2013 (11) TMI 1361 - AT - Central Excise

Exemption under Notification No.06/2006 Conditions to be fulfilled - Whether the goods Gate and Gate Parts classifiable under Chapter 73 of the cleared to Mega Power Project against International Competitive Bidding are entitled to exemption from duty under Notification 06/2006 Held that - The goods are classifiable under Chapter 73 of the Tariff. Under Central Excise Tariff there is no Heading 98.01 and which exists in Customs Tariff only - the goods manufactured in India cannot be classified under 98.01 of the Central Excise Tariff, denial of the exemption on the ground of non-fulfilment of condition of Project Import Regulation is not sustainable particularly when condition No. 86 of the Notification No. 21/2002 is fulfilled by them SARITA STEELS & INDUSTRIES LTD. Versus COMMR. OF C. EX., VISAKHAPATNAM 2010 (7) TMI 568 - CESTAT, BANGALORE the appellants are eligible for exemption under Notification 6/2006 Decided in favour of Assessee.

Summary

Issues:
1. Whether goods supplied against International Competitive Bidding to a Mega Power Project are entitled to exemption from duty under Notification 06/2006 dated 01.03.2006.

Analysis:
The appeal in question was filed by M/s Om Metals, the appellants-assessee, against an Order-in-Original passed by the Commissioner of Central Excise, Jaipur. The appellants, manufacturers of Gate and Gate Parts, were awarded a tender for a hydroelectric project by M/s National Hydroelectric Power Corporation Ltd. (NHPC). The issue revolved around the appellants' claim for exemption under Notification No. 06/2006 dated 01.03.2006 against S.No. 91, which specifies duty exemption for goods supplied against International Competitive Bidding. The Department contended that the appellants did not meet the conditions of the Notification, leading to the issuance of Show Cause Notices demanding duty, interest, and penalty. The Commissioner upheld the Notices, prompting the appellants to challenge the decision.

Upon hearing both sides, the main issue was identified as whether goods classified under Chapter 73 of the Central Excise Tariff, supplied against International Competitive Bidding to a Mega Power Project, are eligible for duty exemption under Notification 06/2006 dated 01.03.2006. The relevant conditions under the Notification were scrutinized, particularly Condition No. 19, which mandates exemption from customs duties leviable under the Customs Tariff Act. Additionally, the exemption provided under S.No. 400 of Notification 21/2002 dated 01.03.2002 for goods required for setting up Mega Power Projects was analyzed, along with its conditions, including certification requirements by designated officials.

The appellants had submitted certificates issued by a Joint Secretary in the Ministry of Power, satisfying Condition No. 86 of Notification 21/2002 dated 01.03.2002. The Commissioner, however, denied the exemption under Notification 06/2006 dated 01.03.2006, citing the applicability of goods classification under Chapter 98.01 of the Customs Tariff and non-fulfillment of Project Import Regulation 1986 requirements. The Tribunal noted that goods in question were classifiable under Chapter 73 of the Tariff, not 98.01, which exists in the Customs Tariff only. Therefore, denial of exemption based on Project Import Regulation non-compliance was deemed unsustainable, especially when Condition No. 86 was met. The Tribunal referenced a similar case involving Sarita Steel and Industries Ltd., where exemption under Notification 06/2006 dated 01.03.2006 was allowed despite Project Import Regulation non-fulfillment. Consequently, the Tribunal ruled in favor of the appellants, holding them eligible for the exemption and setting aside the Commissioner's order.

In conclusion, the Tribunal's decision favored the appellants, emphasizing the correct classification of goods under the Central Excise Tariff and the fulfillment of relevant Notification conditions, ultimately entitling them to the duty exemption under Notification 06/2006 dated 01.03.2006.