The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the exemption of excise duty can be denied only if goods are removed outside the projects and not based on the probability that goods can be removed from the project.
L & T Construction Equipment Ltd, the appellant assessee had cleared hydraulic excavators to contractors/construction companies claiming exemption under exemption Notification No.108/95 Central Excise.
The assessee appealed against the order passed by the adjudicating authority for confirming the demand of Central Excise duty of Rs.11,97,61,791/- with Education Cess and Secondary Education.
Prakash Shah, the counsel for the assessee contended that the procedure of supplying the goods to the contract or to the subcontractors for use in the execution of the projects were as per the certificate issued by the project implementing authority in the name of the manufacturers and mentioning the contractors or subcontractors.
K. A. Jathin, the counsel for the department relied on the decisions made by the lower authorities and contended that few of the hydraulic excavators procured from the assessee had been withdrawn from the project, few are in the process of being withdrawn and others to be withdrawn once the project was completed and evaded the payment of duty.
The Bench observed that in the case of Tata Motors Ltd. versus Commissioner of Central Excise & Service Tax, the court held that only if goods are removed before completion of the project, the benefit of notification can be denied.
A single-member bench comprising P A Augustian (Judicial) held that the assessee was eligible for the exemption for excise duty while allowing the appeal filed by the assessee.
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