2004 (3) TMI 273 - AT - Central Excise

Indian Navy's Construction Material Exempt under Notification No. 64/95

The Tribunal held that construction material supplied to the Indian Navy by certain entities is eligible for exemption under Notification No. 64/95, ... Ship Stores Issues:Eligibility of construction material for exemption under Notification No. 64/95 for supplies to Indian Navy directly or through procurement agencies.Analysis:The issue in these appeals was the eligibility of construction material supplied to the Indian Navy for exemption under Notification No. 64/95. The duty demand and penalty were confirmed by the Commissioner of Central Excise (A) Indore. The Tribunal considered the argument that goods were not directly supplied to the Indian Navy as stores for consumption on board vessels. The Tribunal referred to the case of Goa Paints & Allied Products v. CCE, Goa, where the benefit of the Notification was extended to paints supplied to shipyards working as contractors for the Indian Navy. The Tribunal held that clearances to the Indian Navy by certain entities were covered by the Notification, rejecting the Revenue's argument that construction material is not considered stores for consumption.The Tribunal distinguished previous decisions cited by the Commissioner, emphasizing that the benefit of the Notification can be extended to supplies made to contractors for the Navy. However, the Tribunal agreed with the Revenue's argument regarding supplies to M/s. Mazgaon Docks Ltd. and M/s. Andersons Marine Pvt. Ltd., stating that the benefit cannot be extended to vessels not yet in existence. The Tribunal remanded the case for fresh consideration by the Adjudicating authority in light of the decision in the case of Goa Paints & Allied Products, clarifying that the benefit of the Notification does not apply to goods supplied for use in ships under construction.Regarding penalties, the Tribunal found them unjustified in the case and set them aside. The appeals were disposed of with the direction to re-compute duty liability, if any, after providing a reasonable opportunity of hearing to the assessee.