2017 (5) TMI 1076 - AT - Central Excise

Sub-contract - clearances made on sub-contract for the mega power project- Benefit of N/N. 6/2006-CE dated 01.03 2006 - denial on the ground that the end use certificate is not signed by the CEO of the Project but by the Group Head, Finance - Held that - Since, the Project has been amended including the appellants and also the said document has been amended duly authorising the Group Head, Finance to issue the Project Authority Certificate, the appellants have sufficiently complied with the condition laid in the Notification - denial of benefit is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of benefit of exemption under Notification No. 6/2006-CE dated 01.03.2006
- Validity of Project Authority Certificate signed by Group Head, Finance instead of CEO

Analysis:

Issue 1: Denial of benefit of exemption under Notification No. 6/2006-CE
The appeal was filed against the order passed by the Commissioner (Appeals) upholding the demand, interest, and penalties, denying the benefit of exemption under Notification No. 6/2006-CE dated 01.03.2006. The appellants, manufacturers of rubber products, supplied consignments for a power project without payment of duty, claiming exemption. The department viewed the appellants as sub-contractors to the main contractor, thus ineligible for the exemption. A show cause notice was issued, demanding duty payment. The original authority confirmed the demand, interest, and imposed a penalty. The Commissioner (Appeals) upheld the demand and interest, but reduced the penalty. The appellant argued that they were included as sub-contractors in an amended Project Authority Certificate, making them eligible for the exemption. The Tribunal found the denial of exemption unjustified and set aside the impugned order, allowing the appeal with consequential reliefs.

Issue 2: Validity of Project Authority Certificate signed by Group Head, Finance
The department contended that the end-use certificate should be signed by the CEO, as per the exemption notification. They argued that delegation of authority to the Group Head, Finance was not acceptable. The appellant's consultant submitted that the Group Head, Finance was authorized to issue the Project Authority Certificate and had signed it as per the amendment. The Tribunal noted that the Project Authority Certificate was amended to include the appellants as sub-contractors, with the Group Head, Finance duly authorized to issue it. As the appellants complied with the conditions of the Notification, the denial of the exemption was deemed unjustified. The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with any consequential reliefs.

This judgment by the Appellate Tribunal CESTAT Hyderabad highlighted the importance of compliance with exemption conditions under Notification No. 6/2006-CE and clarified the validity of signatories on Project Authority Certificates for claiming such exemptions.