Decided by – Supreme Court of India
Decided on – 24.08.2011
CIVIL APPEAL NO. 5870 of 2005
J U D G M E N T
ANIL R. DAVE, J.
1. This is an appeal under Section 35-L (b) of the Central Excise Act, 1944 (hereinafter referred to as ‘the Act’), against the Judgement and Order no A/1326/WZB/2005/C-iii dated 7.7.05 in Appeal No. E/1893/01, passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Branch, Mumbai.
2. The material facts are that the appellant is engaged in the manufacture of insulated wires and cables falling under Central Excise Tariff Sub‑Heading No.8544.00. The appellant claimed benefit under Notification no. 205/88 – C.E. dated 25.05.88 as amended by Notification no. 57/95. The said notification grants exemption from payment of central excise duty in respect of manufacture of wind mills, parts of wind mills and any specially designed devices which run on wind mills. As the appellant had received orders from various wind mill manufacturers for specially designed electrical cables, which were to be used in the manufacture of wind mills, the appellant filed a declaration under Rule 173-B of the Central Excise Rules, 1944 (hereinafter referred to as ‘the Rules’) claiming nil rate of duty so as to avail benefit under the aforestated notification for the insulated cables manufactured by it and supplied to the manufacturers of wind mills for using the same as part of wind mills for the period commencing from May, 1995 to February, 2006. The appellant reversed the modvat credit taken on inputs for Rs. 16,14,088.32 for availing the exemption benefit under notification no. 205/88.
3. As the appellant had not paid excise duty on the electrical cables supplied to the manufacturers of wind mills as stated herein above, three show cause notices had been issued to the appellant by the Revenue -Authorities for recovery of total excise duty amounting to Rs. 66,92,604/-. According to the Authorities, the electric cables were neither parts nor specially designed devices, which were necessary for manufacturing or running wind mills. For the aforestated reasons, according to the authorities, benefit under the aforestated notification could not have been availed by the appellant. Ultimately, the Commissioner, Central Excise, Surat – II by an order dated 20.2.1998, confirmed the demand of excise duty amounting to Rs. 66,92,604 and imposed penalty under Rule 173Q(1) of the Rules. The said order was challenged before the Tribunal and the Tribunal allowed the appeal by remanding the matter to the Commissioner. After hearing the appellant, the Commissioner again took the same view by his order dated 22.3.2001.
6. We have heard the learned counsel appearing for the concerned parties. It has been mainly submitted on behalf of the appellant that the electrical cables supplied to the manufacturers of wind mills were specifically designed for use in wind mills. They were special type of cables, without which the wind mills could not have been operated and, therefore, the revenue authorities ought to have granted exemption as stated in the notification referred to herein above. The learned counsel appearing for the appellant gave details as to how the electric cables were specially used for running the wind mills. He further stated that without use of the electric cables supplied by the appellant, functioning of the wind mills would not have been possible. He, therefore, submitted that the appellant ought to have been given the benefit of the notification referred to herein above.
9. So far as the first issue is concerned, it is no more res integra in view of the judgement delivered by this Court in the case of Nicco Corporation Ltd. v. Commissioner of Central Excise, Calcutta (supra). The facts in the said case as well as in the present case are similar and, therefore, we need not consider the said issue again. In the circumstances, the first issue is decided in favour of the Revenue. It is also pertinent to note that the appellant has already paid a sum of Rs. 66,92,604/- towards excise duty. As regards the second issue about the imposition of penalty, we are of the opinion that the said order cannot be justified in the facts of the case.