2006 (3) TMI 48 - SC - Central Excise

Interpretation of Exemption for Wind Mill Parts: Power Cables Excluded

The case involved the interpretation of Notification No. 205/88-C.E. regarding exemption for wind mill parts. The issue was whether power cables qualified ... Parts of wind mills - exemption under Notification No. 205/88-C.E., as amended - identifiability of component parts - distinguishing precedent - precedential value of Tribunal decision affirmed by this CourtParts of wind mills - exemption under Notification No. 205/88-C.E., as amended - identifiability of component parts - Whether the insulated wires and cables sold by the assessee to M/s. Vestas R.R.B. India Limited during August to September, 1995 qualify as parts of wind mills and are thereby entitled to exemption under the Notification. - HELD THAT: - The Tribunal found, and the authorities below had held, that the cables in question performed the ordinary function of transmitting power from the generator to the control panel for onward supply to the grid and were not shown to be identifiable, specially finished parts integral to the wind mill. The Tribunal distinguished the decision relied on by the assessee (Elecon Engineering) on its facts and followed United Cables Industries v. C.C.E., Meerut where similar cables were held not to be parts of wind mills. That Tribunal decision was in turn brought before this Court and, on consideration, the Court upheld the view that insulated cables, although necessary for operation, are not parts of a wind mill which is complete in itself unless the cables are shown to be identifiable component parts performing a distinct integral function. In light of the affirmed Tribunal precedent and the absence of factual proof that the assessee's cables were identifiable parts of the wind mill, the appeal had no merit. [Paras 6, 7, 8]The insulated wires and cables supplied by the assessee do not qualify as parts of wind mills and are not entitled to exemption under the Notification; the appeal is dismissed.Final Conclusion: Appeal dismissed; the Tribunal's conclusion that the insulated cables are not parts of wind mills for purposes of the exemption notification is upheld, relying on the Tribunal decision affirmed by this Court. Issues:1. Interpretation of Notification No. 205/88-C.E. dated 25th May, 1988 regarding exemption for wind mill parts.2. Determination of whether power cables are considered parts of wind mills for the purpose of exemption.3. Analysis of previous tribunal decisions and their applicability to the current case.4. Review of the Tribunal's decision in United Cables Industries v. C.C.E., Meerut.5. Assessment of the dismissal of the appeal by the Supreme Court in Civil Appeal No. 7955 of 2001.Issue 1: Interpretation of Notification No. 205/88-C.E.The case involves the interpretation of Notification No. 205/88-C.E., dated 25th May, 1988, which grants exemption to specific goods related to solar and natural energy. The notification includes wind mills, parts of wind mills, and specially designed devices running on wind mills. The central issue is whether the assessee is entitled to the benefit of this notification for the wires and cables sold to M/s. Vestas R.R.B. India Limited.Issue 2: Classification of Power Cables as Wind Mill PartsThe contention revolves around whether the power cables manufactured by the assessee qualify as parts of wind mills, thus making them eligible for the exemption under the notification. The Revenue argues that the power cables are for general purposes and do not constitute parts of the wind mill. The Adjudicating Authority and the Commissioner (Appeals) supported this view, stating that the cables merely transmit power and do not qualify as wind mill components.Issue 3: Precedents and Tribunal DecisionsThe Tribunal referred to previous decisions, distinguishing the case of Elecon Engineering Co. Ltd. v. Commissioner of Customs, Mumbai-II, and relying on the judgment in United Cables Industries v. C.C.E., Meerut. The Tribunal emphasized that the cables manufactured by the assessee were not identifiable parts of the wind mill, leading to the denial of the exemption benefit.Issue 4: Review of United Cables Industries v. C.C.E., MeerutThe decision in United Cables Industries v. C.C.E., Meerut was challenged in an appeal before the Supreme Court, which upheld the Tribunal's ruling that insulated cables are not considered parts of wind mills for exemption purposes. The Supreme Court affirmed that even though wind mills depend on electric cables to function, the benefit of exemption under Notification No. 205/88-C.E. does not extend to such cables.Issue 5: Dismissal of the Appeal by the Supreme CourtConsidering the Supreme Court's affirmation of the previous decision, the appeal in question was dismissed without any costs. The Court found no merit in the appeal, aligning with the interpretation that the insulated cables manufactured by the assessee do not qualify as parts of wind mills for exemption under the notification.Overall, the judgment clarifies the criteria for determining eligibility for exemption under Notification No. 205/88-C.E. and establishes that power cables, even crucial for wind mill operations, do not fall under the category of wind mill parts for exemption purposes.