CESTAT Bangalore: Appeals Allowed for Water Purifier Manufacturer. Central Excise duty demand set aside.

The Appellate Tribunal CESTAT Bangalore allowed the appeals filed by the water purifier manufacturer, setting aside the demand for Central Excise duty, interest, and penalties imposed by the adjudicating authority and first appellate authority. The Tribunal accepted the appellant's arguments supported by an Analytical Report, confirming that the water purifiers did not require pressurized tap water to function as alleged by the Revenue. The Tribunal found that the purifiers operated on gravity flow without external pressure or electricity, meeting the conditions for exemption under Notification No.6/2007.

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Issues:
- Appellant manufacturing water purifiers claimed exemption under Notification No.6/2007.
- Revenue doubted functionality of water purifiers and issued show cause notices.
- Adjudicating authority confirmed demand for Central Excise duty, interest, and penalty.
- First appellate authority confirmed demand for two products.
- Appeal filed before Appellate Tribunal CESTAT Bangalore.

Analysis:
The appellant, a manufacturer of excisable goods, specifically water purifiers, faced allegations from the Revenue for manufacturing and clearing seven water purifier models without paying Central Excise duty by claiming exemption under Notification No.6/2007. The Revenue doubted the functionality of the water purifiers, claiming they only work with pressurized tap water. Show cause notices were issued, proposing demand for Central Excise duty, interest, and penalties. The appellant provided a detailed reply, supported by an Analytical Report from a Technical Expert, refuting the Revenue's claims. However, the adjudicating authority upheld the demand, leading to the appellant filing appeals before the first appellate authority, which confirmed the demand for two products - Aquasure on Tap Water Purifier and Aquasure Storage Water Purifier-US Tech, prompting the appeals before the Appellate Tribunal.

During the hearing at the Appellate Tribunal, both parties presented their arguments, and the Tribunal carefully examined the documents on record. The Tribunal noted that the Revenue's doubts were effectively rebutted by the Analytical Report, which clarified that the water purifiers in question do not require external pressure and operate on gravity flow without the need for electricity, pump, or pressurized vessel. It was highlighted that previous appeals for different periods had been allowed based on similar expert reports. Moreover, the Tribunal found that the user manual for the models did not indicate a requirement for electricity or pressurized tap water for the purifiers to function. Despite the Revenue's suspicions, no evidence was presented to contradict the functioning explained in the user manual.

Based on the evidence and analysis, the Tribunal was satisfied that the water purifiers met the conditions of the Notification by functioning without electricity and pressurized tap water. Consequently, the Tribunal set aside the impugned orders, allowing the appeals with any consequential relief as per the law. The judgment was pronounced in Open Court on 23/09/2021.

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