2017 (6) TMI 708 - AT - Central Excise

Duty liability of boiler components - N/N. 6/2006-CE dated 01/03/2006 - denial on the ground that the project for which the appellants were supplying components are having power plants with capacity 500/600/800 MW each - Held that - the provision of notification relied upon by the Original Authority is not available during the period now under consideration - the Original Authority applied a non-existing legal provision to deny the exemption - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Duty liability of boiler components claimed under Notification No.6/2006-CE.
2. Denial of exemption by the Original Authority based on an incorrect ground.
3. Application of a non-existing legal provision to deny exemption.
4. Legality of the impugned order and the appeal.

Analysis:
1. The dispute in the case revolved around the duty liability of boiler components cleared by the appellant under Notification No.6/2006-CE for setting up Thermal Power Plants. The Revenue contended that the appellants were not eligible for exemption due to not fulfilling the conditions of the said notification, specifically the requirement of a power plant capacity of 1,000 MW or above. The Commissioner initially accepted the nature of the project as a Mega Power Project, but the Original Authority denied the exemption based on a different ground related to international competitive bidding and customs duty exemption under Notification 21/2002-CUS.

2. The Original Authority's denial of exemption was based on the condition 86 (iii) of Notification 21/2002-CUS, which the appellants allegedly did not fulfill. However, the appellants argued that this condition was no longer applicable during the relevant period due to an amendment in the notification. They also presented a certificate from a government officer to demonstrate compliance with the amended condition. The impugned order was challenged on the grounds of being based on an erroneous application of a non-existing legal provision.

3. Upon review, the Tribunal found that the Original Authority had denied the exemption on a ground not mentioned in the show cause notice and had applied a legal provision that was no longer in effect during the relevant period. The appellants' submission of the certificate confirming compliance with the amended condition further supported their case. Consequently, the Tribunal held that the impugned order was legally unsustainable and set it aside, allowing the appeal.

4. In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the importance of adherence to relevant legal provisions and the necessity for decisions to be based on valid grounds. The judgment highlighted the significance of procedural fairness and the requirement for authorities to apply current and applicable legal provisions while making determinations in excise duty matters.