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TMI Blog2023 (7) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... ia. 3. Two Show Cause Notices dated 04.03.2009 and 15.12.2009 were issued to the Appellant demanding excise duty of Rs.5,94,19,588/- along with interest and equivalent penalty on the chassis cleared, by denying the exemption on the ground that the supplied goods were not in the nature of being consumed in the core activity of the project on permanent basis. Further, it was also alleged that the contractors purchased the goods in their own name, from their own funds. 4. The Notices were adjudicated and the demands made in the Notices were confirmed vide Order-in-Original dated 19.03,2010. Aggrieved against the impugned order, the Appellant is before us. 5. In their submissions, the Appellant stated that Notification 108/95 grants exemption to all goods required for execution of the projects financed by international organizations like World Bank, Asian Development Bank etc. To claim exemption, the manufacturer has to obtain a certificate from the head of the Project Implementing Authority, countersigned by an officer not below the rank of Joint Secretary to the Government of India or Principal Secretary or Secretary to the State Government, to the effect that the goods are requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption is meant only for the goods which become part of the project on permanent basis and not for the goods which are used by the contractors for execution of the project and after completion of the project, goods remain with the contractors, being owners of such goods for further deployment in other projects. The amendment is purely clarificatory in nature and states the position that always meant to be. 4. All pending disputes may be resolved accordingly. All the state governments and other authorities who issue the essentiality certificate may be requested to ensure that the certificates are issued only for goods which satisfy the above discussed criterion. Dilip Goyal Under Secretary to the Govt. of India. 9. As per the above mentioned Circular, the exemption is applicable to goods which form part of the project on permanent basis and not to the goods which are used for execution of the project and after completion of the project remain with the contractors, for further deployment in other projects. The appellant stated that this interpretation has gone beyond the mandate of the Notification. 10. The Appellant stated that the dispute has been settled by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... execution of the project. After the project is completed the contractor is well within his right to withdraw the capital goods and machinery used in execution of the project, since it does not form part of the structure of the project. The department wrongly interpreted the Explanation 2 to mean that only the goods which are consumed in the project are eligible for the exemption. If such a interpretation is accepted, then no capital goods will be eligible for the exemption, as the machinery or capital goods will not be get consumed in the project. Thus, the only plausible interpretation for the Explanation 2 would be that the goods brought into the project should not be withdrawn by the contractor during the course of execution of the project. After the project is completed and if the contractor shifts the capital goods to some other project, then the exemption cannot be denied. 16. We find that this view has been taken by the Tribunal in the case of Schwing Setter (I) Pvt. Ltd Vs CCE&ST.LTU,Chennai-2018(364) ELT 653 (Tri.-Chennai). The relevant portion of the order is reproduced below: "2.2 The second ground is that as per Explanation 2 inserted w.e.f. 1-3-2008, in the Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities below have denied the exemption by incorrectly interpreting the abovesaid Explanation 2 inserted in Notification No. 13/2008, dated 1-3-2008. He pleaded that the appeal may be allowed. 3. The Ld. AR, B. Balamurugan supported the findings in the impugned order. He adverted to Explanation 2 of the Notification and submitted that the benefit of the Notification is available only when the goods brought into the project are not withdrawn by the supplier or contractor. The exemption would be applicable only for such goods which become part of the project on permanent basis (eg : cement and steel etc.) and not for those which are used by the contractors for execution of the project who after completion of the project will become the owners of the said goods and would put the said goods for further deployment in other project. That in the present case, the appellant has withdrawn the capital goods after completion of the project and therefore the exemption has been rightly denied by the authorities below. To support his contention he relied upon the decision in the case of Bird Machines v. CCE, Delhi - 2011 (263) E.L.T. 82 (Tri.-Del.), that in the said case, the Division Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the capital goods are withdrawn after completion of the project, these goods are not eligible for exemption. He has strongly relied upon the decision of the Tribunal in the case of Bird Machines v. CCE, Delhi - 2011 (263) E.L.T. 82 (Tri.-Del.). The relevant portion of the said decision in Bird Machines case is reproduced as under :- "39. It is contended that the Explanation II being clarificatory nature, it supports the case of the appellants. The Explanation prohibits withdrawal of the goods from the project by the supplier or the contractor. The same according to the Advocate for the appellants discloses that the ownership of the goods is immaterial and can vest in any supplier or contractor. First of all one has to understand that we are trying to interpret an explanation to a notification. It is settled law that the explanation cannot be construed beyond the scope of what is provided under the main provision itself. Explanation is added to any statutory provision to avoid any ambiguity arising out of the main statutory provision. The explanation cannot have existence independent of the main statutory provision. Being so, based on explanation itself, one is not entitled to en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the capital goods used in the project cannot be withdrawn even after completion of the project would be highly impractical and impossible. The law does not compel a man to do that which he cannot possibly perform. "Lex. non cogit ad impossibilia". The decisions in the case of Caterpillar India Pvt. Ltd, (supra), IBM India Pvt. Ltd., held that the goods supplied to Contractors were available for exemption. The goods involved in these cases are not goods such as cement or steel which form part of the project permanently. The Higher Courts have held that exemption is available even if such goods are supplied to Contractor and that supply to Contractor would mean supply to Project Authority as stated in the Notification. The department cannot then interpret the Explanation inserted in the Notification to restrict the exemption only to goods which form part of project on permanent basis. The appellant has complied with the condition of furnishing certificate of designated authorities. The department allowed clearance of the goods without any murmur on the validity of the certificate. The department cannot later turn around to deny exemption by interpreting Explanation 2 to the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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