2003 (1) TMI 299 - SC - Central Excise

Court affirms tribunal decision; Department's actions support ruling. Board circular deems parts eligible for exemption.

The Court upheld the tribunal's decision in favor of the respondent, emphasizing the Department's acceptance and implementation of the decision through ... Whether in the facts and circumstances of the case parts of nozzle and nozzle holders are entitled to the benefit of notification 217/85? Held that:- As pointed out by learned counsel for the respondent, the Board itself by its Circular No. 14/88, dated 26-5-1988 has held that parts of nozzle and nozzle holders are not nozzle and nozzle holders for the purpose of the notification in question so as to deny the benefit of exemption to those parts. Issues:Interpretation of exemption notification regarding parts of nozzle and nozzle holders used in the manufacture of an internal combustion engine.Analysis:The case involved a dispute regarding the entitlement of the respondent to the benefit of an exemption granted under Notification No. 217/85 for parts of nozzle and nozzle holders used in the manufacturing of an internal combustion engine. The Department contended that since the notification did not exempt nozzle and nozzle holders specifically, the benefit could not be claimed for the parts used in the manufacture. The Tribunal had differing opinions from the Judicial Member and the Technical Member. The Technical Member held that parts of nozzle and nozzle holders should be considered separately from the complete products and are entitled to the exemption. This view was supported by a judgment of the Supreme Court in a similar case. The third Member agreed with the Technical Member's interpretation, leading to a majority decision in favor of the respondent.The Department argued that since the exemption notification excluded nozzle and nozzle holders, the parts constituting these products should also be excluded from the benefit of the notification. However, the respondent's counsel contended that the parts would eventually become part of the internal combustion engine and not just the nozzle or nozzle holder. The counsel also highlighted that the Department had accepted the tribunal's decision without reservation in a subsequent application, which was upheld by the Collector of Central Excise & Customs (Appeals), Pune. The counsel referred to a Board Circular supporting the eligibility of parts for exemption under the notification. The Court acknowledged the Department's challenge but noted that the Department had already obtained a favorable order through a separate process without making it contingent on the Court's judgment. Considering the actions of the Department and the circular issued by the Board, the Court found it unnecessary to delve into the main issue of interpretation and dismissed the appeals.In conclusion, the Court upheld the tribunal's decision in favor of the respondent, emphasizing the acceptance and implementation of the decision by the Department through separate proceedings. The Court found no grounds to overturn the tribunal's ruling based on the Department's actions and the Board's circular supporting the eligibility of parts for exemption under the notification.