ANIRUDDHA BOSE,J. - (1.) The Appellant before us is engaged in manufacture of railway wagons and other products. The present appeal is directed against a decision of the Customs, Exercise and Service Tax Appellate Tribunal, Kolkata passed on 20th September, 2016 confirming demand of certain sum of money coupled with penalty and interest on the ground of allegation of removal of 95 wagons during the period between August, 1996 and August, 1997 without payment of excise duty. These wagons were supplied on the basis of an order placed by the Government of India, Ministry of Railways on 4th August, 1995.
(2.) Admitted position is that the appellant did not pay excise duty on these wagons, which led to issue show cause-cum-demand notice followed by an adjudication order sustaining the action of the excise authorities. The show cause notice was issued on 16th July, 1998 and a copy of the said show cause notice was produced before us by the learned counsel for the Appellant at the time of hearing. We direct the same to be kept as part of records.
(3.) Before the adjudicating authority as well as the Tribunal, the Appellant had resisted the demand primarily on the basis of exemption notification bearing no. 64/95-CE dated 16th March, 1995. This exemption notification covered all goods falling under heading nos. 86.01 to 86.06 of the schedule to the Central Excise Tariff Act, 1985. It is not in dispute that these heads include wagons for exemption but this exemption was subject to the following qualification:- "if intended for use by the Indian Railways. If,- (i) such engines are designed for use as prime movers for transport vehicles and given for that purpose some special shape, size, or quality which would be essential for any other purpose; (ii) it is proved to the satisfaction of the officer below the rank of Assistant Collector of Central Excise that they are intended to be used as original equipment parts in the manufacture of vehicles falling within Chapter 87 of the said Schedule, manufactured in a Central Government Ordinance Factory; and (iii) such use is elsewhere than in the factory of their production, the procedure set out in Chapter X of the Central Excise Rules, 1944 is followed." There is also a letter of the appellant received from the Railway authorities on 24th July, 1997. It has been recorded in this letter addressed to the appellant:- "Contents of your above referred letter has been explained. These wagons are being procured against the demand of Oil Industry under 'Own Your Wagon Scheme' and therefore these wagons now attract excise duty. At the time of placement of contract these wagons were excisable. However, Modvat benefits are also now available on the inputs used for production of these wagons, which should be availed by you.";