Exemption for wind mill tower components upheld for forged flanges used as parts of a non-conventional energy system.

M.S. forged flanges supplied as parts or spares for wind mill towers were treated as eligible for exemption under Notification No. 6/2000-CE as components of non-conventional energy devices or systems. The Tribunal accepted that the wind mill tower forms part of the wind operated electrical generator, so a flange used in that tower is likewise part of the same system. It also held that exemption could not be denied merely because the tower was assembled at site, and that the phrase "consumed in the factory of production" could not be read narrowly to defeat the exemption. The earlier decision and bona fide belief, together with absence of suppression, supported the assessee.

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Issues: Whether M.S. Forged Flanges, manufactured and supplied as parts/spares of wind mill towers, were eligible for exemption under Notification No. 6/2000-CE as non-conventional energy devices/systems.

Analysis: The Tribunal followed the decision in the respondent's own case and held that the wind mill tower is itself a part of the wind operated electrical generator, and that a flange used in the tower is therefore a part of that system. It was further accepted that the exemption could not be denied merely because the tower was assembled at site, and that the department could not restrict the expression "consumed in the factory of production" so narrowly as to defeat the exemption. The earlier decision also supported the assessee on bona fide belief and absence of suppression, in the light of the departmental circular requiring scrutiny of declarations.

Conclusion: The goods were held eligible for exemption under Notification No. 6/2000-CE, and the Revenue's appeal was dismissed.

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