Defense Pumps Ineligible for Excise Duty Exemption, Penalty Imposed

SOM ENGINEERING CORPORATION Versus COLLECTOR OF C. EX., KANPUR

SOM ENGINEERING CORPORATION Versus COLLECTOR OF C. EX., KANPUR - 2000 (124) E.L.T. 696 (Tribunal) Issues:
- Classification of power driven pumps for excise duty exemption under Notification No. 57/78
- Time-barred demand for excise duty
- Statutory formalities compliance
- Entitlement to benefit under Notification No. 57/78
- Imposition of penalty

Classification of power driven pumps for excise duty exemption under Notification No. 57/78:
The dispute in this case revolves around whether power driven pumps cleared by the appellants to defense establishments are eligible for the benefit of Notification No. 57/78, which exempts power driven pumps primarily designed for handling water from excise duty. The appellants argued that the pumps were primarily designed for handling water, supported by the Directorate General of Technical Development's confirmation of their dual usage for refueling and washing vehicles. However, the Tribunal found that the pumps were not primarily designed for handling water as they were flame proof, water proof, and equipped with a control gun for refueling purposes, making them unsuitable for the exemption.

Time-barred demand for excise duty:
The appellants contended that the demand for excise duty was time-barred as there was no willful suppression of facts on their part. They cited precedents to support their plea, emphasizing that they had provided detailed information to the Department during inquiries. However, the Tribunal held that the appellants had not disclosed crucial facts about the pumps being water and flame proof with a control gun in their classification list, revealing these details gradually during the investigation. Consequently, the Tribunal upheld the invocation of Section 11-A of the Central Excise Act, 1944.

Statutory formalities compliance:
The appellants argued that they had complied with statutory formalities and cited a decision of the Allahabad High Court to support their position. However, the Tribunal did not delve deeply into this issue in its judgment, focusing more on the substantive aspects of the case.

Entitlement to benefit under Notification No. 57/78:
The Tribunal analyzed the specifics of Notification No. 57/78, which exempts power driven pumps primarily designed for handling water from excise duty. It noted that the pumps in question, described as Pump Refueling Electric 24 Volt D.C., were primarily used for refueling defense vehicles with petrol and diesel, rather than handling water. The inclusion of a control gun and their flame and water-proof nature further indicated their unsuitability for the exemption, leading to the denial of the benefit under the notification.

Imposition of penalty:
After considering all aspects, the Tribunal decided that a penalty of Rs. 25,000 would suffice in this case to meet the ends of justice. Despite the penalty imposition, the appeal was ultimately dismissed, affirming the denial of the excise duty exemption under Notification No. 57/78 due to the pumps' primary design for refueling rather than water handling.