Aircraft classified as Engineering Goods Eligible for Excise Duty Exemption: CESTAT [Read Order]

In a recent judgement, the Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has ruled that aircraft classified as engineering goods are eligible for excise duty exemption. The appellant, M/s.Taneja Aerospace and Aviation Ltd, engaged in manufacturing aircraft parts under Chapter 88 of CETA 1985, cleared these parts to M/s. National Aerospace Laboratories, Bangalore, and M/s. Hindustan Aeronautics Ltd., Bangalore, without paying Excise duty by claiming an exemption under Notification No. 10/1997-CE dated 01.03.1997. The Department, however, challenged this exemption, contending that the appellant's goods did not meet the specified criteria for exemption under the notification. Ready to Grow? Choose a Course That Fits Your Goals! A show cause notice dated 04.06.2013 was issued for the period May 2012 to February 2013, proposing the demand of duty, interest, and penalties. The original authority confirmed the demand, including interest, and imposed penalties. The appellant appealed to the Commissioner (Appeals), who upheld the original authority's decision. Consequently, the appellant filed this appeal. The Department argued that the aircraft parts manufactured by the appellant did not qualify as ‘scientific and technical instruments, apparatus, equipment (including computers), accessories and spare parts’ as outlined in the exemption notification. The denial of exemption was based on the claim that the goods, being mere parts of aircraft, did not meet the specifications required for the exemption. Ready to Grow? Choose a Course That Fits Your Goals! The appellant contended that the notification covers “engineering goods” and provided certificates indicating that the goods were supplied to M/s. National Aerospace Laboratories and M/s. Hindustan Aeronautics Ltd. The appellant argued that parts of aircraft should fall under the category of “engineering goods” eligible for exemption. For subsequent periods, similar show cause notices were issued, and the issue was contested again. The Commissioner (Appeals), in OIA No. 90/2017 dated 27.03.2017 and OIA No. 100/2017 dated 24.04.2017, set aside the demands, citing a Board’s clarification that aircraft parts, as engineering goods, should be eligible for exemption. The exemption was granted for the periods November 2014 to May 2015 and June 2015 to March 2016. Ready to Grow? Choose a Course That Fits Your Goals! In the case of Autoprint Machinery Manufacturers (P) Ltd. Vs CCE Coimbatore - 2010 (260) ELT 439 (Tri.-Mad.), the Tribunal held that a narrow interpretation of the term “equipment” to deny exemption was not acceptable. The Tribunal found that “Auto print 1520 mini offset printing machine” qualified for exemption, despite the narrow interpretation of equipment. The issue for consideration is whether the appellant qualifies for the exemption under Notification No.10/1997-CE. The appellant contends that the Board's circular dated 29.2.2016 clarifies that engineering equipment is included in the items exempted by Notification No.10/97. It is noted that the Commissioner (Appeals) for a subsequent period addressed the same issue and granted the exemption, ruling that goods classified as parts of aircraft fall under “Engineering Goods.” The bench finds no reason to deviate from this interpretation and thus concludes that the appellant is eligible for the exemption under Notification No.10/1997-CE. Ready to Grow? Choose a Course That Fits Your Goals! The two member bench of the tribunal comprising Vasa Sesha Giri Rao (Technical member) and Sulekha Beevi C.S (Judicial member) impugned order was set aside. The appeal was allowed, and the appellant was granted consequential relief, if applicable. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Aircraft classified as Engineering Goods Eligible for Excise Duty Exemption: CESTAT [Read Order]

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