2012 (12) TMI 103 - AT - Central Excise

Denial of exemption at Sr. No. 91 of Notification No. 6/2006-C.E., - exemption was available to all goods supplied against International Competitive Bidding subject to condition that the goods in question should have been eligible for exemption from duties of Customs when imported into India Held that - Deemed export benefits dealt within para 8.6.1 and 8.6.2 deal with incentive granted by DGFT and not exemption granted by Ministry of Finance and there is no reason to refer to those conditions so long as they are not referred to in the notification claimed - relief from excise duty is not granted through the mechanism of deemed export but administered through exemption notification issued - Revenue has not made any case that any of the conditions specified in the exemption notification is not fulfilled - exemption cannot be denied for the reason that sub-contractor did not take part in International Competitive Bidding - waiver of pre-deposit allowed

Issues:
1. Eligibility for exemption under Notification No. 6/2006-C.E.
2. Interpretation of conditions specified in Customs Notification No. 21/2002-Cus.
3. Compliance with Foreign Trade Policy 2004-09.
4. Applicability of deemed export benefits.
5. Approval as a sub-contractor for exemption eligibility.

Eligibility for exemption under Notification No. 6/2006-C.E.:
The case involved the Appellants manufacturing CCTV systems for M/s. BHEL under an exemption claim at Sr. No. 91 of Notification No. 6/2006-C.E. The exemption was subject to Condition No. 19, requiring goods to be eligible for customs duty exemption when imported into India. The Appellants argued they met this condition as the goods were for a mega power project certified for customs duty exemption under Notification No. 21/2002-Cus. The Revenue contended the Appellants did not participate in International Competitive Bidding, leading to a Show Cause Notice for recovery. The Tribunal held that the Appellants, even if not part of the bidding, could be eligible if the goods were supplied to the project awarded to a bidder. The Tribunal noted that the exemption was not subject to Foreign Trade Policy conditions, and as BHEL opted for local procurement, the Appellants should be eligible for the exemption.

Interpretation of conditions specified in Customs Notification No. 21/2002-Cus.:
The Customs Notification No. 21/2002-Cus. (Sr. No. 400) specified conditions for customs duty exemption for goods imported for executing a project. The Appellants argued they fulfilled the conditions by producing the required certificates. The Revenue contended the Appellants were not approved as a sub-contractor and did not meet the specified criteria. However, the Tribunal found that the Appellants' eligibility was not contingent on being a sub-contractor, as long as the goods were supplied to the project as required.

Compliance with Foreign Trade Policy 2004-09:
The Appellants argued that the Foreign Trade Policy conditions were not relevant to their exemption claim under Notification No. 6/2006-C.E. They contended they met the conditions specified in the Policy and that the specific requirements did not apply to them. The Revenue highlighted discrepancies in the certificates and argued that the Appellants were not approved as sub-contractors, thus ineligible for the exemption. However, the Tribunal emphasized that the exemption was not tied to the Policy conditions, focusing on the fulfillment of the exemption notification requirements.

Applicability of deemed export benefits:
The Appellants referenced decisions supporting their case and argued that the deemed export benefits under the Foreign Trade Policy did not affect their eligibility for the exemption under Notification No. 6/2006-C.E. The Tribunal concurred, stating that the benefits under the Policy were distinct from the exemption granted by the Ministry of Finance, and the conditions under the Policy were not relevant to the exemption claimed.

Approval as a sub-contractor for exemption eligibility:
The Revenue contended that the Appellants were not approved as sub-contractors and thus ineligible for the exemption. However, the Tribunal clarified that eligibility for the exemption did not hinge on being an approved sub-contractor, as long as the goods were supplied to the designated project. The Tribunal found that the Appellants had made a case for waiver of pre-deposit of dues and ordered a stay on the collection of dues pending the appeal.

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