Exemption covers un-machined castings solely used to manufacture wind-operated electricity generators and their components

Notification No. 6/2006-CE exempts goods used in specified energy devices, including wind-operated electricity generators, their components and parts, as well as parts consumed within the factory to manufacture those specified goods. The analysis states that this wording covers parts further used to make components of wind-operated electricity generators, so exemption cannot be denied merely because the goods are un-machined castings. Tailor-made castings produced to customer drawings, incapable of alternative use and intended solely for such generators, fall within the exemption. The Board's clarification and supporting precedent reinforce this interpretation, making denial of exemption unsustainable.

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Issues: Whether un-machined castings manufactured and supplied for use in the manufacture of wind operated electricity generators were eligible for exemption under Notification No. 6/2006-CE dated 01.03.2006.

Analysis: The notification exempts goods falling under any Chapter when used in the specified energy devices and specifically includes wind operated electricity generator, its components and parts thereof, as well as parts consumed within the factory of production of such parts for manufacture of the specified goods. The entry was held to cover parts which further go into making parts for wind operated electricity generators, and the contrary reading adopted in the impugned order was found to be inconsistent with the plain language of the notification. The castings were also found to be tailor-made according to customer drawings, incapable of alternate use, and intended solely for manufacture of wind operated electricity generators. The clarification issued by the Board and the supporting precedent reinforced that the exemption could not be denied merely because the goods were un-machined castings.

Conclusion: The un-machined castings were held to be eligible for exemption under Notification No. 6/2006-CE, and the denial of exemption was unsustainable.

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