Tribunal denies exemption claim for locomotives used in factory maintenance.

The Appellate Tribunal CEGAT, New Delhi upheld the lower authority's decision, denying M/s. Tata Iron & Steel Co. Ltd.'s claim for exemption under Notification 281/86 for parts of Rolling Stock used for repair and maintenance of transport equipment within the factory premises. The Tribunal determined that locomotives and rolling stock, being moving items, do not qualify as machinery installed in the factory as required by the Notification. Despite arguments citing legal precedents, the Tribunal held that machinery needs to be fixed in position for use, and as locomotives are movable, they were not eligible for the exemption.

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Issues:
- Eligibility for exemption under Notification 281/86 for parts of Rolling Stock used for repair and maintenance of transport equipment within the factory premises.

Detailed Analysis:

The appeal before the Appellate Tribunal CEGAT, New Delhi challenged the Order-in-Appeal upholding the Order-in-Original disallowing the claim for exemption under Notification 281/86 for parts of Rolling Stock used for repair and maintenance of transport equipment within the factory premises. The appellant, M/s. Tata Iron & Steel Co. Ltd., Jamshedpur, argued that locomotives used in their factory for material movement are machinery, and the goods brought from their Adityapur factory for maintenance should be considered as goods used for machinery maintenance. The appellant contended that machinery includes locomotives, citing relevant legal precedents.

The appellant's counsel referenced judgments such as N.K. Kapoor v. Kirloskar Cummins Ltd., Patel Plastics v. Union of India, and Kudremukh Iron Ore Company Ltd. v. Commissioner of Customs, Bangalore, to support the argument that locomotives should be considered machinery. The High Court of Bombay in the first case held that components used in assembling diesel engines on dumpers or locomotives are considered machinery. The scope of the term machinery was examined in the second case, and the Tribunal in the third case determined that trucks and drills are integral parts of production machinery, supporting the contention that locomotives are machines.

However, upon reviewing the submissions and records, the Tribunal found that the Notification exempted excisable goods intended for use in a factory for machinery repair or maintenance. The Tribunal interpreted the term "machinery installed" in the Notification and concluded that locomotives and rolling stock, being moving items, do not fall under the definition of machinery installed in the factory. The definitions of "install" and "installation" from various dictionaries were considered, emphasizing that machinery needs to be fixed in position for use. As locomotives are movable and not fixed in position within the factory, they were deemed ineligible for the exemption under the Notification. The Tribunal upheld the lower authority's decision, dismissing the appeal and denying the benefit of the exemption to the appellant.

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