2018 (8) TMI 1566 - AT - Central Excise

Goods supplied to a Mega Power Project - Benefit of N/N. 21/2002 Cus dated 1/3/2002 - The department was of the view that in the Joint Secretary s Certificate dt.16/12/2009, the project is mentioned as one for expansion and not for setting up of Mega Power Plant and therefore the requirement under S.No.400 of N/N. 21/2002 Cus. Dt.1/3/2002 is not satisfied. Whether power project in respect of which supplies were made by the appellants is a standalone project which was newly set up or whether it is an expansion of existing power project? Held that - It is unequivocally clarified by the Ministry that power project is not a mere expansion of existing power project, but is an independent power project, which is newly setup. Further as per notification 12/2012-Cus. Dt.17/3/2012, the said power project is specified in Entry 53 of the List 32A. The power project is an independent one newly set up and not an expansion of an existing project. The denial of exemption is without any basis, and therefore the duty demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Interpretation of excise duty exemption for goods supplied to Mega Power Projects
- Determination of whether the power project is a standalone project or an expansion of an existing project

Analysis:
1. The dispute revolves around the interpretation of excise duty exemption for goods supplied to Mega Power Projects under notification 6/2006-CE dated 1.3.2006. The appellants were awarded a contract for supply of items to a Thermal Power Plant and claimed exemption under Sl.No.91 of the notification. The issue arose when the department alleged that the project was an expansion and not eligible for the exemption. The department issued a show cause notice proposing duty recovery, interest, and penalties. The Commissioner confirmed the duty payment and imposed penalties. The appellants challenged this decision through an appeal.

2. The appellant argued that the project was for setting up an independent thermal power plant, not an expansion. They presented the Mega Power Project Certificate and a clarification from the Ministry of Power supporting their claim. The Ministry confirmed that the project was an independent power project, not an expansion, under notification No.137/2009-Customs. The appellant also highlighted a similar favorable decision in their own case for a subsequent period, which the department did not appeal against, citing the principle of finality in legal decisions.

3. The department contended that the project was mentioned as an expansion in various documents, indicating it was not standalone. However, the Ministry's clarification and the notification 12/2012-Cus specified the project as a standalone one. The Order-In-Original No.2/2013 in the appellant's own case also supported their argument that the project was newly set up, not an expansion. The order emphasized that the project was recognized as a "setting up" project, entitling it to duty exemption.

4. After analyzing the evidence and documents, the Tribunal concluded that the denial of exemption lacked a valid basis. The project was determined to be a standalone project, newly set up, not an expansion. The duty demand was deemed unsustainable, and the impugned order was set aside. The appeal was allowed, granting consequential reliefs as necessary.