M/s Raydean Industries Vs The Commissioner Central Goods & Service Tax (CESTAT Delhi)
The issue that arises for consideration in this appeal is whether ‘module mounting structures’, which are manufactured by the appellant and which are supplied to suppliers of solar power water pumping systems for irrigating agriculture fields, is exempted from payment of central excise duty in terms of the notification dated 17.03.2012. The appellant claims that such exemption would be available at serial no. 332 of the said notification. The description of excisable goods at serial no. 332 is ‘non-conventional energy devices or systems’ specified in List 8 and the appellant has placed reliance upon serial number (10) of the List 8, which is ‘solar power generating system’. The contention of the appellant is that the notification would not exempt the ‘systems’ mentioned in List 8, but various component comprising the system and since ‘module mounting structures’ is a component of the ‘solar power generating system’, it would be exempted from payment of central excise duty under this notification.
It is not possible to accept this contention of the learned counsel of the appellant. What has been exempted from payment of central excise duty under serial no. 332 of the notification dated 17.03.2012 is ‘non-conventional energy devices or systems’ specified in List 8. At serial number (10) of List 8, ‘solar power generating system’ is mentioned. Serial number (21) of List 8 mentions ‘parts consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20’. Only such parts are exempted from payment of central excise duty which are consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20 and not parts of water pumping station. It needs to be noted that entry number (10) of List 8 mentions ‘solar power generating system’ and not ‘module mounting structures’.
The Principal Commissioner has rightly concluded that the serial number 10 of List 8 refers to ‘solar power generating system’ and not to ‘module mounting structures’ manufactured by the appellant and only parts consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20 of List 8 are exempted from payment of central excise duty.
The Principal Commissioner has also correctly appreciated the effect of the amendment made on 11.07.2014 to the aforesaid notification dated 1703.2012. According to the Principal Commissioner, prior to the amendment only parts consumed within the factory of production of such parts for the manufacture of goods specified at serial numbers 1 to 20 of List 8 were exempted, but after the said amendment the exemption is also available to parts of goods specified at serial numbers 1 to 20 of List 8 in a situation where it is consumed not only within the factory of production for the manufacture of goods specified in List 8 but also when used elsewhere than in the factory of production, subject of course to the condition that the procedure laid down in the relevant rules has been followed.
It is, therefore, not possible to accept the contention of learned counsel for the appellant that the ‘module mounting structures’ should be granted exemption from payment of excise duty in terms of the notification dated 17.03.2012 and not the ‘solar power generating system’.
FULL TEXT OF THE CESTAT DELHI ORDER
M/s Raydean Industries1 has filed this appeal to assail the order dated 15.07.2019 passed by the Principal Commissioner, CGST and Central Excise Commissionerate, Jaipur 2 , by which the demand of central excise amounting to Rs. 6,85,64,844/- has been confirmed by invoking the extended period of limitation provided under section 11A(4) of the Central Excise Act 19443, with interest and penalty.
2. The appellant manufactured ‘module mounting structures’ and supplied the same to suppliers of solar power water pumping systems for irrigating agriculture fields. These water pumping systems were provided under various tenders floated by the State and Central Governments under subsidy schemes of the Ministry of New and Renewable Energy, Government of India. According to the appellant, the water pumping systems have three critical components namely: (i) solar photo voltaic module or solar panel, (ii) AC or DC solar water pump with controller and (iii) module mounting structure with manual tracking facility. The appellant supplied the third component to the successful bidders and the material was sent to the location where the solar panels or solar water pumps were installed. The appellant further claims that the solar panels are fixed on these module mounting structures, which have the facility to track the movement of the sun from east to west so that solar energy is produced for maximum time period.
3. According to the appellant, module mounting structure are parts of the solar generating system, which system is exempted from payment of central excise duty at serial no. 332 of the notification dated 17.03.2012. The appellant, therefore, claimed exemption from payment of central excise duty on module mounting structures and cleared the goods against ‘Nil’ payment of central excise duty.
4. The relevant portion of the notification dated 17.03.2012 containing serial no. 332 is reproduced below:
