TaxTMI 
TaxTMI 
2023 (7) TMI 823
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....f various types of boilers and boiler components falling under Chapter 84 of First Schedule of Central Excise Tariff Act, 1985. 3. In the course of verification of the ER-1 returns filed by units, it was noticed by the department that assessee has claimed to have been manufacturing Agro Waste Fired Boilers and clearing the same without payment of duty by claiming exemption vide Sl.No.84 of Notification No.6/2006-CE dated 1.3.2006 upto 16.03.2006 and vide Sl.No.332 of Notification No.12/2012-CE dated 17.03.2006 from 17.03.2012 onwards. On verification of the invoices under which the alleged boilers were cleared, it was seen that each unit was clearing parts of Boilers and not the Boiler itself. The units had not manufactured the entire Water Tube Boiler / Agro Waste Fired Boiler in their factory and only certain parts of such Boilers were cleared without payment of duty availing the above exemption notification. The parts manufactured by each unit did not constitute a full boiler. Further, it appeared that appellant had not consumed the parts of Agro Waste Fired Boilers in the manufacture of entire boiler and had only cleared to their customer for which the exemption is....
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....nforming the department the intention of assessee company to have a new premises for manufacturing excisable goods. Since even with the addition of this shed, there was space constraint, assessee company had to take another premises at 4/3, Musiri Road, Thenkadapanthangal Village, Walajapet 632 513 within the jurisdiction of Superintendent of Central Excise, Ranipet, Range I, Ranipet. This unit, which is Unit V was also registered (by merger of unit IV & Unit V) with the Central Excise on 08.10.2009. One another Unit, which is Unit II was functioning within the jurisdiction of Superintendent of Central Excise, Range IV and operations in this unit was stopped in March 2009. Thus, 3 out of 4 units are within the jurisdiction of the Superintendent of Central Excise, Range IV, while one falls within the jurisdiction of the Superintendent of Central Excise, Range I, but all within the jurisdiction of the same Assistant Commissioner of Central Excise, Ranipet Division, Ranipet. These details would show that the assessee company had taken new premises for manufacture after informing the department and taking registration as required under law.&nbs....
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....he clearances along with invoices for the last 5 years. The assessee furnished all details. Based on the details furnished, and the copies of the invoices submitted by assessee, these show cause notices have been issued to the different units. The facts being identical and the manufacturer being one and the same, namely, M/s.Thermodyne Technologies P. Ltd., the assessee filed common reply to all the notices. 8. In the impugned order, the adjudicating authority has held that the assessee units had cleared only parts of boilers and not complete boiler and therefore is not eligible for the exemption from payment of duty, under the notification. However, it was held that there is no misstatement or suppression of facts and thereby restricted the confirmation of demand to the normal period. 9. The Ld. Counsel explained that it is the assessee company and not the units which receives orders for supply and erection of Agro waste fired boilers/ Water tube boilers from their customers. These boilers are classifiable under chapter heading 8402 12 00 of the Schedule to Central Excise Tariff Act, 1985. On receipt of each such order from the customers, in the Head Office at ....
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....ed along with the items manufactured or may be ordered to be delivered at the site of the customers. Even while manufacturing the boilers, they are manufactured in different phases part by part over period of time and dispatched to the site of customers on completion of each part. This is because all the parts cannot be manufactured at a time. Their storage and transport will pose problems. Recognizing the difficulty, the HSN Notes very clearly states in Part V under Section XVI "For convenience of transport many machines and apparatus are transported in an unassembled state. Although in effect the goods are then a collection of parts, they are classified as being the machine in question and not in any separate heading for parts. The same applies to an incomplete machine having the features of the complete machine presented unassembled. However unassembled components in excess of the number required for a complete machine or for an incomplete machine having the characteristics of a complete machine are classified in their own heading". 11. It is submitted that, on the very same allegation an earlier SCN dt. 27.6.2003 was issued for the period January 2003 to March 2003. The ....
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....at parts but not the whole are cleared from the factory, in view of the fact, that the respondent has a contract to deliver a boiler. Parts removed in several consignments will have to be deemed to be a boiler in complete form". It is argued by the Ld. Counsel that the adjudicating authority ought to have followed the ratio of these judgments and held that the goods (parts) removed are only boilers, particularly so when the assessee is executing an order for supply of Agro Waste fired boilers/water tube boilers. The exemption availed by assessee ought to have been held as correct and the proceedings dropped. 13. The Ld. Counsel adverted to Rule 2 (a) of the General Rules for Interpretation of the First Schedule to the Central Excise Tariff Act, 1985. According to this any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or failing to be classified as complete or finished by virtue of this rule), p....
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....h part is a device producing energy and hence eligible for the exemption. 16. It is argued that the adjudicating authority has also failed to take note of the practice in this Industry. Usually, boiler is manufactured as different parts and cleared as and when each part is manufactured, but describing them as 'boiler' only. Reliance was placed on the following judgments: (a) Commissioner of Central Excise, Trichy Vs. BHEL (b) Commissioner of Central Excise, Pune I Vs. Thermax Babcock Wilcox Ltd and a few other cases. It is submitted that adjudicating authority has chosen not to refer and rely on these decisions. 17. Again, based on representation from Trade, CBEC had issued clarification as Trade Notice 40/92 dated 15.06. 1992 by Collector (as per the designation of Commissioner, then) of Central Excise, Madras. A perusal of this clarification would make the context very clear. The trade represented their difficulty that boiler manufacturers manufacture only certain parts and outsource the remaining and the field officers were denying the exemption under notification 205/1988 dated 25.05.1988 (forerunner to notification 6/2006-CE dated 1.3.2006). In this context it was clarified ....
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.... been denied. It may not be out of place to mention that such an interpretation will defeat the purpose for which the Government granted the exemption and the notification will be rendered a nullity, in so for as this particular entry is concerned. 20. The practice followed in this industry is to manufacture the boilers in different lots, clear and assemble at the site of the customers. The assessee has also followed the same and all along, the department has not questioned the correctness. The units have been visited by a number of officers from time to time; the audit parties have periodically conducted audit in all the units. In response to queries from the department, the procedure followed has been informed. In fact, in the impugned order, adjudicating authority has held that there is no suppression. Having said so, in fact if the authorities wanted the assessee to change the practice, it can be only prospective, provided it is legally sustainable. Accordingly, confirmation of duty even for the one year period is not warranted. Suddenly, a contra view cannot be taken by the department, when there is no change in the legal provisions. The assessee has manufactured pressure par....
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....tion. The Ld. AR prayed that the department appeals may be allowed and the assessee appeals may be dismissed. 23. Heard both sides. 24. The two issues that arise for consideration are (i) whether the assessee is eligible for exemption of the Notification 6/2006-CE dt. 1.3.2006 - amended Notification 12/2012-CE dt. 17.03.2012 ? (ii) whether the extended period is invocable? 25. To analyse the issue as to whether the assessee is eligible for the benefit of exemption under Notification No.6/2006-CE and subsequent notification 12/2012 it would be convenient to extract the relevant part of these notifications which read as under : TABLE S. No. Chapter or heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No. 1 2 3 4 5 84 Any Chapter Non-conventional Devices /systems Specified in List 5 Nil .... LIST 5 (See S. No. 85 of the Table) (1) Flat plate solar Collector (2) Black continuously plated solar selective coating sheets (in cut length or in coil) and fins and tubes (3) Concentrating and pipe type solar collector (4) Solar cooker (5) Solar water heater and system (6) Solar air heating system (7) Sol....
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.... of List 8 refers to Agricultural forestry, Agro-industrial, Industrial, Municipal and Urban waste conversion device producing energy. Again, Sl.No.21 refers to "parts consumed within the factory of production of such parts for the manufacture of goods specified at S.Nos. 1 to 20 above". It can be seen from Notification 6/2006 as well as Notfn 12/2012 that these notifications provide the exemption from payment of excise duty on the agricultural, forestry, agro-industrial, industrial municipal and urban waste conversion device producing energy and also for parts if such parts are consumed within the factory. 27. The records of this case bring out that during the disputed period assessee company has obtained purchase order for agro waste fired boiler. The department does not have a case that assesse company manufactured or cleared any boiler that does not fit into the items referred to in the notifications. In the monthly E.R-1 returns filed by the assessee unit as well as in the invoices, the item mentioned is 'agro waste fired boilers'. The only allegation of the department is that each assessee unit has cleared parts of a boiler and does not constitute a complet....
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....shown as assessee company i.e., M/s.Thermodyne Technologies Pvt. Ltd. The consignee name is shown as M/s.Ruchi Soya Industries Ltd., Unit II. The invoice which is for clearance of parts corresponds to the purchase order. At the coloum of description of the goods, it is mentioned as "1x30 TPH AGRO WASTE (PALM FIBRE FIRED RECIPROCATING GRATE BOILER". The two parts cleared as per this invoice is Economiser Block-I and Economiser Block-II. It is also stated in the invoices that the assessee is availing the exemption as per Notification 12/2012. It needs to be mentioned that the purchase order and invoice above (relating to M/s.Ruchi Soya Industries Ltd.) is referred by the adjudicating authority to consider the issue of cum duty price benefit This is seen discussed in end part of para 15 of the impugned order. In the SCN No.16/2013 dt. 21.3.2013 for illustrative purpose two invoices have been referred. These invoices are as under: Sl.No. Invoice No.& Date Classified as Classified under CETSH Actual goods cleared CETSH to be adopted 1. 075/22.03.12 Agrowaste Fired Travelling Grate Boiler (45 TPH) 8402 12 00 1 Auxiliary Piping 2. ....
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....g authority that the scope of the purchase order is for supplying the complete equipment and commissioning of the equipment that therefore the assessee-company had supplied agro waste fired boiler and the exemption was eligible. 31. Ld. counsel for assessee has explained that on receipt of the purchase order the assessee company provides the design and drawing for each order of boiler. Each unit is capable of manufacturing any part. The boiler being of huge size, it is not practically possible to manufacture the same inside the factory and transport into the customer's premises. The parts which are manufactured by different units are dispatched to the customer's site and erected as per the design and drawing. Though boilers were cleared in piecemeal manner but purchase order is for a complete equipment and it takes shapes only at the site of the customer. Further it has also to be noted that there is no order placed for separate parts of the boilers. As per Trade Notice No.40/92 dated 16.6.92 it has been explained as under : "TRADE NOTICE No.40/92 Dated : 16.6.92 Sub : Benefit of exemption under Sl.No.15 of the table annexed to Notification No.2....
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....al fuel can be used. 4. The above may be brought to the notice of all the constituent members of your trade associations. (Issued from file C.No.IV/16/314/92-CX.II)" 32. The issue of having to clear parts of boiler has been examined by the Board and in order to maintain uniformity in the classification of excisable goods and the levy of duty on boiler designed for agricultural or municipal waste as also conventional fuel it is clarified by the Board that benefit of notification No.205/88-CE dated 25.5.1988 (subsequent notification 6/2006) will be available for such goods even when these goods are cleared in CKD / SKD condition provided that evidence is produced that goods cleared as parts form a complete device and that evidence is also produced for supply of such complete device to the buyer. The adjudicating authority has declined to rely and apply this Trade Notice by observing that the parts are not cleared in a complete knocked down (CKD) or semi knocked down (SKD) condition. The Trade had represented their difficulty of field staff denying the exemption for clearance of parts of boilers. Para 2 (a) (b) (c) of Trade Notice would show that parts were clea....
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....pulleys and structurals cleared by the appellants could not themselves be called collection of parts of the conveyor system, stackers/reclaimers. Those parts could not be said to be assembly of parts of such advanced stage as to be considered as having the essential features of the complete conveyor, stackers/reclaimers at the time of clearance." 34. After considering the rival contentions, the Tribunal analysed and held the issue as under : "6. We also find that in the Thermax Babcock & Wilcox Ltd. (supra) case which dealt with an identical dispute, the Tribunal held as follows : "But we still hold that this variance in opinions expressed, does not alter the fact that the parts of boilers as cleared by the respondents, do constitute an incomplete boiler in an unassembled form. The facts as come out clearly indicate that the essential parts of boilers are cleared from the factory as it is not possible to clear a complete boiler in one go. Even when one considers that some of the parts removed from the factory are of auxiliary nature, one has to agree that an incomplete boiler in unassembled form is cleared. That the boiler in unassembled form is removed in several lots on diff....
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....ise has been carried out by the Revenue in the present assessment year. Be that as it may, in the face of the opinion of the expert and the HSN note, details of which have been extracted above, we are of the view that the Primary Authority as well as the First Appellate Authority was perfectly justified in coming to the conclusion that the components of the boilers cleared as parts but essential to put into operation the boilers, would be classifiable under sub-heading 8402.10 and not as claimed by Revenue under sub-heading 8402.90. We, therefore, do not find any infirmity in the order assailed before us so as to justify taking of a view different from what has been recorded by the First Authority as well as the Appellate Authority." 36. In the case of CCE Pune I Vs Thermax Bobcock & Wilcox Ltd. 2005 (182) ELT 336 (Tri.-Mumbai) the issue was the classification of pressure parts of boiler removed in several consignments whether to be regarded as a boiler in complete form and whether classifiable as boiler under 8402.10 or under 8402.90 as parts. The Tribunal held that fact that boiler in unassembled form is removed in several lots on different dates itself does not mean that parts ....