T.K. Jayaraman, Member (T)
1. This appeal has been filed against the OIA No. 98/2005-CE dated 29.09.2005 passed by the Commissioner of Central Excise (Appeals-II), Bangalore.
2. The appellants manufactured furniture, an excisable commodity. They availed benefit of exemption Notification No. 10/97-CE dated 1.3.1997 for the furniture supplied to M/s. Liquid Propulsion Systems Centre and National Institute of Oceanography. Revenue proceeded against the appellants for demand of duty on the ground that the goods cleared are not entitled for the said exemption. It is the contention of the Revenue that the impugned goods cannot be considered and Scientific and Technical Instrument or Apparatus or Equipment or Accessories or Spare parts for instruments, apparatus and equipment. Hence, the lower authority confirmed the demand and imposed equal penalty under Section 11AC. Further, he demanded interest under Section 11AB. The Commissioner (Appeals) has upheld the order of the lower authority in the impugned OIA. The appellants strongly challenge the impugned order.
3. Shri K.K. Varier, the learned Consultant, appeared for the appellants and Shri K. Sambi Reddy, the learned JDR, for the Revenue.
4. The learned Consultant urged the following points:
(i) Reliance on Apex Court’s decision in the case of CCE, Allahabad v. Ginni Filaments Ltd. 2005 (181) ELT(SC) is misplaced as the case relates to Notification 123/81-CE applicable to 100% EOUs. The condition in Notification 123/81 is quite different from the present notification 10/97. The comparison is as follows:
Sl. Notn. No. 123/81-CE dt. Notn. No. 10/97-CE dt. No. 02.06.1981 01.03.1997 1 Exempts excisable capital goods, Goods specified in Col. 3 of the table components and raw materials, below when supplied to the institutions consumables, spares and packing specified in the corresponding entry in materials when brought in Col. 2 of the said table, subject to the connection with the manufacture conditions specified in the and packing of articles into an corresponding entry in Col. 4 100% EOU. of the said table.
(ii) Each Notification has to be read on its own terms and the conditions stipulated therein cannot be ignored. In the present case, the competent authority has issued a Certificate that the said goods are required for research purpose only. Once such a certificate is issued, the appellants are entitled for the exemption.
(iii) The item supplied to the institutions will be categorized as Accessory against description furnished in 2(b) of column No. 3 of the table annexed to the Notification.
(iv) The Computer workstations and computer furnitures supplied by the appellants are squarely covered under Accessories to computers. The research work depends on the skills and efficiency of human beings and providing computer furniture is vital for better results. The furnitures are designed for workstations specifically and scientifically to work long stretch without any hindrance and to avoid strain on spinal cord of human body.
(v) It is held in the following cases that when an exemption is subject to the production of a certificate from the specified authorities in the Notification, it should be given credence because such a certificate is conclusive and binding on the Revenue authorities:
a. Equipment Sales Corporation v. Collector
(vi) Further, the learned Consultant relied on the following decisions:
a. Danke Products v. CCE, Vadodara-II
b. Surlux Diagnostics Ltd. v. CC, Bombay
c. Indian Oil Corporation Ltd. v. CCE
d. Guard Electronics Systems Pvt. Ltd. v. CCE, Delhi-II 2004 (178) ELT 673 (Tri.-Del.)
e. L.G. Electronics India Ltd. v. CCE, Nodia 2004 (178) ELT 471 (Tri.-Del.)
f. Ambit Infotech Pvt. Ltd. v. CCE, Pondicherry 2004 (176) ELT 328(Tri.-Chennai)
g. Andrew Yule & Co. Ltd. v. CCE, Chennai
h. CCE, Kochi v. H.M.T. Ltd.
(vii) Since the appellants have not violated any of the legal provisions, they are not liable to pay duty, interest and penalty.
(viii) Since there is no suppression of fact from the department, imposition of penalty under Section 11AC is not proper. The following case-laws were relied on:
(i) Padmini Products v. CCE
(iii) Pushpam Pharmaceutical Company v. CCE
(iv) CC, Bombay v. Unitech Exports Ltd.
5. The learned JDR submitted that these items are only meant for visitors and by no stretch of imagination, they can be called as accessories to scientific equipment, apparatus meant for research, etc.
6. We have gone through the records of the case carefully. The issue is with regard to entitlement of exemption notification 10/97-CE dated 1.3.1997 in respect of certain furniture supplied to M/s. Liquid Propulsion Systems Centre and National Institute of Oceanography. The Notification gives exemption for Scientific and Technical Instruments apparatus, equipment including computers. It is not the case of the appellant that the impugned goods would fall under the above category. However, the Notification gives exemption for the accessories and spare parts and consumables. The contention of the appellant is that the impugned goods are to be considered as Accessories. There are other conditions such as the registration of the institution with Department of Scientific and Industrial research. Further, a Competent Officer should certify that the institution is not engaged in any commercial activity and that the said goods are required for research purposes only. In the present case, the above conditions have been fulfilled. The concerned authority has certified that these goods are required for research purposes only. Revenue is of the view that the impugned goods are furnitures and they are not at all required for research purposes. Therefore, they have ignored the Certificate issued by the competent officer. They have also not accepted the appellant’s contention that the impugned goods should be considered as Accessories. At this point, we would like to give the details of the impugned goods.
6.1 The invoice issued to National Institute of Oceanography gives a general description of the goods as “Laboratory furnitures, Wall cabinets, Revolving Chairs, etc. as per attached List.” A perusal of the list shows that the items of furniture are specially designed for the laboratory. For a clearer understanding, we are giving the list.
1. Island Table with Reagent Shelves
2. Reagent Shelves
4. Straight Work top with CPU holder and drawer unit
5. L-shaped work top with CPU holder and drawer unit for HOS, etc.
It is seen that all these items are modular furniture specially designed for the laboratory. It can be seen that the Notification gives exemption not only for the scientific equipments but also for the accessories. The question is whether the impugned goods can be considered as accessories or not.
6.2 The definition of accessory as given in The Oxford Advanced Learner’s Dictionary is “an extra piece of equipment that is useful but not essential or that can be added to something else as a decoration”. For example, a computer may function even without a specially designed table for it. In that sense, the particular accessory is not very essential for its functioning. However, in a laboratory environment, where there are many scientific equipments and apparatus, they should be placed in a proper manner. Moreover, in a research laboratory, there is interaction between human beings and elements of the system. In such an environment, it is very necessary to design the environment, keeping in view to optimize the human well being and overall system performance.
6.3 In fact, there is a separate subject on this and it is known as Ergonomics. According to the International Ergonomics Association, Ergonomics is as follows:
Ergonomics (or human factors) is the scientific discipline concerned with the understanding of interactions among humans and other elements of a system, and the procession that applies theory, principles, data and methods to design in order to optimize human well-being and overall system performance (definition adopted by the International Ergonomics Association in 2000).
Further, “Physical ergonomics deals with the human body’s responses to physical and physiological loads. Relevant topics include manual materials handing, workstation layout, job demands, and risk factors such as repetition, vibration, force and awkward/static posture as they relate to musculoskeletal disorders.”
6.4 Keeping in view the fact that human beings have to interact with the elements of system in work place, even the furniture meant for research purposes are designed ergonomically. In that sense, these furniture are required for the research purpose as certified by the Competent Authority. Hence, when the notification gives exemption for accessories also, a broader interpretation should be given to it to include the modular furniture specially designed. We agree with the learned Consultant that the Apex Court’s decision cited by the Adjudicating Authority relates to 100% EOU in the context of Notification 123/81. The facts are quite different in that Notification and they are distinguishable from the present one.
6.5 Summing up, we find that the conditions of the Notification have been fulfilled by the appellant and the impugned goods can definitely be considered as Accessories to Scientific Equipments. Hence, we allow the appeal with consequential relief, if any.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)