TaxTMI 
TaxTMI 
2019 (3) TMI 1073
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....against the Advance Ruling No. RAJ/AAR/2018-19/09 dated 01.08.2018. BRIEF FACTS OF THE CASE 3. KEI Industries Ltd. (hereinafter also referred to as the "Appellant") is a public limited company incorporated in India and is engaged in the business of manufacturing and supply of various kinds of Power Cables. 4. The issue is the supply of Copper XLPE insulated armoured low tension cables (hereinafter referred to as "electric/power cables") by the Appellant to M/s. Vedanta Ltd. 5. M/s. Vedanta is undertaking petroleum operations under PRE-New Exploration Licensing Policy (PRE-NELP) granted by the Government of India/State Government to Cairn Energy India Pvt. Ltd. in the State of Rajasthan which was vested in Vedanta after the merger of Cairn India Pvt. Ltd. in Vedanta. For carrying out such petroleum operations, it uses various kinds of machines and equipment. Almost all machines and equipment used by Vedanta for petroleum operations run on electricity and thus, electric cables are required for providing electricity to such machines and equipment. 6. M/s. Vedanta issues tender notice for supply of power cables required for its petroleum operations and further selects a ....
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....of the following :- i) On careful perusal of notification it is evident that Electric cables are not included in any of the entries of goods specified from entry no. 1 to 23 of the List of goods appended to Notification No. 03/2017-CT. ii) Entry no. 24 of List of goods appended to Notification No. 03/2017-CT. restricts accessories, stores, materials or consumables ONLY in relation to the goods specified in the list of goods from entry no. 1 to 23. What Appellant has failed to specify is that "Electrical cables" supplied by him will be accessories, stores, materials and/or consumables to which specific goods as mentioned in entry no. 1 to 23 of the list of goods. iii) Moreover on examination of purchase orders it is found that they too do not specify that electrical cables supplied will be accessories, stores, materials and/or consumables to which specific goods as mentioned in entry no. 1 to 23 of the list. iv) Appellant has mentioned that Electrical Cables so supplied by them 1) are not specific and exclusive to machine used by M/s Vedanta. 2) supplied cables are capable of being used with more than one kind of machine by M/s Vedanta. Thus it....
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.... 13. Case for the Party ELECTRIC CABLES SUPPLIED BY THE APPELLANT WOULD BE COVERED UNDER THE SCOPE OF SL. No. 1 OF NOTIFICATION No. 03/2017-CT(RATE) DATED 28.06.2017 The LD. AAR has failed to appreciate the fact that DGH is the sole authority to certify that goods are required for petroleum operations after ascertaining the use of goods and all the other conditions as per the notification number 3/2017. Further an exhaustive procedure is being followed by DGH for issuance of essentiality certificate as DGH is the Indian governmental regulatory body established under the Ministry of petroleum and Natural gas, Government of India. Appellant's understanding: 1 According to the Appellant, the electric cables supplied by the Appellant to Vedanta for supplying electricity to the machines or equipment used in its petroleum operations would qualify as 'material', 'accessories', 'consumables', and/or 'stores' under Sl. No. 1 of Notification No. 03/2017 for running machines listed in the list annexed to that notification. The reasons are furnished herein below: Applicable provisions: Notification No. 03/2017 2 Notification No. 03/201....
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.... the Assistant Commissioner of Central tax or Commissioner of State tax, as the case may be, having jurisdiction over the supplier of goods, at the time of outward supply of goods, a certificate from a duly authorised officer of the Directorate General of Hydro Carbons in the Minis o Petroleum and Natural Gas, Government of India, to the effect that the goods are required for, (A) Petroleum operations referred to in sub-clause (ii) of clause (a) under the contract referred to in that sub-clause, or 5 Further, Sl. No. 1 of Notification No. 03/2017 provides that the said benefit would be available for the goods provided in List 1 of Notification No. 03/2017. The List of goods appended to Notification No. 03/2017-CT specifies various goods including, "24. sub-assemblies, tools, accessories, stores, spares, materials, supplies, consumables for running, repairing or maintenance of the goods specified in this List" Analysis of the entry 6 On a careful perusal of the above entry, it is clear that the concessional rate benefit would be available to the goods specified in the list to Notification No. 03/2017 provided the goods are used for the activities mentioned....
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....ion with the operations undertaken under a contract with the Government of India; and • a certificate from the Directorate General of Hydro carbons certifying that the goods are required for the petroleum operations referred in the Sl. No. 1. 14 It is to be noted that the term 'Indian Company' has not been defined in Notification No. 03/2017-CT. Moreover, it is also not defined in the CGST or IGST Act. In common parlance, an 'Indian Company' would mean any company who is established and registered in India in accordance with the relevant laws prevailing at that time. 15 To substantiate the same, reference is made to the definition provided in the Income Tax Act, 1961, which defines Indian Company under section 2(26) as under: "(26) "Indian company" means a company formed and registered under the Companies Act, 1956 and includes... ... ... ... ...." 16 In view of the above, it can be concluded that to claim benefit of concessional rate of tax under Notification No. 03/2017, the following conditions are required to be satisfied cumulatively in the instant case: i. The goods must be covered under the list to the Notification No.0....
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....rred to Vedanta. It is submitted that fulfilment of Condition No. 3 is also not disputed in the impugned order by the Ld. AAR. 19 Condition No. 4: It is also explained in the facts above that at the time of placing order with the Appellant, Vedanta produces a certificate issued by the Directorate General of Hydrocarbons (referred as "DGH") certifying that the goods specified in the certificate are required for the petroleum operations undertaken by Vedanta. Thus, the Appellant supplies the goods to Vedanta only when it produces the requisite certificate. A copy of the certificate issued by the Directorate General of Hydrocarbons dated 18.01.2018 is already enclosed as Annexure-E. It is submitted that fulfilment of Condition No. 4 is also not disputed in the impugned order by the Ld. AAR. 20 The Appellant wishes to place reliance on the decision of Hon'ble Customs, Excise & Service Tax Appellate Tribunal in the case of Focus Energy Ltd. versus Commissioner of Customs (Import), Mumbai reported at 2014(313) E.L.T 231 (Tri. Mumbai) = 2013 (2) TMI 681 - CESTAT MUMBAI . The Hon'ble Tribunal, in relation to identical exemption, i.e. Sl. No. 358 of Customs Notification No. 12....
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....3/2017. However, the term 'accessories' is also not defined in Notification No. 03/2017. 26 To understand the meaning and scope of the term 'accessories' used in Notification No. 03/2017, reference is made to the dictionary meaning of the term 'accessories', which have been extracted hereunder: (i) The New Merriam- Webster's Dictionary "a person or thing that aids subordinately, an adjunct, appurtenance, accompaniment" The Oxford Advanced Learners Dictionary "an extra piece of equipment that is useful but not essential" (iii) The Collin's Co build English Dictionary for Advanced Learners "accessories are items or equipment that are not usually essential, but which can be used with or added to something else in order to make it more efficient, useful or decorative" (iv) The Chamber's English Dictionary "subsidiary, present along with something more important" 27 Moreover, while determining the meaning of the term 'accessories', the Hon'ble Apex Court in the matter of Annapurna Carbon Industries Co. vs. State of Andhra Pradesh [AIR 1976 SC 1418],= 1976 (....
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....bles are used to supply electricity to machines which would make machines functional. Thus, undoubtedly, the electric cables are necessary for functioning of machines and therefore, the electric cables make these machines more efficient or useful. 32 In view of the above, it is clear that the electric cables add to the usefulness or efficiency of the machines in as much as it makes the machines functional. Therefore, it can be safely concluded that electric cables supplied by the Appellant to Vedanta qualify as accessories. 33 The above contentions are further supported by placing reliance on various judicial decision, wherein, the meaning and scope of the term 'accessories' has been discussed. 34 Reliance in this regard is placed on the decision of Hon'ble Tribunal in the matter of CC, Bangalore vs. NI Micro Technologies Pvt. Ltd. [2014 (311) ELT 458 Tri - Bang] = 2013 (12) TMI 709 - CESTAT BANGALORE wherein, while deciding that the battery of a cellular phone is an accessory, the Tribunal held as under: "3. After giving careful consideration to the submissions, we find that parts, components and accessories of mobile handsets including cellular phone....
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.... as the same is required for supplying electricity to the machines which is required for functioning of machines. Thus, the electric cables are essential for the functioning of machines and therefore, in view of the above referred decision, it is clear that electric cables supplied by the Appellant would qualify as 'accessories' required for running the machines. 38 Attention is also invited to the decision of Hon'ble Delhi Tribunal in the matter of CCE, Chandigarh vs. Arihant Spring Mills [2002 (147) ELT 1181]. = 2001 (5) TMI 779 - CEGAT, NEW DELHI In this case, the Tribunal has held that the electric installations including enamelled winding wires, which are used for transmission of electricity to machines, would be eligible to cenvat credit as the same is classifiable as components/accessories/parts of machine. The aforesaid decision stands affirmed by the Supreme Court reported at 2003 (151) ELT A178 = 2001 (9) TMI 1166 - SUPREME COURT 39 Similarly, in the case of Ashoka Synthetics Ltd. vs. CCE, Bhubaneswar [1997 (96) ELT 170 Tri] = 1997 (7) TMI 340 - CEGAT, CALCUTTA it was held that wires and cables which are used for transmission of power are es....
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....necessary tools, equipment, etc." (v) Collin's English Dictionary for Advanced Learners, new edition "materials are the things that you need for a particular activity" (vi) Oxford Advanced Learner 's Dictionary (pl.) "things that are needed in order to do a particular activity" 43 On a careful perusal of the above extracted dictionary meanings of the term 'material', it is apparent that the term 'material' means and includes all those things, equipment or implements which are necessary or important for carrying out any particular activity. 44 It has already been discussed in the facts above that the machines procured by Vedanta for carrying out petroleum operations run on electricity and therefore, in order to run those machines, electricity would be required. In other words, in the absence of electricity, the machines cannot function and would be rendered useless. The electricity required for functioning of machines is supplied with the help of electric cables and therefore, the electric cables are essential for running the machines. 45 In view of the above discussions, it is abundantly clear that the electric ca....
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.... equipments is a matter that can be decided only by the concerned organization and there cannot be a general rule. It is also noticed that Notification No. 10/97 covers consumables also in addition to accessories and spare parts. Therefore this cannot be treated on par with Notification No. 6/2002. Therefore wires and cables cleared can be covered under the heading consumables and therefore it has to be held that this is also admissible as far Notification No. 10/97 is concerned." .... Emphasis Supplied 47 The above referred decision makes it abundantly clear that the wires and cables are also eligible to qualify as stores or consumables. Therefore, the electric cables supplied by the Appellant in the instant case would also qualify as stores or consumables for running machines specified in the list and would be covered by the entry no. 24 of the list to Notification No. 03/2017. It is to be noted that the Ld. AAR has not disputed this submission of the Appellant. 48 The AAR at Para 9(u) of the impugned ruling has held that it is not rational to consider electrical cables as accessories, stores, materials or consumables for running of the goods mentioned in the list on the....
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....or use with the following machines (covered under Entry No. 9 of the list): i. Electrical submersible Pump's motor ii. 33KV ring main unit iii. Progressive cavity Pump's motor iv. Electrical Heat Tracing v. Power and Motor Control Center vi. Plant Lighting vii. UPS 53 An undertaking to this effect has been given by Vedanta vide its certificate dated 06.09.2018, enclosed as Annexure-F. The certificate also certifies that the electric cables supplied by the Appellant are ONLY being used with the machines / equipment used in relation to the petroleum operations undertaken by Vedanta and that the electric cables are not diverted to any other use. In view of the above, the Appellant is entitled to the concessional rate of Goods and Service Tax under Notification 3/2017. 54 It is further submitted that the fact that the electric cables are for use with the machines / equipment falling under Entry No. 9 of the list is also certified by the Directorate General of Hydrocarbons in its certificate dated 18.01.2018, enclosed as Annexure-E. In this regard, Annexure A to the certificate, specifically column 3 of the tab....
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....ries, stores, materials or consumables to goods falling under entry no. 1 to 23 of the list, which is pre-requisite to claim concession under the Notification No. 03/2017. 59 In this regard, the Appellant is now submitting an undertaking / certificate by Vedanta (enclosed as Annexure - F) mentioning the machines with which the electric cables are used. Further, Vedanta has certified that electric cables are exclusively being used for machines running for petroleum operations and that the same are not being diverted for any other use. 60 In view of the detailed discussion above, it can be safely concluded that the electric cables supplied by the Appellant to Vedanta are covered by the list (entry no. 24) appended to Notification No. 03/2017. Moreover, the electric cables are supplied to Vedanta, an Indian company, against the certificate issued by the Directorate General of Hydrocarbons. As all the conditions prescribed in Notification No. 03/2017 for Sl. No. 1 are satisfied, the Appellant is eligible for the benefit of concessional rate of duty under Notification No. 03/2017. 61 Therefore, the impugned order should be set aside and the Appellant should be provided the bene....
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....nuing even today. Warranty Clause on internal page 11 of the purchase order no. 4500030182 both dated 14.11.2017 [page 79 of our appeal memo] provides that "warranty shall be 18 months from the receipt of material or 12 months from the date of installation, whichever is earlier". It is submitted that the entire transaction is for supply of goods and supply of warranty services and will be completed only on expiry of warranty period. Supply of warranty is in continuation to the supply of goods, which is the principal supply. Thus, the Appellant submits that since the supply in the present case is continuing and an ongoing supply, the advance ruling application filed by the Appellant satisfies the definition of 'advance ruling' being in relation to the supply of electric cables being undertaken by the Appellant. 3. Without prejudice, the Appellant also submits that the Appellant regularly enters into similar contracts for supply of identical / similar electric cables to various customers like Vedanta. In fact, there were purchase orders pending also on the date when the Appellant filed the advance ruling application, i.e. on 09.05.2018. A sample copy of such a purchase ord....
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....ismissal of the appeal which was already admitted, by invoking a proviso, the tribunal devoted its attention to this issue and passed an order running into five pages. The time which the tribunal devoted for all this could have very well and fruitfully been devoted to the adjudication on merits of the appeal. It is improper to throw out a litigant on such a technical ground after the appeal is entertained and kept pending. Once the appeal was admitted in this case and kept pending, then, no useful purpose is served by dismissing it at the final hearing on the ground of maintainability. Ultimately, it is a discretion vesting in the Tribunal, which it must exercise judiciously and not capriciously. We find that refusal to decide the appeal on merits was vitiated by an error of law apparent on the face of the record." ii. PRAKASH CHANDRA GOYAL vs UNION OF INDIA, 2010 (256) E.L.T. 667 (Cal.) = 2010 (3) TMI 488 - CALCUTTA HIGH COURT "12. Ordinarily, this writ application involving questions about alleged sale of goods by the government to a private party should not have been entertained in the writ jurisdiction. But, since the writ has been entertained and it is pendi....
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....ted 8-5-1985. In his order dated 25-6-1985, he dealt with the appellant's liability towards payment of duty and interest under Section 72(1) of the Customs Act. In our view, the Assistant Collector's order dated 8-51985 and 25-6-1985 got merged together and the Collector (Appeals) also decided the issues relating to the appellants' liability to payment of duty and interest. In the circumstances, the preliminary objection regarding maintainability of the present appeal before us is not sustainable and hence the preliminary objection is rejected." 7. In view of the decisions cited above, the Appellant humbly submits that its appeal should not be dismissed on the ground of maintainability. 8. It is pertinent to mention here that department has not filed any appeal against the order of Advance Ruling Authority admitting the application for advance Ruling. It is submitted that in the absence of any appeal by the department, Appellate authority Suo moto cannot raise the issue of maintainability of application before the Advance Ruling Authority. DISCUSSION AND FINDINGS 17. Having gone through the decision of the Authority for Advance Ruling (AAR) and submissions m....
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.... the burden of that error. AAAR is an independent forum. Needless to mention that this body (AAAR) is at a higher pedestal than that of AAR and so it has all the powers to modify the ruling of the AAR the way it deems fit. If the AAR has entertained and pronounced its ruling on any issue which was outside the scope of the Advance Ruling, this forum (AAAR) has every power to undo the job done by the AAR while disposing appeal, and this job can be done by the AAAR even if neither of the Party (i.e Appellant or Department) pleaded for the same during the proceedings of the appeal filed before it. This position is evident from Section 95(a) ibid which bounds this body (AAAR) also to entertain appeals only in relation to supply of goods or services or both being undertaken or proposed to be undertaken. This sole provision is enough to pronounce loudly that even decision on maintainability of the issue is not sacrosanct for this forum. 20. The appellant has also contended that, as per Purchase Order, warranty for the supplies undertaken is continued even today, hence , it can't be said that the supplies were completed before they applied for Advance Ruling. They have submitted tha....