goods were used for intended purposes covered by the Notification. It is coupled with the fact that the Appellant had informed their jurisdictional authorities about the clearance of goods under exemption. In such case when the goods are covered by the exemption notification and there is no dispute about the use of goods, we are of the view that the intended benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After enquiry/ investigation by the revenue, the Appellant were issued show cause notice dated. 23.01.2017 alleging that the bulk cooler manufactured by the Appellant and mentioned as Stationary pre-cooling equipment is not supplied for installation of any Cold Storage, Cold Room or refrigerated vehicle but supplied to various Milk Co-operative societies for the purpose of storing milk and cooling it at 4 degree Celsius, accordingly the claim of exemption under Notification No. 6/2006 CE dated. 01.03.2006 and Notification No. 12/2012 CE dated. 17.03.2012 by the Appellant is not correct. The heading 8418 of the CETA applies to refrigerators, freezers and other refrigerating or freezing equipment whereas the tariff item 8419 of the CETA, 1985 applies to machinery, plant for treatment of material by a process involving a change of temperature. The said product cannot be classifiable as refrigerating equipment under chapter heading No. 8418 but as per its specific function the Bulk Milk Cooler deserves the classification only under Chapter heading No. 8419 of the CETA, 1985. Kitchen Equipment s consists of Stainless Steel Bulk Cooking Equipment like Rice Dal Cooker; Rice, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lk to 4 degree Celsius. Hence the description of the goods Bulk Milk Coolers are not tallying with the description Stationary Pre-cooling equipment . For the period post 17.03.2012 he held that as the goods cannot be regarded as pre-cooling equipment hence not eligible for exemption. He also held that the condition of the notifications viz. use of goods for the specified purpose and the condition of following the procedure laid down in Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods), Rules, 2001 was not followed. He also upheld the confiscation of goods and levy of penalty. Aggrieved the Appellant has filed the present appeal. 3. Shri. Saurabh Dixit, Learned Counsel appearing for the Appellant submits that firstly the notification No. 6/2006 CE was amended vide notification No. 12/2010 CE dated 27.02.2010 by which the exemption to dairy operations was also provided. He submits that the contention of the lower authorities that exemption is available to stationary pre-cooling equipment whereas bulk milk coolers cannot be said to be stationary precooling equipment since it reaches only 4 degrees Celsius temperature for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry. They had also intimated the revenue authorities in this regard on 12.01.2012 and 25.04.2012 and in response they were informed on 24.02.2012 and 10.07.2012 that exemption can be claimed if the conditions of the same are satisfied. That the condition is satisfied once the goods are cleared to Milk Co-operatives. As regard condition of following the procedure laid down in Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods), Rules, 2001, he submits that the rule is to be followed only where the goods are cleared to manufacturers and not when the goods has been cleared to actual consumers. There is no doubt about the use of the goods for intended purpose and hence the exemption is available. The impugned order holds that even where the recipient is not registered with Central Excise still such rule has to be followed. However the same is not correct as the issue deals with recipients who are not manufacturers at all, irrespective of excise registration. That even as per rules, the receiver of the goods has to follow the conditions and not the supplier. The Appellant has recorded all the details and there is no doubt about the use of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of exemption from Jan 2012. Thus no fraud or suppression of facts can be alleged. The revenue was well aware about the product being manufactured and cleared by the Appellant and since the product was exempt from duty, they did not take registration. Hence the demands are time barred. 4. As regard confiscation of goods, he submits that the goods were lying in factory and hence the same cannot be confiscated. The goods were not offending in nature. He relies upon order in case of Nakoda Enterprises 2017 (357) 474 (TRI). 5. Shri. T.G. Rathod, Learned Joint Commissioner, Authorized Representative appearing for the revenue submits that since the Bulk Milk Cooler does not fulfill the description of the exempted goods covered by the Notification No. 6/2006 CE dated 01.03.2006 and Notification No. 12/2012 - CE dated 17.03.2012, the Appellant are not eligible for the exemption. He also submits that since bulk cooler is liable for duty, therefore its clearance value is to be added to the turnover during the impugned period and this result into crossing of SSI Exemption limit. Hence all clearances of Appellant is liable for duty. He supports the impugned order and reiter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 against the Appellant s classification of 84186990. 7. We find that it is an undisputed fact that Bulk Milk Cooler were supplied for installation of cooling facility for preservation and storage of Milk by cooling by Mechanical Appliances. The goods in question are Stationary Pre-cooling equipment which is also not disputed and the product broucher also shows the same. When the bulk milk cooler are in stationary stage and are used for cooling the milk so as to bring down the temperature to 4 degree centigrade with intention of storage and preservation, it is clear that the goods are for use as cold storage of Milk. In Case of Praj Industries 2009 (242) E.L.T. 430 (Tri. - Mumbai), the tribunal has held as under : 10 . We have examined the position. We find that the explanatory note to Harmonized commodity description and coding systems explains about Ch. Heading 8418 as under :- The refrigerators and refrigerating equipment of this heading are in the main machines or assemblies of apparatus for the production, in a continuous cycle of operations, of low temperatures (in the region of Zero degree Centigrade or less) at the active cooling element, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2015 accepting the classification of Bulk Cooler under CETH 8418. The relevant extracts are as under : B.9 - Vadodara Zone - Classification - Classification of Milking Machines and Dairy Machines - Whether Classifiable Under Tariff Item 84.18 or 84.19 : Issue : The Bulk Milk Cooler is described as an insulated tank made up of SS 304 stainless steel sheets with evaporators, direct expansion condensing unit and smooth agitation, which is installed at village unions of dairy co-operative societies and in the farms. This equipment is defined by the international standard ISO 5708 which require : to cool down the temperature of milk from 35 degree C to 4 degree C in less than 3 hours with an ambient temperature upto 38 degree C and then to keep the temperature of milk at 4 degree C constant so that the quality of milk doesn t get deteriorated and bacteria are not generated in the milk. The unit classified the said product under tariff item 8434 20 00 prior to 2011. However, after objection by the audit, accepting the suggestion to classify the goods under tariff item 8419 89 90 instead of 8434 20 00, the assessee started to classify Bulk Milk Cool ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, by the absorption of the latent heat of evaporation of liquefied gases (e.g. ammonia, halogenated hydrocarbons), of volatile liquids or, in case of certain marine types, of water. In case of M/s. Praj Industries [2009 (242) E.L.T. 430], Hon ble Tribunal decided classification of Bulk Milk Cooling Tank having following items viz. (i) Milk Vessel (ii) Ice Water Vessel, (iii) Cooling Coil, (iv) Condensing Unit etc. relying on the HSN notes decided the classification of goods under CETH 8418. Hon ble Tribunal recorded the following argument as justification for classification of the equipment under the heading 8418 - as per the explanatory note to CH. 8418, the temperature at the active cooling element is what is important and not the temperature of the refrigerated product. The cooling coil immersed in water generates ice of 38 mm diameter around it, thus producing cryogenic temperature. For scope of classification under heading 8419, two case laws were examined. In case of M/s. Universal Heat Exchangers [2000 (122) E.L.T. 770], Hon ble Tribunal noted that Ammonia condenser, used by appellant in chilling of water is able to achieve cooling only up to 8 C and not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nary Pre-cooling equipment. Hence the exemption is available to the Appellant. 9. As regard condition of the notification viz the following of procedure laid down in central excise (Removal of Goods at Concessional rate of duty for manufacture of excisable goods) Rules, 2001, and the exemption under notification is available to the satisfaction of the Assistant/ Deputy Commissioner, we find that the goods were for use in dairy product preserving and the customers are not manufacturers with no central excise registration. Seemingly it was not possible for the Appellant to follow such condition. Even on non following of such condition the benefit cannot be denied. The undisputed fact is that the goods were used for intended purposes covered by the Notification. It is coupled with the fact that the Appellant had informed their jurisdictional authorities about the clearance of goods under exemption. In such case when the goods are covered by the exemption notification and there is no dispute about the use of goods, we are of the view that the intended benefit be given to the Appellant. Our views are also based upon judgments in case of Hetero Drugs Ltd. 2010 (262) ELT 490 (TRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that in case of sale to interconnected undertaking the assessable value would be the transaction value to the interconnected undertaking only and the sale price of the interconnected undertaking will not merit any consideration. Our views are based upon order in case of Sri Kannapiran Mills Ltd. 2016 (344) ELT 1107 (TRI) and 2017 (349) ELT A157 (SC), Mahindra Ugine Steel Co. Ltd 2015 (318) ELT 592 (SC), H.H.Interior Auto Components Ltd. 2018 (360) ELT A312 (SC), Universal Starch Chem Allied Ltd. 2017 (358) ELT 279, Handy Wires P. Ltd. 2015 (329) ELT 169 (TRI). 12 We also find that from the show cause notice and the impugned order, it nowhere appears that the Appellant had any intention to evade payment of duty. They had made correspondence with the department way back in 2012 intimating the description of goods and availment of exemption. Further from the facts of the case no contumacious conduct of the Appellant is appearing. They had bonafide belief that Bulk Milk Cooler is exempted from payment of duty by virtue of exemption notification supra. In such case it cannot be said that the Appellant had any intention to suppress the fact. Therefore we are of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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