High Court directs Tribunal to refer windmill parts exemption to Larger Bench

The High Court directed the Tribunal to refer the cases of M/s. Rakhoh Enterprises and M/s. Gemini Instratech Pvt. Ltd. to a Larger Bench for interpretation of Notification No. 6/2006. The Tribunal determined that anchor rings, load spreading plates, and windmill doors are eligible for exemption under the notification, as they are considered essential parts of the wind-operated electricity generator. Both companies' appeals were sent back to the Tribunal for further proceedings in accordance with the Larger Bench's interpretations.

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Issues Involved:
1. Denial of benefit of Notification No. 6/2006 to M/s. Rakhoh Enterprises for anchor rings and load spreading plates.
2. Denial of benefit of Notification No. 6/2006 to M/s. Gemini Instratech Pvt. Ltd. for windmill doors.

Detailed Analysis:

1. Denial of Benefit of Notification No. 6/2006 to M/s. Rakhoh Enterprises:
1.1 M/s. Rakhoh Enterprises were issued a show cause notice to deny the benefit of Notification No. 6/2006, dated 1-3-2006, for anchor rings and load spreading plates. A duty of Rs. 5,36,83,121/- was confirmed for the period February 2008 - January 2013, along with an equivalent penalty under Section 11AC of the Central Excise Act, 1944, and interest under Section 11AB/11AA.

1.2 The High Court, in Writ Petition No. 7889 of 2015, observed that the Tribunal should have referred the petitioner’s case to the Larger Bench as it involved the same notification and required interpretation. The High Court quashed the Tribunal’s order dated 25-9-2014 and directed that the issue be referred to a Larger Bench for decision. The Tribunal was instructed to decide all three appeals in accordance with the Larger Bench's interpretation of the Notification.

1.3 The Tribunal examined whether the benefit of Notification No. 6/2006 could be extended to anchor rings and load spreading plates. The appellant argued that these items are parts of the wind-operated electricity generator, essential for providing stability and support to the structure. The AR countered that these items are part of the foundation, not the tower, and thus not covered under the exemption.

1.4 The Tribunal found that anchor rings and load spreading plates are designed to attach the tower to the ground, making them parts of the tower. Consequently, they are eligible for exemption under Notification No. 6/2006.

2. Denial of Benefit of Notification No. 6/2006 to M/s. Gemini Instratech Pvt. Ltd.:
2.1 M/s. Gemini Instratech Pvt. Ltd. were denied exemption for windmill doors under Notification No. 6/2006 for the periods April 2008 - September 2008, October 2006 - March 2007, and April 2007 - March 2008. The demands confirmed were Rs. 10,84,298/-, Rs. 47,59,163/-, and Rs. 45,23,649/- respectively, along with penalties and interest.

2.2 The Tribunal referred the matter to a Larger Bench to determine whether windmill doors qualify for exemption under Notification No. 6/2006, which grants exemption to “wind operated electricity generator, its components and parts thereof including rotor wind turbine controller.”

2.3 The appellant argued that the issue was settled by the Supreme Court in their own case (2015 (323) E.L.T. 220 (S.C)), where it was held that windmill doors are parts of the wind-operated electricity generator. The AR relied on the impugned order.

2.4 The Tribunal agreed with the appellant, referencing the Supreme Court’s decision that windmill doors, being safety devices, are parts of the generator. Thus, the Tribunal held that windmill doors are entitled to exemption under Notification No. 6/2006.

Conclusion:
The appeals of M/s. Gemini Instratech Pvt. Ltd. and M/s. Rakhoh Enterprises were remitted back to the referral Bench for appropriate orders, in line with the interpretations provided by the Larger Bench. The Tribunal concluded that both anchor rings and load spreading plates, as well as windmill doors, qualify for exemption under Notification No. 6/2006.

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