M/s Walco Engineering Limited, the appellants, are engaged in the manufacture of cooling towers, doors, wall panels, ceiling panels, floor panels etc; the appellants were clearing the goods, to M/s Natura Green Foods Products Private Limited, availing exemption contained in Notification. 

On conduct of audit of the records of the appellants, Revenue was of the opinion that the subject goods do not fall under the list specified under List 4 of the notification. 

Accordingly, a show cause notice has been issued and was confirmed vide OIO; on an appeal preferred by the appellants, Commissioner (Appeals) vide impugned order has upheld the order of the Original Authority while setting aside the penalty proposed. 


Krati Singh, Counsel for the appellants, submitted that the goods were supplied under a Certificate issued, as per the Notification, by Deputy Commissioner, Central Excise Division, Bareli as communicated to them vide letter; the letter was in accordance with the procedure prescribed under Rule 3 of Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001; such availment of benefit was also communicated, vide letters sent along with ARE-3, to Deputy Commissioner, Central Excise Division, Bareli, in terms of Rule 4 of the said Rules; the appellants also reversed 10% of the total value of the subject goods cleared, as required under Rule 6 of CENVAT Credit Rules, 2004.

She submitted that the show cause notice proceedings are in violation of the permission granted by jurisdictional Assistant Commissioner of the manufacturer of the finished goods.


The division bench of S. S. Garg Member (Judicial) and P. Anjani Kumar Member (Technical) noted that it is evident that the appellants have availed the exemption contained in Notification only after the receipt of a Certificate issued by the jurisdictional Deputy Commissioner, in charge of their customer. The Department has not got the Certificate nullified/ modified/ withdrawn.

The Tribunal said that therefore, in view of the settled legal position, the Department has not made out any case for recovery of duty from the appellant. Moreover, it is the customer of the appellant who has furnished a bond undertaking to pay the duty in case, it is payable.  

The bench found that even if it is held that the appellant is not eligible to avail the exemption, their customer is liable to pay duty in terms of the bond. On this count also, duty cannot be confirmed on the appellants. 

Case title: M/s Walco Engineering Limited v/s The Commissioner of Central Excise, Delhi

Citation: Excise Appeal No.1210 Of 2011 

Amit Sharma

Author of Tax Concept

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