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July 5, 2022

Heading of the notification or the fact that the budget speech is not included in the notification cannot be used to deny an exemption

by CA Shivam Jaiswal in Legal Court Judgement

Heading of the notification or the fact that the budget speech is not included in the notification cannot be used to deny an exemption

Facts and Issue of the case

The brief facts of the case are that the appellant are engaged in the manufacture of sophisticated machinery like Induction Melting and Heating Furnace, Induction Welding Equipment and also parts of such machinery. For manufacturing of such goods the appellant requires huge amount of capital goods and materials, some materials like Automatic winding machine, automatic tester, reflow oven, centurion, precision solder paste printer, pick & place machines, etc are required by the appellant and equipment and machinery namely (i) Reflow Oven, (ii) Precision Solder Paste Printer, (iii) Pick and Place Machines, (iv) Conveyor Belt System, (v) Automatic Test and Inspection Equipment and (vi) Automatic Test and Inspection Equipment which were ordinarily imported by the appellant from foreign countries.

The Central government has issued a Notification No.25/2002-Cus dated 1.3.2002 which has been amended from time to time. The goods described in the notification are allowed full exemption from customs duty leviable thereon as specified in the First Schedule of the Customs Tariff Act. The goods imported by the appellant which constitute the subject matter of the present appeal are specified the notification and such goods are fully exempted for use in the manufacture of finished goods in the nature of “PCB assemblies”.

The appellant has been using the equipment and machinery involved in the present case for manufacture of PCB assemblies in the factory which are sold in the market whereas, substantial quantities of PCB assemblies are used further within the factory for manufacture of the appellant’s final products namely induction melting and heating furnace as well as induction welding equipment. Since the goods like reflow oven, centurion, precision solder paste printer, pick and place machines, etc. imported by the appellant were to be used for the manufacture of PCB assemblies in the appellant’s factory. The appellant claimed this exemption for such imported goods.

The adjudicating authority issued a demand note for recovery of government dues. The said letter for recovery was issued in pursuance to the Order-In-Original. The appellant being aggrieved by the said letter filed an appeal before the learned Commissioner (Appeals) who has upheld the recovery letter dated 06.01.2020 therefore, the present appeal filed by the appellant.

Shri Amal Dave, learned counsel appearing on behalf of the appellant at the outset submits that the same issue in the appellant’s own case has been considered by this tribunal and held that the appellant are eligible for exemption Notification. He submits that since the demand in the present case is in pursuance of the earlier order which has already been set aside by this tribunal hence, the appeal be allowed. Shri Dharmendra Kanjani, learned Superintendent (AR) appearing on behalf of the revenue reiterates the finding of the impugned order.

Observation by the court

The court had carefully considered the submissions made by both the sides and perused the records. The court had  find that the only ground on which the department has been denying the exemption Notification is that the subject imported goods are exempted only if it is imported and used by the IT Industries whereas, in the appellant’s case the industry is not IT Industry but it is induction melting and heating furnace as well as induction welding equipment manufacturing unit. The court had  find that there is no dispute that the subject imported material are clearly specified in the table given in the notification, the notification does not prescribe a condition that the imported goods are eligible for exemption only for IT Industries therefore, so long the goods are specified in the notification against the exemption cannot be denied.

Conclusion

The appeal of the assessee is allowed by the court.

Inductotherm-India-Pvt-Ltd-Vs-C.C.-Ahmedabad-CESTAT-Ahmedabad

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