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TMI Blog2004 (7) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... ification No. 205/88-CE, dated 25-5-88. The turbines were cleared in CKD/SKD condition. The mega-wattage and size of the turbines are such that the same cannot be cleared in a fully assembled condition. These were dispatched in CKD condition to the locations from the appellant's factory in Hoskote in Bangalore. Some of the parts of the turbine are out-sourced by the appellants, tested in their factory and sent along with the manufactured goods to the site of the customer. However, the Officers of Directorate General of Anti Evasion (Central Excise), Bangalore, visited the appellant's factory and conducted investigations. Consequent to which a show cause notice was issued to the appellants. It was alleged that they have wrongly availed benefit of Notification No. 205/88-CE by claiming that turbines were manufactured and cleared by them whereas they were clearing parts of turbines. The Commissioner in his Order-in-Original No. 20/99, dated 28-9-1999 in Para 25 has observed that - Of course, there is no denying the fact"25. that BFL are manufacturers of Turbines. Though all the essential components were manufactured only by BFL, the stage at which such goods were cleared from their f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rather than sending all the components at once. There is no requirement for the appellants to stock all the required components at the given point of time. A turbine cannot be manufactured instantaneously. It takes a lot of time to complete the ingredients of the machinery and test the same. The specification of the turbines is to comply with the designs, drawings and layout at the site or factory of the customers and testing of the turbines with its critical components are done at the factory of the appellants. The only activity that takes place at the site will be assembly, erection and commissioning. The turbine is manufactured when it is designed and devised for the specific requirement for the buyer and tested by assembling certain crucial components for its functioning. Even if it is not accepted that the parts were cleared, the benefit of Notification No. 5/98-C.E. is still available to the appellants under Serial No. 223 of the said exemption Notification. The description under serial No. 223 provides exemption to goods fall under Heading 84.10 of CETA. The description being "Turbines for hydro electric equipment of a capacity not exceeding 15 MW". Once the parts are class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived at site from the supplier. After the installation of entire project at site, trial runs will be made and after the satisfaction of customer, site will be handed over. He therefore pleaded that these are parts and sub-assemblies of the Turbine which were cleared from the factory but for convenience of transport these were cleared in CKD condition. Therefore, these are eligible for exemption under Notification No. 205/88-C.E. 3.Shri P.M. Saleem, ld. SDR appearing for the Revenue pleaded that in all the clearance documents, the appellants have shown clearance of the parts of the turbine. The exemption notification is only for clearance of turbine. Even if the parts are cleared in CKD condition for manufacture of complete turbines and it has to be so mentioned in the clearance documents, then the benefit of notification will be available to the appellants. However, they have never shown in clearance documents that they are clearing turbine in CKD condition. Only the parts of the turbine which are cleared for captive consumption are exempted from duty. The parts cleared outside the factory are not exempted from duty under Notification No. 205/88-C.E., dated 25-5-88. E/14/2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proved and once the department discharges the initial burden, if shifts on Respondents and then applicability of provision of Section 11A (1) of Central Excise Act, 1944 is to be construed liberally. It was pleaded that the order of the Commissioner may be set aside. E/1060/2001 : 6.In the Revenue's appeal, it is mentioned that M/s BFL entered in to contract on turn-key basis with various State Governments and other agencies for erecting mini hydel projects which includes supply of hydro turbines, generator, electronic governor, etc. The contract also provides for supply of maintenance spares for a specific period, erecting and maintenance of the project. In the classification declaration No. 4/98-99 with effect from 1-3-99, they had declared "all goods other than parts falling under Chapter 8410.10 (Turbines dispatched in SKD condition), Turbines for Hydro Electric Equipment of a Capacity not exceeding 15 MW" and they have also declared ten items as parts falling under Chapter 8410.90 namely - (i) Hub Assembly comprising of Hub Boby, piston Rod, Piston, Hub boby bearings. (ii) Runner bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e absence of any of the circumstances as mentioned under clause (a) to (d) thereto. The Commissioner (Appeals) has not recorded any reasons for admission of such additional evidence as required under Rule 5(2) ibid. The Commissioner (Appeals) did not give any opportunity to verify those documents in terms of Rule 5 (3) ibid and therefore the order is in violation of principles of natural justice. The order of the Commissioner (Appeals) is not correct and legal as the complete turbine was assembled only at site utilizing the components and parts cleared from the factory with the bought out items. No evidence was produced that turbine came into existence in the factory and only for the sake of easy transport the same was disassembled and cleared to site. Clearance of different components/parts at different point of time cannot be taken to construe that a turbine was cleared in 'knocked down' condition. 7.Ld. Advocate appearing for the Respondents re-iterated his submissions already made in their Appeal No. E/l 925/99. 8.We have carefully considered the submissions made by both sides. E/1925/99 : We find that the main issue in this appeal is whether the appellants have cleared tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Rules of the Tariff, the goods cleared by the appellants may not qualify as completely finished turbine in CKD condition. Therefore, whatever goods were cleared by them are only parts and not turbine in CKD/SKD condition. 9.We find that the decision relied upon by the appellants in their support are for treating the equipment as a whole when these are cleared in "knocked down" condition for the purpose of assessment. In the present case, the appellants have failed to establish that they have cleared the turbine in CKD/SKD form to assess it as a complete turbine. Since some major parts/components were purchased from outside and they were directly taken to the site where turbine was erected and commissioned, therefore whatever was cleared from the factory was not a turbine in CKD/SKD condition but these were only parts of the turbine. The invoices of the appellants show clearance of parts and sub-assemblies only. Therefore, we do not find any merit in the appeal of the appellants and the same is rejected. E/14/2001 : 10.We have already held that M/s BFL have not cleared the goods as turbine in CKD/SKD condition but they have cleared the parts of turbine. In their classificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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