TMI Blog2022 (4) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of goods specified at serial numbers 1 to 20 of List 8 in a situation where it is consumed not only within the factory of production for the manufacture of goods specified in List 8 but also when used elsewhere than in the factory of production, subject of course to the condition that the procedure laid down in the relevant rules has been followed - It is, therefore, not possible to accept the contention of learned counsel for the appellant that the module mounting structures should be granted exemption from payment of excise duty in terms of the notification dated 17.03.2012 and not the solar power generating system . An exemption notification has to be strictly construed, as was observed by the Supreme Court in COMMNR. OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND ORS [ 2016 (5) TMI 185 - SUPREME COURT] and in M/S LARSEN TOUBRO LTD. ANOTHER, ECC CONSTRUCTION GROUP VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD [ 2015 (10) TMI 612 - SUPREME COURT] - The distinction sought to be drawn by the learned counsel for the appellant between devices and systems is not of relevance to the present case because both non-conventional energy devices or systems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The relevant portion of the notification dated 17.03.2012 containing serial no. 332 is reproduced below: Sl. No. Chapter or heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No. -- -- --------- --- ---- 332 Any Chapter Non-conventional energy devices or systems specified in List 8 Nil - 5. List 8 of the Notification is as follows: List 8 Flat plate solar Collector (2) Black continuously plated solar selective coating sheets (in cut length or in coil) and fins and tubes (3) Concentrating and pipe type solar collector (4) Solar cooker (5) Solar water heater and system (6) Solar air heating system (7) Solar low pressure steam system (8) Solar stills and desalination system (9) Solar pump based on solar thermal and solar photovoltaic conversion (10) Solar power generating system (11) Solar photovoltaic module and pan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty benefit. 10. Shri A.K. Prasad learned counsel appearing for the appellant made the following submissions: (i) Serial Number 332 of the notification dated 17.03.2012 prescribed nil rate of duty to non-conventional energy devices or systems specified in List 8 . In other words the notification itself distinguishes a device from a system and this is also borne out by the various systems included in List 8; (ii) An exemption under central excise law pre-supposes excisability of the product. In other words, exemption can only be provided to excisable goods as defined in section 2(d) of the Excise Act. A system cannot be considered as excisable goods since a system comprises various excisable goods connected together to form a system . There is no classification of a system as a whole under the Central Excise Tariff. Each component or element comprising the system would, however, be classifiable individually under the Central Excise Tariff and would be excisable goods in their own right; (iii) When the systems mentioned in the above notification are not goods or excisable goods , as they are generally assembled at site as immovable property, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Solar Power Generating System , there is no need to take recourse to serial No. 21 of List 8 which refers to parts consumed within the factory of production of such parts for the manufacture of goods specified at serial No. 1 to 20. On the basis of the interpretation given to the word system , serial No. 21 of List 8 will, in any case, not apply to systems as it refers only to parts of goods and not to parts of systems ; and (viii) If the interpretation adopted by the department is taken to be correct, it would defeat the very purpose of issuing the notification to encourage use of non-conventional energy devices and systems . If duty is charged on a component of the solar power generation system , the whole purpose of exempting the system would be defeated. 11. Shri Sanjay Kumar Singh, learned authorised representative appearing for the Department, however supported the impugned order and made the following submissions: (i) A plain reading of the notification dated 17.03.2012 is that devices and systems are covered under the List 8 (entry 1-20) read with the description in column 3 of serial number 332 and are eligible for the exemption under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a component of the solar power generating system , it would be exempted from payment of central excise duty under this notification. 14. It is not possible to accept this contention of the learned counsel of the appellant. What has been exempted from payment of central excise duty under serial no. 332 of the notification dated 17.03.2012 is non-conventional energy devices or systems specified in List 8. At serial number (10) of List 8, solar power generating system is mentioned. Serial number (21) of List 8 mentions parts consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20 . Only such parts are exempted from payment of central excise duty which are consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20 and not parts of water pumping station. It needs to be noted that entry number (10) of List 8 mentions solar power generating system and not module mounting structures . 15. The Principal Commissioner in the impugned order, has also dealt this issue in the following manner: 5.6.2 On going through the Notification No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 20 of List 8 were removed from Serial No. (21) of the List 8 and were separately included against the newly inserted Serial No. 332A in the Table to the said Notification on fulfillment of Condition No.2 specified in the Annexure to the Table of the said Notification. Prior to the amendment dated 11.07.2014, the Notification No.: 12/2012-CE dated 17.03.2012 exempted the parts of goods specified at S. Nos. 1 to 20 of the List 8 subject to the condition of their consumption within the factory of production of such parts for the manufacture of goods specified at S. Nos. 1 to 20. After the said amendment in the Notification No.:12/2012-CE dated 17.03.2012 vide Notification No.: 12/2014-CE dated 11.07.2014, the exemption was made available to the parts of goods specified at S. Nos. 1 to 20 of the List 8 in both the situations - (i) when consumed within the factory of production for the manufacture of the goods specified in the List 8 and also (ii) when used elsewhere than in the factory of production i.e. on as such clearance from the factory of manufacture i.e. without being further used in the factory for manufacture of the goods specified in the List 8. However, the exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enerating system are exempted from Value Added Tax. The State Government had framed a policy providing incentives to a developer, including exemption from Value Added Tax and at serial number 10 solar power generating system was mentioned. The contention of the appellant was that the existence of a sub-station was an essential practical requirement of solar power plant and, therefore, this was also covered under the exemption. It is in this context that the Madhya Pradesh High Court observed as follows: 18. Even by taking into account the aforesaid judgment, this Court is of the opinion that power generating system includes all components even the grid/goods related to sub-station, without which, the system cannot work. 19. The policy framed by the State Government otherwise will have no meaning. The policy was framed keeping in view global warming and resultant climatic changes and all kinds of incentives have been provided for setting up of solar power based projects in the State of Madhya Pradesh. It is really unfortunate that instead of promoting such projects, all kind of hurdles are being created on the ground of technicalities, on the ground that exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X
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