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TMI Blog2020 (7) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2011 as well as the order in STA.No.15 of 2011, all dated 02.5.2013 respectively for the assessment year 2006-07, 2005-06 and 2006-07. By the said orders, the orders passed by the Appellate Deputy Commissioner (CT)-I, Chennai respectively in Appeal Nos.28 of 2009, 3 of 2010 and 29 of 2009, all dated 09.4.2010 were set aside with regard to tax alone. 2. We have elaborately heard Mr.D.Vijayakumar, learned counsel appearing for the petitioners and Mrs.G.Dhana Madhri, learned Government Advocate appearing for the respondents. 3. The revisions were admitted on 12.2.2016 on the following substantial questions of law : "(i) Whether the Tribunal is justified in holding that the carbide tip tools sold by the petitioner to the dealer of 100% E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mblies, precision machined components to 100% export oriented units (EOUs), claimed exemption as the goods sold were consumable goods and the petitioners would be entitled to the benefit of the said Government Order dated 21.11.1997 and filed their returns. While so, the Inspection Wing of the respondent - Department inspected the place of business of the petitioners on 09.11.2006, 17.5.2005 and 09.11.2006 respectively and certain defects were pointed out, pursuant to which, a proposal was made wherein, among other things, the Assessing Officer proposed to disallow the claim for exemption on sales to EOUs and accordingly issued notices to the petitioners to file their objections. There was another proposal to levy penalty under Section 12(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections and confirmed the proposal in the notices dated 29.4.2009 by the assessment orders dated 28.7.2009. 9. These orders were put to challenge by the dealers before the First Appellate Authority, who allowed the appeals by order dated 09.4.2010 inter alia holding that the commodity dealt with by the petitioners was not machinery parts or tools as found by the Assessing Officer, but it is a carbide tip inserts sold, which was used as a consumable for cutting only. It was further held that the dealers would be eligible to avail the exemption. The First Appellate Authority agreed that the case of the dealers would squarely fall within the meaning of Section 16(1)(b) of the Act and not under Section 55 of the Act and that there was no provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct in an unidentifiable form thereby to be called as consumables. Ultimately, referring to the observations made in the aforementioned decisions, the appeals were partly allowed with regard to tax. 11. So far as the levy of penalty is concerned, the Tribunal concurred with the findings of the First Appellate Authority and dismissed the appeals of the State to that extent. To be noted, as against the order passed by the Tribunal confirming the order of the First Appellate Authority, in so far as the levy of penalty is concerned, the State filed a revision against the second petitioner in TCR.No.73 of 2017, which was dismissed by a Division Bench of this Court by order dated 22.12.2017. Therefore, to that extent, the orders passed by the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iced above, after the inspection was conducted in the place of business of the respective dealers by the officers, notices were issued to the dealers proposing to disallow the exemption on sales to 100% EOUs. Upon receipt of the proposal, the dealers submitted their reply and produced documents and details of supply of material, etc. The Assessing Officer, on going through the documents, found them to be in order and allowed their claim for exemption. This exemption, which was allowed, was sought to be denied by the Assessing Officer by reopening the assessment and by invoking the power under Section 55 of the Act after issuing the notice dated 29.4.2009. On a reading of Section 55 of the Act, it is evidently clear that there was no power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different in the said case and could not have been applied to the case on hand. 17. The most important aspect, which is to be noted, is that the exemption has been granted by the State Government for sale of certain items of goods to 100% EOUs in the State and the units located in Chennai Export Processing Zone. Therefore, the object of exemption is to promote exports. The Tribunal proceeded largely by examining as to what would be the meaning of the term 'consumable' and referred to the two decisions and held that though the carbide tip inserts lose their utility, they do not lose identity. The Tribunal should have interpreted the expression 'consumable goods' and if the same is done, the nature of the goods supplied and whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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