2008 (5) TMI 717 - AT - Income Tax

Summary

Issues involved: Interpretation of Notification Nos. 3/2007 and 6/2002 regarding benefit extension to goods manufactured and cleared to another unit without following Chapter X procedure.

Issue 1: Benefit extension under Notification Nos. 3/2007 and 6/2002

The dispute revolved around whether the benefit of Notification Nos. 3/2007 and 6/2002 could be extended to goods manufactured and cleared to another unit without following the Chapter X procedure as specified in the said Notifications. The Appellate Tribunal noted that the appellate Commissioner had already extended the benefit to the appellant, emphasizing that the notifications exempted 'goods' and not 'parts', and that the chapter specified was 'any chapter'. It was highlighted that the use of goods in the manufacture of Power Driven Pumps was not contested, and a previous Tribunal decision was cited to support the position that if the benefit of a notification is available, it cannot be denied solely on the grounds of non-compliance with the Chapter X procedure.

Issue 2: Non-following of Chapter X procedure

The Tribunal observed that the Revenue did not dispute that the goods were entitled to the benefit if the Chapter X procedure was followed, and there was also no disagreement that the goods were cleared to the other unit and utilized in the production of power driven pumps. It was reasoned that the mere non-compliance with the Chapter X procedure should not automatically lead to the denial of the benefit of the Notification. The Tribunal emphasized that the Chapter X procedure is primarily required to establish the receipt and utilization of goods by the recipient unit for the specified purpose in the notifications. However, if this purpose can be achieved through other means, the technical grounds of non-compliance with the procedure should not result in the denial of the substantive benefit available to the assessee. The Tribunal referred to previous decisions to support this stance and concluded that there was no flaw in the view taken by the Commissioner (Appeals), thereby rejecting the appeal filed by the Revenue.