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M/s Walchandnagar Industries Ltd. Versus Commissioner of Central Excise, Pune

2017 (12) TMI 281 - CESTAT MUMBAI

Benefit of N/N. 5/99-CE dt. 28.2.99, 6/2000-CE dt. 1.3.2000, 3/2001-CE dt. 1.3.2001 and 6/2002-CE dt. 1.3.2002 - various parts/machinery of boilers - goods supplied in the CKD/SKD form - Held that: - the goods supplied in the CKD/SKD form also eligible for exemption N/N. 3/2001-CE dt. 1.3.2001 - even if some parts of the entire boiler procured by the appellant from outside, the goods manufactured by the appellant and supplied in CKD/SKD is correctly classifiable as boiler under Chapter Heading 8 .....

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list filed in 1995, thereafter they were issuing invoices for clearance parts of boiler as a piecemeal of complete boiler under chapter heading No.8402.10 - no suppression of fact can be alleged against the appellant - demand is also hit by limitation in absence of any suppression of fact on the part of the appellant. - Appeal allowed - decided in favor of appellant. - Appeal No. E/2188/06 - Dated:- 21-11-2017 - Shri Ramesh Nair, Member ( Judicial ) And Shri Raju, Member ( Technical ) Shri R .....

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on under Notification No. 5/99-CE dt. 28.2.99, 6/2000-CE dt. 1.3.2000, 3/2001-CE dt. 1.3.2001 and 6/2002-CE dt. 1.3.2002 while executing the orders in respect of the following projects namely- (1) Nagarjuna Green Power Ltd. (Job No. 74105) (2) Ind-Bharat Energies Ltd. (Job No.69301) (3) Gayatri Agro Industiral Power Ltd. (Job No.69101) (4) Wamshi Industrial Corporation Ltd. (Job NO. 69401) (5) Glarion Power Corporation Ltd. (Job No. 76605) (6) Selco International Ltd. (Job No. 88005) (7) Sai Ren .....

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r works at Walchandnagar and thereafter boiler is installed at site; that all pressure parts are not manufactured at WIL, that Main Drum, Lower Drum, Headers, Boiler Tubes/Panels,, Super Heater, Economiser are the pressure parts of the Boiler and that structure, Furnace, Air Heater, Dust Collector (mechanical, ESP) Ducting, Piping, Valves, Pumps, Chimney, instrumentation and electrical items are other parts which put together to form a Boiler/System for energy generation. On a specific query whe .....

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WIL are not manufacturing boilers as a whole in their factory but are assembled at site out of the components/systems cleared from their own factory as well as from the vendors. Accordingly it was contended that the goods manufactured and cleared by the appellant are not boilers but it is a parts of boilers which is not exempted under the notification claimed/availed by the appellant. The adjudicating authority confirmed the demand invoking the extended period and denied the exemption notificat .....

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dors. Since the boilers as such cannot be cleared all the parts are cleared in piecemeal but all the parts put together consist of boiler and it has essential characteristic of boiler. He submits that all the contracts with the buyer is in respect of supply of the complete boiler and not for parts therefore the appellant are manufacturing boiler and executing project of supply, erection and installation of boiler at the buyers premises. In this fact if it is presumed that appellant are not manuf .....

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n their classification list which was filed right from 1995 as well as in the invoices issued for removal of goods clearly declared the Chapter Heading 8402.10, which is meant for boiler and not for parts. He also submits that the entire boiler has main nine pressure parts out of which seven pressure parts were manufactured by the appellants in house, one part was getting manufactured on job work basis and two parts are bought out. Therefore the major portion of the boiler is manufactured by the .....

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case comes into existence i.e. from the stage of manufacturer of major parts of the boiler, supply and erection installation of boiler therefore there is no doubt that the appellant have supplied and sold the boiler which is a non-conventional energy device, hence the same is eligible for exemption. He further submits that as per the Section 37B Order No. 4/92 dated 19.5.1992, it was clarified that the notification No.205/88-CE dt. 25.5.1988 which is pari materia to the Notification claimed in t .....

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ete boiler duly assembled was not cleared from the factory, the exemption cannot be denied. In support, he placed reliance on the following judgments: (i) Commissioner of C.Ex. Pune-I Vs. Thermax Bobcock & Wilcox Ltd. 2005 (182) ELT 336 (Tri.-Mumbai) (ii) Thermax Babcock & Wilcox Ltd. Vs. Commissioner of Central Excise, Pune 2015 (320) E.L.T. 32 (S.C.) (iii) Shree Venkateswara Engg. Corporation Vs. C.C.E. Coimbatore 2016 (335) E.L.T. 62 (Tri.-Chennai) (iv) Metafab Hightech (P) Ltd. Vs. C .....

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limitation he submits that there is no suppression of fact on the part of the appellant, as they have declared the goods in question in their classification list in the year 1995 wherein the boiler was classified under heading 8402.10. In respect of clearance of the boiler in CKD/SKD form in the invoice the individual part of the boiler was also mentioned declaring the chapter heading of 8402.10. Therefore the entire fact that the appellant are clearing the boiler in CKD/SKD form claiming the c .....

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cause notice was issued on 30.3.2005 accordingly the entire demand is time barred. In this support Ld. Counsel relied upon the Tribunal judgment in the case of Boving Fouress Ltd. Vs. Commissioner of Central Excise, Chennai 2004 (1750 E.L.T. 899 (Tri.-Bang.). He further submits that since the appellants have cleared the goods under exemption Notification No.3/2001-CE dt.1.3.2001 they have followed the provisions of Rule 6(3) of Cenvat Credit Rules and accordingly reverse an amount of 8% of the v .....

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of boiler. The exemption notification No. 3/2001 and similar notifications are available only to those goods which are non-conventional energy device/system. The goods manufactured and cleared by the appellant does not have essential characteristic of such device/system, therefore the exemption notification was rightly denied by the adjudicating authority. He placed reliance on the Tribunal judgment in the case of Cethar Vessels Ltd. Vs. Commissioner of C. Ex., Indore 2009 (241) ELT 580 (Tri. Ch .....

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installed as boilers which is functioned with the non-conventional fuel as the same is biomass-based boiler. The major parts of the boilers are manufactured by the appellant. Though some of the parts are procured either on job work or through vendor but the entire boiler is supplied by the appellant in CKD/SKD form therefore it cannot be disputed that the goods supplied by the appellant is non-conventional energy device/system. As per the nature of the boiler, it is invariably cleared in CKD/SK .....

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nded irrespective whether the boiler is cleared in assembled form or in CKD/SKD form. It is very pertinent to note that with all the buyers, the appellant have entered into a contract for supply of complete boiler and its erection and installation at the site of the buyer. On execution of the complete contract the appellant have supplied the complete boiler and erected and installed the same. This clearly shows that the appellant have successfully executed the contract wherein the complete boile .....

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they have been denied the benefit of exemption under S. No. 15 of the table annexed to Notification No.205/88-CE dt. 25/5/1988 (earlier Notifn. No. 120/81-CE dated 15/5/81) (a) Only assemblies/components are being cleared by them for erection of FBCB at site. (b) The FBCBS can also work on other Fuels though designed for fuels like agricultural or municipal waste. 2. It was submitted by them that FBCBS are generally cleared in unassembled or disassembled condition by following any or all of the .....

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hich act as support for mounting pressure parts and ducting which act as an enclosure to convey the fuel gas from one heat recovery area to the other, manufactured by sub contractors and dispatched along with the factory manufactured components to site or direct to the sub contractors to send these items to site directly or fabricated at site. (d) Carry out civil work necessary to hold the structures and erect these components one by one, provide electric and water connection. With reference to .....

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nal fuel, and in exercise of the powers conferred under Section 37B of the Central Excise & Salt Act, 1944 (1 of 1944) the Board hereby orders that: (a) Benefit of Notification No. 205/88-CE dtd. 25.5.88 (earlier Notification No. 120/81-CE dtd. 15.5.81) will be available to such goods, even when these are cleared in CKD, SKD conditions provided that evidence is produced that goods cleared form part of a complete device, and the evidence is also produced for supply of such a device to the buy .....

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ssue of Trade Notice. From the above Section 37B order it can be seen that identical issue has been clarified that even the boiler is cleared in CKD/SKD conditions the exemption is available subject to condition that supply of such device/system to buyer is established. In the facts of the present case, as per the contract and execution thereof it is established that the goods supplied to the buyer is non-conventional energy device/system i.e. Biomass boilers, though cleared in CKD/SKD form. Thi .....

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per-heaters, de-super-heaters steam receivers, steam accumulators, soot removers, water tube, fire-box walls, and other apparatus of accumulation etc. are auxiliary item supplied along with the boilers. These auxiliary item increase or regulate the output of a boiler or its efficiency. But the expert, whose opinion the Commissioner took into consideration, opines that economizer, super heater and heat recovery unit are essential parts of a boiler. This opinion therefore is at variance to that ex .....

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ory are of auxiliary nature, one has to agree that an incomplete boiler in unassembled form is cleared. That the boiler in unassembled form is removed in several lots on different dates itself does not mean that parts but not the whole are cleared from the factory in view of the fact that the respondent has a contract to erect and commission a boiler and has been disclosing this fact to the Department. For the reasons stated above we hold that the parts removed in several consignments is a boile .....

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ht out items are not to be added to the assessable value. The various bought out components are auxiliary accessories to the boiler and what is cleared from the factory is a complete boiler; according to the Commissioner. He also accepted the assessees contention that he had not claimed Modvat credit of duty paid on bought out items and therefore the bought out items cannot be said to be the constituents of a boiler. (II) Rachitech Engineers Pvt. Ltd. (supra) held that- 5. We have considered the .....

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h 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-CE 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 .....

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gg. Corporation (supra) held that- "6. After hearing both sides and on perusal of the submissions made by the appellant and on going through the records, we find that, the following facts are relevant. It is seen from the copy of the Purchase Order received by the appellants from M/s. Fashion Syncrotex Pvt. Ltd., that the order is for Agro based fired Steam Generator. It is pertinent to note here that the said exemption notification admittedly does not refer to any particular description of .....

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olar pump based on solar thermal and solar voltaic conversion (10) Solar power generating system (11) Solar photo module and panel for water pumping and other applications (12) Solar drier and system (13) Wind operated electricity generator, its components and parts thereof (14) Water pumping wind mill, wind aero-generator and battery charger (15) Bio-gas plant and bio-gas engine (16) Agricultural, forestry, industrial, municipal and urban waste conversion device producing energy (17) Equipment .....

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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 Co .....

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red 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. When a description is very wide without excluding any specific category of items it would not be permissible to deny the ben .....

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y calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the notification or by necessary implication therefrom, the matter is different. We notice from the findings of the lower authorities that the goods cleared by the appellants have reached finality in the sense that they have become identifiable goods though according to the lower authorities they are only parts. We find that this conclusion has not been arri .....

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the exemption as the items in question are only devices for the purpose of conversion of the waste material into non-conventional energy for which purpose the exemption is granted. We are also persuaded by a decision taken by the Hon ble Tribunal in CCE, Delhi v. Rachitech Engineers Pvt. Ltd. (supra), where at Para 5 which is relevant is reproduced as under :- 5. We have considered the submissions from both the sides and perused the records. Sl. No. 237 of the table to the Notification 6/2002-C .....

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at 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 (Ap .....

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Bench after considering the submissions made by both sides has discussed the issue in para 5 which is reproduced as under:- 5. We have considered the submissions from both the sides and perused the records. Sl.No.237 of the table to the Notification 6/2002-CE 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". T .....

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rticular 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. 7. .....

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e 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 appellan .....

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ividual 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. When a description is very wide without excluding any specific category of items it would not be per .....

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cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the notification or by necessary implication therefrom, the matter is different. We notice from the findings of the lower authorities that the goods cleared by the appellants have reached finality in the sense that they have become identifiable goods though according to the lower authorities they are only parts. We find that th .....

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have no hesitation in allowing the exemption as the items in question are only devices for the purpose of conversion of the waste material into non conventional energy for which purpose the exemption is granted. 7.3 In view of the judicial pronouncements made in the issue, we hold that the impugned order is not sustainable and is liable to be set aside. The impugned order is therefore set aside and appeal is allowed with consequential benefit, if any. From the above judgments it is found that t .....

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