CATERPILLAR INDIA PVT. LTD. Vs. CCE

JUDGEMENT

(1.) THE appellants are engaged in the manufacture of Bar Loader, Loader, Backhoe Loader falling under Chapter Heading 84.29 of the 1st Schedule to the CETA 1985. During the period March 2002 to December 2002 they cleared 25 Nos. of the above mentioned excisable goods by availing exemption in terms of Notification No.108/95 -CE dated 28.8.95 which inter alia exempts excisable goods supplied to projects financed by United Nations and International Organizations approved by the Government of India, subject to certain conditions relating to production of certificate from specified authorities. Before the clearance of each of the vehicles, they specifically informed the Assistant Commissioner of Central Excise having jurisdiction over their factory, of the proposal to clear the goods in terms of the Notification. Certificate issued by Project authorities as well as clearance issued by the Government of India was also enclosed. The show cause notice one dated 27.3.2003 covering the period March 2002 to December 2002 raising duty demand of Rs. 84,21,600/ - and the other dated 29.1.2004 covering the month of January 2003 raising a demand of Rs.6,52,800/ - (total duty demand is Rs.89,74,400/ -) together with interest and proposing imposition of penalties were issued on the ground that the benefit of exemption under the Notification was not available to the appellants as it only exempts goods supplied to Projects financed by United Nations or International Organizations approved by the Government of India while the appellants had cleared the loaders to contractors of the respective Projects and not to the Project Implementing Authorities and on the ground that the contractors continue to be the owners of the goods and continue to possess them even after the completion of the Project. The notices were adjudicated by the Commissioner of Central Excise who confirmed the demands together with interest under Section 11AB of the Central Excise Act and imposed the penalty of Rs.25 lakhs on the appellants under Rule 25 of the Central Excise Rules. Hence this appeal.

(2.) WE have heard both sides. The relevant extract of the notification is reproduced below: -

(3.) IT is not the case of the department that the goods have not been supplied to the Projects financed by International Organizations. The goods were supplied to various sub contractors for the Golden quadrilateral Project financed by Asian Development Bank. Goods have also been used for the Project. The notification nowhere stipulates that the excisable goods supplied should be directly paid for by the organization financing the project. Since the goods have admittedly been used for the project, the question of misuse of goods for unintended purposes, as noted by the Commissioner, does not arise. The fact that after the projects are implemented, the sub contractors are entitled to retain the goods supplied to them under the notification cannot result in denial of benefit of exemption under the notification to the appellants. We are supported in our view by the Larger Bench decision of the Tribunal in Toyo Engineering India Ltd. v. CC, Mumbai 2000 (122) ELT 315 in which it has been held that the mere fact that the construction machinery used in the initial setting up of the specified plant could possibly be used subsequently elsewhere in the setting up of another plant will not debar the importer from the facility of project import. There is also no evidence in the present case that the goods in question were used in any other project after the implementation of the Golden Quadrilateral Project. There is also no requirement under the Notification that the entire cost shall be borne by the International Organization, as held by the Tribunal in Nester Pharmaceuticals Ltd. v. CCE Delhi 2000 (116) ELT 477.