Excise Duty Exemption claim for Setting up of Water Treatment Plants: CESTAT allows Refund of Duty Paid under Protest [Read Order]

The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) allowed the refund of duty paid under protest as there was an excise duty exemption claim for setting up water treatment plants.

M/s. Alstom T & D India Ltd, the appellants received orders from M/s. Megha Engineering and Infrastructure Ltd., Hyderabad for the supply of goods for use in the project of Moulana Abdul Kalam, Hyderabad, Sujala Shranti (drinking water supply) and Sippu Lift Irrigation Project, Gujarat. 

The appellant informed the department that they intended to clear the goods like 24 numbers of Capacitor Voltage Transformers, 220 KV Control and  Relay Panel 220 KV SF 6 Circuit Breaker and 66 KV Circuit Breakers by availing the exemption as per Sl. No.7 (1) of Notification No. 6/2006 dated 01.03.2006 read with condition No. 4 of Sl. No.7 of Notification No.6/2006 dated 01.03.2006. 

As per the above Notification, the exemption was available to all items of machinery, including instruments, apparatus and appliances, auxiliary equipment and their parts required for setting up water treatment plants.  Condition no.23 imposed by the Notification is that an assessee has to produce a certificate issued by the District Collector stating that the goods cleared for the intended use specified in column (3) of the Table of the Notification.

The department viewed that certificates issued by the District Collector mentioned that the goods were intended for use in the pumping station for transmission of water to the water treatment plant and not for use at the plant itself.  Accordingly, the Department advised the appellant that they were not eligible for exemption from the Notification.  The appellants cleared the goods on payment of duty under protest.  Subsequently, they filed three refund claims for the duty paid in respect of the goods cleared as per the Notification.

Three separate Show Cause Notices were issued proposing to reject the refund claims alleging that the duty paid by them under protest is correct and that the appellants are not eligible for refund.  Being aggrieved by such order, the appellants filed an appeal before the Commissioner (Appeals), who vide orders impugned herein upheld the order of rejection of refund claims. 

Ms. O. M. Reena appeared and argued for the department. It has been further argued by the taxpayer that once a Government authority issues the required certificate as per the condition attached, the same has to be accepted by the Department.

The state government authority has clearly stated in the certificate that the goods are intended for the specified purpose, i.e., for use at the pumping station and the water supply project. Nowhere in the certificate, it has been mentioned that the goods are for use in the water treatment plant.

A two-member bench comprising of Ms Sulekha Beevi C S, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) held that the rejection of the refund claims is not justified.  The CESTAT set aside the impugned orders and allowed the appeal.

To Read the full text of the Order CLICK HERE

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