Pitti Castings Pvt Ltd Vs Pr. Commissioner of Central Tax (CESTAT Hyderabad)
CESTAT Hyderabad allowed the appeal filed by Pitti Castings Pvt Limited and set aside the order dated 28/29.01.2013 denying exemption under Notification No. 6/2006-CE dated 01.03.2006 to unmachined castings supplied for manufacture of Wind Operated Electricity Generators (WOEG). The appellant manufactured machined and unmachined castings according to customer specifications and drawings. The unmachined castings were drilled, painted and subsequently used in WOEG manufacture. The appellant contended that Notification No. 6/2006-CE applied to goods falling under any chapter and that classification under CETH 7325, rather than CETH 8503, did not affect exemption eligibility.
The dispute concerned whether the unmachined castings qualified for exemption under the notification, particularly List 5 covering specified conventional energy devices and their components and parts. The Commissioner had interpreted Serial No. 21 of List 5 as covering parts consumed within the factory of production of such parts, and denied exemption because the appellant supplied unmachined castings for further manufacture of WOEG parts.
CESTAT found that this interpretation of Serial No. 21 was misplaced. It held that the entry specifically included parts that further went into making parts for WOEG. The Tribunal also considered a CBEC clarification dated 30.06.2011 stating that the castings were made according to drawings, used only for assembling WOEG, and were tailor-made and incapable of use elsewhere with or without changes.
The Tribunal found that the appellant’s castings were similarly tailor-made for WOEG manufacture. It held that unmachined castings were eligible for exemption and observed that another reading of the notification would defeat its stated intention. Referring to Dilip Kumar and Company and Magna Gold Castings Ltd., the Tribunal also noted the principles concerning plain construction of exemption notifications and classification of incomplete goods having essential characteristics of finished goods. The impugned order was set aside and the appeal was allowed with consequential reliefs, if any, as per law.
Cases Discussed
- Pearl Insulations Pvt Ltd (CESTAT, Tri-Bang), [2025(393) ELT 546(Tri-Bang)]
- SKF Technologies Pvt Ltd (CESTAT, Tri-Ahmedabad), [2020 (9) TMI 78-Tri-Ahmedabad]
- Hyundai Unitech Electrical Transmission (CESTAT Mumbai), [2005 (187) ELT 112 (Tri-Mumbai)] affirmed [2015 (323) ELT220(SC)]
- Magna Electro-Castings Ltd (CESTAT Chennai), [2005 (186) ELT 556 (Tri-Chennai)]
- Mega tech Control Pvt Ltd (CEGAT Chennai), [2002 (5) TMI-CEGAT, Chennai]
- Tamil Nadu Electricals (CEGAT Chennai), [2002 (7) TMI 611-CEGAT Chennai]
- High Energy Batteries(I) Pvt Ltd (CEGAT), [2002(142) ELT 266(T)]
- Elcon Engineering Ltd (CEGAT), [1998(103) ELT 395(T)]
FULL TEXT OF THE CESTAT HYDERABAD ORDER
Pitti castings Pvt Limited, the appellant, challenges the impugned order dated 28/29.01.2013, passed by Commissioner of Customs, Central Excise & Service Tax, vide which it was held that the un-machined castings manufactured by the appellants and supplied for use in the manufacture of Wind Operated Electricity Generator (WOEG), are not eligible for exemption under Notification No. 6/2006-CE dated 01.03.2006.
2. Shri Narendra Dave, Learned counsel for the appellants dwells elaborately on the classification of un-machined castings and submits that while machined castings are used as it is in the manufacture of WOEG, un-machined castings are drilled for making holes to fit nuts and bolts, painted and thereafter used in manufacture of WOEG. He submits that the classification of un-machined castings has no bearing on the eligibility to the notification as it is applicable for goods falling under ‘any chapter’. He submits that the learned commissioner erred in interpreting that only WOEG parts and components classifiable under CETH 8503 are eligible for exemption and not the un-machined castings falling under CETH 7325. He also erred in adopting Section Note to Section XVI which provides that conversion of incomplete blanks in to ready to use parts amounts to manufacture, which has no bearing on the issue before him.
3. Learned Counsel submits that they have manufactured castings, machined or un-machined, strictly as per the specifications and drawings given by their customers who used them as parts in the manufacture of WOEG. These are solely and principally intended to be used as parts of WOEG. The un-machined castings are not whether used elsewhere or not usable also. He submits that even application of Rule 2(a) of General Rules of Interpretation to Tariff will make the un-machined castings to be castings thus, making them eligible for exemption under Notification No. 6/2006-CE dated 01.03.2006.
4. He relies on Tamil Nadu Electricals [2002 (7) TMI 611-CEGAT Chennai] and submit that in the absence of any chapter-specific limitation in the exemption Notification and an item is specially designed device for the windmill (or part thereof), exemption must be extended irrespective of tariff heading. He also relies on following cases.
- High Energy Batteries(I) Pvt Ltd [2002(142) ELT 266(T)]
- Elcon Engineering Ltd [1998(103) ELT 395(T)]
- Mega tech Control Pvt Ltd [2002 (5) TMI-CEGAT, Chennai]
- Hyundai Unitech Electrical Transmission [2005 (187) ELT 112 (Tri-Mumbai)] affirmed [2015 (323) ELT220(SC)]
- SKF Technologies Pvt Ltd [2020 (9) TMI 78-Tri-Ahmedabad]
- Magna Electro-Castings Ltd [2005 (186) ELT 556 (Tri-Chennai)]
- Pearl Insulations Pvt Ltd [2025(393) ELT 546(Tri-Bang)]
5. Shri B. Sangameshwar Rao, Learned Authorized Representative, reiterates the findings of the impugned order. He takes us through the relevant paras and submits that the Commissioner has rightly arrived at the classification of un-machined castings and denied the benefit.
6. Heard both sides and perused the records of the case.
7. Brief question involved in the instant case is as to whether exemption contained under Notification No. 6/2006 is available to the un-machined parts supplied to the manufacturers of WOEG by the appellant. We find that the Show Cause Notice alleges that the purchase order dated 20.05.2010 placed by M/s Leitner Shriram Manufacturing Ltd., and the purchase order dated 18.01.2010 placed by M/s Winergy Drive Systems India Pvt Ltd., mentioned the quantity in Kgs and therefore the same cannot be treated as castings and thus the parts of wind operators electricity generators.
8. We find that Notification No. 6/2006-CE dated 01.03.2006 exempts goods falling under any Chapter and used in any conventional energy devices/systems specified in List 5. List 5 of the Notification is as follows:
(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) Solar low pressure steam system (8) Solar stills and desalination systems (9) Solar pump based on solar thermal and solar photovoltaic conversion (10) Solar power generating system (11) Solar photovoltaic module and panel for water pumping and other applications (12) Solar crop drier and system (13) Wind operated electricity generator, its components and parts thereof including rotor and wind turbine controller (14) Water pumping wind mill, wind aero-generator and battery charger (15) Bio-gas plant and bio-gas engine (16) Agricultural, forestry, agro-industrial, industrial municipal and urban waste conversion device producing energy (17) Equipment for utilising ocean waves energy (18) Solar lantern (19) Ocean themal energy conversion system (20) Solar photovoltaic cell (21) Parts consumed within the factory of production of such parts for the manufacture of goods specified at S.Nos. 1 to 20 above.
9. We find that Learned Commissioner interprets Serial 21 as follows:
19.6 Further, I find that item no. 21 of list 5 of notification, exempts-“Parts consumed within the factory of production of such parts for the manufacture of goods specified at S.Nos. 1 to 20 above”. If the intention of notification is to exempt all the goods going into WOEG, then obviously there is no necessity for including item 21, which exempts parts consumed within the factory of production of such parts of WOEG. If VSP were manufacturing WOEG/Parts and used unmachined castings therein, probably, they would have been eligible for exemption. But the case of VSPL merely involves manufacture of unmachined castings, which are cleared for further manufacture of WOEG/Parts, and accordingly, they are not entitled to exemption.
From the above, it appears that Learned Commissioner has misread the entry no. 21 under List 5 stating that the parts used for manufacture of parts of WOEG and fall under the respective chapter of parts falling under serial no. 1-20 of the said List 5. Learned Commissioner is of the opinion that in case the parts listed under serial no. 1 to 20 are to be taken to belong to any Chapter, entry no. 21 could be redundant. We are of the considered opinion that this understanding does not come from a plain reading of the entries in List 5. We are of the opinion that serial no. 21 of the List 5 is specifically provided to include the parts which further go into making of parts for WOEG. Therefore, we find that the conclusion arrived at by the Learned Commissioner is misplaced.
10. Further, we find that CBEC vide clarification dated 30.06.2011 clarified as follows:
“A. Whether any design/drawings are provided for making the items.
Yes. Drawings are issued by M/s EIL to M/s Vaksh Steels. Based on these drawings M/s Vaksh makes the mould and further the Un-machined & Machined casting. Drawings are the same for Machined & Un-machined Castings.
C. Whether the item is used after being procured?
The item whether Un-machined or Machined Castings is used only in assembling for producing WOEG.
E. Whether this item can be used anywhere else with some changes or as it is.
No. These castings are used for M/s EIL wind turbines only for the manufacture of WOEG & cannot be used anywhere else with or without any changes. These items are tailor made (whether Un-machined or Machined Castings) i.e. according to the drawing supplied by M/s EIL and hence cannot be used anywhere else with or without any changes. These drawings & moulds are the sole property of M/s EIL. This item whether Un-machined or Machined Castings, are not even displayed at exhibitions as they are secret of EIL.”
11. In the instant case too, it is on record that the castings manufactured by the appellant are tailor made to use of manufacture of WOEG and have been manufactured as per their requirements. Therefore, we find that the un-machined castings are also eligible for exemption. Any other reading of the notification would defeat the intention of the notification itself. We find that Hon’ble Apex Court in the case of Dilip Kumar and Company categorically stated that notification should be construed plainly on the language without supplementing anything to it. Therefore, we find that as the notification and list are very clear, there is nothing to give interpretation that entry at 21 of the list refers to the same Chapter as the parts at Serial no. 1020 fall. We also find that Tribunal in the case of Magna Gold Castings Ltd., supra, held that classification is not concerned when the exemption notification and even incomplete goods having the essential characteristics of finished goods would also be classifiable under the heading relevant to the finished article. We also find strength from the clarification issued by CBEC and the other cases relied upon by the appellant.
12. In view of the above, we do not find any merit in the impugned order and therefore set aside the same. In the result, we allow the appeal with consequential reliefs, if any, as per law.
(Pronounced in the open court on 10.07.2026)
