Assessees were engaged in the manufacture of Gas Compressor package, classifiable under Sub-heading No.8414.86 of the Schedule to the Central Excise Tariff Act, 1985. They supplied Gas Compressors to M/s Oil & Natural Gas Corporation Ltd (ONGC) on the basis of the tenders contract awarded to M/s Engineers India Ltd and M/s Efficient Engineers India Pvt Ltd, based on international competitive biddings for the supply to the projects viz. D1 Well-cum-water injection platform project, Sagar Laxmi and for the supply of the compressors to Mehsana Project. The Assessee cleared the goods without payment of duty, by availing the benefit of exemption Notification No.6/2002-CE, dt.01.03.2002 as amended. By the impugned order, the Adjudicating authority confirmed the demand of duty alongwith interest and imposed penalty, denying the benefit of exemption Notification No.6/2002-CE (supra) and allowed the option to pay penalty 25% of duty alongwith full amount of duty and interest within 30 days of the communication of the order under Section 11AC of the Central Excise Act 1944. The assessee filed appeal against the demand of duty, interest and penalty. Revenue filed appeal for extending option to pay penalty 25% of duty alongwith full duty and interest under Section 11AC of the Act.
2. The learned Advocate on behalf of the Appellant drew the attention of the Bench to Sr.No.301 of the Table appended to the said notification and condition No.64 of the said notification. He submits that they have supplied the Compressors, which are exempted from the duties of Customs, and therefore, there is no reason to deny the benefit of exemption notification. He also submits that the Adjudicating authority denied the benefit on the ground that the components used in the Compressors were cleared on payment of Customs duty. Without prejudice, it is submitted that they have used the indigenous components for manufacture of the Compressors. On any event, the use of the imported components cannot be the ground to deny the benefit of exemption notification, which is not mentioned in the condition of the notification.
The learned Authorised Representative on behalf of the Revenue reiterates the findings of the Adjudicating authority. He submits that the Appellant used imported components, where the Customs duty was paid, in the manufacture of Compressors and therefore, they are not eligible to avail the benefit of exemption notification. He drew the attention of the Bench to the relevant portion of the Adjudication order.
After hearing both the sides and on perusal of the records, we reproduce the relevant portion of the table appended to the notification 6/2002-CE dated 1.3.2007 as amended as under:-
