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TMI Blog2017 (1) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... heir factory and partly sent to Thermax for job-work and final clearance of exempted boiler. They are paying an amount equal to 8% in terms of Rule 6 of CENVAT Credit Rules, 2004, in those transactions, Thermax is not paying excise duty on the ground that the job-worker is not liable for duty in terms of Rule 4(5)(a) of the Rules, at the same time Babcock is clearing the boiler under exemption Notification No. 3/2001-CE. The department issued show cause notice on Babcock as well as on Thermax. In respect of Thermax the duty demand was proposed on the parts manufactured by them on behalf of Babcock. In respect of Babcock, the excise duty demand was raised on the boilers cleared under exemption Notification No. 3/2001-CE on the ground that Babcock is clearing boilers in CKD form and not the complete boiler and therefore, the exemption Notification is not applicable. The exemption Notification is applicable to 'boiler' and not to the parts. There was also proposal for disallowance of CENVAT credit in respect of inputs sent for job-work under Rule 4(5)(a) to Thermax. Demand on this ground was also confirmed. The adjudicating authority confirmed the demand both on Babcock as well as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commissioner of Central Excise, Jaipur 2001 (136) ELT 73 (Tri-Del.) upheld by the Supreme Court as reported in 2002 (146) ELT A309; iii. Dhana Singh Synthetics Pvt Ltd. v. Commissioner of Central Excise, Vapi 2015 (326) ELT 609 maintained by Supreme Court 2016 (337) ELT A140 (SC); iv. Circular No. 306/22/97-CX dated 20/03/1997 He also placed reliance on the following judgments. i. Commissioner of Central Excise, Delhi - IV v. Rachitech Engineers Pvt Ltd 2015-TIOL-1169-CESTAT-DEL ii. Shree Venkateswara Engineering Corporation v. Commissioner of Central Excise, Coimbatore 2016 (335) ELT 62 (Tri-Chennai); iii. Metalfab Hightech (P) Ltd v. Commissioner of Central Excise, Nagpur 2016-TIOL-1472-CESTAT-MUM 4. On the other hand, Shri Sanjay Hasija, Superintendent (AR) on behalf of Revenue reiterates the findings of the impugned order. He submits that the appellant Babcock admittedly cleared from their factory, parts of the boiler. Therefore, the goods as presented is parts and not boiler. Therefore, exemption which is available only to boilers cannot be extended to parts. He placed reliance on the decision of this Tribunal in the case of Commissioner of Central Excise, Bangalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submissions from both the sides and perused the records. Sl. No. 237 of the table to the Notification No. 6/2002-C.E. covers "non-conventional energy devices/systems specified in list 9." Sl. No. 16 of the list 9 covers "agricultural, forestry, agro-industrial, industrial, municipal and urban waste conversion devise producing energy". There is no dispute that the chimneys manufactured by the appellant are meant for biomass burning boilers being manufactured by M/s. ISGEC John Thompson who in turn, supply such boilers to the end-users for production of energy from waste. The Commissioner (Appeals)'s view is that since what is covered by Sl. No. 237 of Notification No. 6/2002-C.E. is the non-conventional energy devices/systems and since there is very thin distinction between part and device, as the device is thing made for a particular purpose and since chimney being an integral part of the biomass fired boiler can be treated as a device for non-conventional energy devices/systems, the exemption under this Notification would be available to the chimneys. We agree with the view of the Commissioner (Appeals), as rightly observed by the Commissioner (Appeals), the device is a thing m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been supplied in Knocked Down condition, it is difficult to presume that the goods cleared by them in such a condition cannot be brought under the broad description shown in Sl. No. 16 of List 9 of the notification. It is not the case of the Revenue that the goods supplied by the appellants even in Knocked Down Condition do not contribute for the conversion of the waste into energy. The appellants had produced the diagram to substantiate that all the individual items supplied in knocked down condition would contribute to the ultimate product namely a boiler/generator which could not be supplied in one lot. As it has already been observed above, the description in List 9 to the said notification being very wide cannot be given a restricted meaning that it could not cover each individual item which is cleared in Knocked Down Condition as the description covers all devices meant for the ultimate purpose. While giving a finding as above we have taken into consideration the broad description of the device as shown in Sl. No. 16 of List 9 of the said notification and we have not taken into consideration the individual identity which may or may not be there of the goods cleared. Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant are meant for biomass burning boilers being manufactured by M/s. ISGEC John Thompson who in turn, supply such broilers to the end-users for production of energy from waste. The Commissioner (Appeals)'s view is that since what is covered by Sl. No. 237 of Notification No. 6/2002-C.E. is the non-conventional energy devices/systems and since there is very thin distinction between part and device, as the device is thing made for a particular purpose and since chimney being an integral part of the biomass fired broiler can be treated as a device for non-conventional energy devices/systems, the exemption under this Notification would be available to the chimneys. We agree with the view of the Commissioner (Appeals), as rightly observed by the Commissioner (Appeals), the device is a thing made for a particular purpose and as such the chimney meant for biomass fired boiler has to be treated as non-conventional energy device." The Tribunal has come to a similar conclusion under similar circumstances under the very same notification. Relying on the above reasons, we allow the appeal with consequential relief. Miscellaneous applications disposed." 7. In the case of Metalfab H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparison of these descriptions with other descriptions given in the same list, it is clear that while other descriptions specifically refer to a particular device/machine, the description against Sl No 16, is so wide and comprehensive so as to cover all types of conversion devices which are required for conversion of the waste for producing energy. While the appellants have been ordered to supply specific devices which have been supplied in Knocked Down condition, it is difficult to presume that the goods cleared by them in such a condition cannot be brought under the broad description shown in Sl No 16 of list 9 of the notification. It is not the case of the Revenue that the goods supplied by the appellants even in knocked down condition do not contribute for the conversion of the waste into energy. The appellants had produced the diagram to substantiate that all the individual items supplied in knocked down condition would contribute to the ultimate product namely a boiler/generator which could not be supplied in one lot. As it has already been observed above, the description in list 9 to the said notification being very wide cannot be given a restricted meaning that it could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re set aside and appeal is allowed with consequential benefit, if any." 8. On going through the above judgments we have seen that the boiler even if cleared in CKD/SKD condition to the customers site, the same is regarded as boiler and is eligible for exemption. It was further clarified by the Board in the Section 37B Order No. 4/92 dated 19/05/1992. The relevant portion of the order is reproduced below. "3. The Board has carefully considered the issue of classification and levy of duty of excise raised above, and the provider of exemption Notification No. 205/88-CE dated 25/05/1988 and has considered that it is necessary or expedient for the purposes of ensuring uniformity in the classification of excisable goods and the levy of duty of excise on boilers, designed for agricultural or municipal waste a s also conventional fuel, and in exercise of the powers conferred under Section 37B of the Central Excise & Aalst Act, 1944 (1 of 1944), the Board hereby orders that - (a) Benefit of the notification No. 205/88-CE dated 25/5/88 (earlier Notification No. 120/81-CE dated 15/5/81) will be available to such goods, even when these are cleared in CKD, ISKD conditions, provided that evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecords, challans or memos or any other document produced by the manufacturer or provider of output service taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer or provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer or provider of output service can take the CENVAT credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service. 12. From the plain reading of the above rule it can be seen that Rule 4(5)(a) only provides for movement of the inputs on which CENVAT credit is availed for the purpose of job-work. Rule 4(5)(a) is not the authority to grant any exemption to the job-worker from payment of duty if it arises on the manufacture of goods by the manufacturer. Generally the duty liability on the part of the job-worker remains exempted under Notification No. 214/86-CE dated 25/03/19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the facts of the present case we find that there is no dispute about the fact that the appellant is a job worker, who did the processes on the goods received from the principal manufacturer. No duty liability can be fastened upon him even if the goods are not specified under Notification No. 214/86-C.E. It stands concluded in the above judgments that the Provisions of Rule 57F(4) and Rule 4(5)(a) Cenvat Credit Rules are independent of the Notification. 5. In view of the above, we find no merits in the Revenues stand. The impugned orders are accordingly set aside and appeal allowed with consequential relief to the appellant." 14. From the above decision it is observed that the Tribunal has held that only if the inputs supplied by the principal to the job-worker under Rule 57F(4), the job-worker on the job-worked goods is not required to pay any duty. 15. The other issue as to whether there is any provision for exemption from payment of duty in the case of job-worker under Rule 57F(4) or otherwise was not discussed in the aforesaid decision. As already mentioned, Rule 4(5)(a) only provides for removal of input on which CENVAT credit was availed for the purpose of job-work and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant. 17. As regards the decision in Dhana Singh Synthetics (supra) relied upon by the Learned Counsel, on going through the said decision, we find that the fact in the said judgment is that the principal manufacturer cleared the finished goods on payment of duty and also the judgment is on the revenue neutrality. Therefore, it does not categorically hold that the job-worker is not liable for payment of duty under the Act. In view of our discussion on the various judgments, we do not agree with the coordinate bench decisions inasmuch as it holds that the job-worker is not liable to pay duty particularly in the facts of the present case, where the principal manufacturer i.e. Babcock has not cleared their final product i.e. boiler on payment of duty and admittedly cleared under exemption Notification No. 3/2001-CE. Since there are contrary views on the issue as to dutiability on the job-worker, for resolving the conflict it is desirable to refer the particular issue to the Larger Bench. We, therefore, refer the following question to the Larger Bench for resolution: In the facts and circumstances of the present case, when the principal manufacturer (Babcock) clears the final product ..... X X X X Extracts X X X X X X X X Extracts X X X X
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