SKF Technologies India Pvt. Ltd. Not Related to SKF India Limited; Exemption on Wind Energy Bearings Sustained — CESTAT Ahmedabad

Case Overview

Case Name: SKF India Limited Vs Commissioner of Central Excise (CESTAT Ahmedabad)
Appeal Number: Excise Appeal No. 11311 of 2016
Date of Order: 23/03/2022
Forum: CESTAT Ahmedabad

Background and Context

The present set of appeals before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad, arose from subsequent proceedings initiated against the appellants concerning the manufacture of ball and roller bearings falling under Chapter Heading 84 of the Central Excise Tariff Act, 1985. These bearings were supplied for end-use by the Railways, for wind energy generation, or for general commercial purposes, with the entire output being channelled through SKF India Limited as the sole selling entity.

In respect of bearings destined for wind energy applications, the appellants had been availing the benefit of the exemption notification under Notification No. 6/2006-CE dated 01.03.2006. Following an investigation, the Revenue authorities issued show cause notices covering the period 2009-10 to 2013-14, and subsequently for the period April 2014 to March 2017, raising two principal contentions:

  1. That SKF India Limited and the appellants were related persons, and accordingly, central excise duty was required to be computed on the price at which SKF India Limited effected onward sales to end-customers.
  2. That the appellants were not entitled to claim the benefit of the exemption under Notification No. 6/2006-CE in relation to bearings supplied for use in wind-based electricity generation.

Proceedings Before the Tribunal

Appellant's Submissions

The appellants' counsel drew the Tribunal's attention to the fact that both contested issues had already been conclusively adjudicated by the very same Tribunal in the appellants' own case for the earlier period, through Final Order No. A/11135-11137/2020 dated 25.08.2020. Since the current show cause notices pertained to subsequent periods involving identical facts and legal questions, the counsel urged that the earlier ruling be followed as binding precedent.

Revenue's Submissions

The Authorised Representative appearing for the Revenue acknowledged that the earlier Tribunal order had been assailed before the Hon'ble Supreme Court and that a stay application had been filed and listed on multiple occasions. On this basis, Revenue urged the Tribunal to defer adjudication of the present matter until the Supreme Court rendered its verdict.

Tribunal's Preliminary Ruling on Deferment

The Tribunal carefully examined Revenue's request and noted a critical fact — that no stay order had been granted by the Supreme Court despite the matter having been listed before it on at least four separate occasions. The Tribunal accordingly declined to keep the appeals pending and proceeded to decide the matter on merits, relying on its own earlier findings.

Revenue's Position

Revenue sought to establish that SKF India Limited (SKFIL) and SKF Technologies India Pvt. Ltd. (SKFTIL) were related parties within the meaning of Section 4(3)(b)(iv) of the Central Excise Act, 1944, on the basis of the following factors: