2023 (8) TMI 894 - AT - Central Excise

International Competitive Bidding - Exemption under Notification No. 6/2006-CE dated March 1st 2006 denied - Appellant appointed as sub-contractor for the projects BHEL required the Appellants to supply boiler components of main equipments of the Mega Power Project while L T required the Appellant to supply Technological Structures and Chutes of Coal Handling Plant of the Mega Power Project - HELD THAT - The goods have been cleared by the Appellants to the specified Mega Power Projects against International Competitive Biddings and the said facts have duly been recorded in the impugned order and there is no dispute on the said facts. The notifications under which exemptions have been claimed by appellants are subject to condition that the said goods when imported into India are exempted from payment of customs duty. In the instant case since the goods have been supplied for setting up expansion of Mega Power Projects we find that the Learned Commissioner in his adjudication order has not negated the submissions made by the appellant regarding the availability of the exemptions from customs duty. Had the said goods been imported from outside India the same would have been eligible for exemption as projects import as available under the aforesaid Notification No. 21/2002. The goods in question are classifiable under Chapter 73 of the Tariff. Under Central Excise Tariff there is no Heading 98.01 which exists in Customs Tariff only. Since the goods manufactured in India cannot be classified under Heading 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 dated 1-3-2002 is fulfilled by them - it is held that appellants are eligible for exemption under Notification 6/2006-C.E. dated 1-3-2006 and accordingly the impugned order is liable to be set aside. As it is an undisputed fact that the impugned goods were supplied and used for setting up/expansion of the Mega Power Projects through International Competitive Bidding process therefore the exemption as claimed by the Appellant is admissible to them. Under the circumstances there is no merit in the order of the adjudicating authority challenged herein which therefore needs to be set aside. The impugned order passed by the Learned Commissioner is therefore dismissed as non-maintainable - The appeal filed by the assessee is allowed.

Summary

Issues Involved:
1. Eligibility for Excise Duty Exemption under Notification No. 6/2006-CE.
2. Classification of Goods under the Central Excise Tariff Act.
3. Fulfillment of Conditions for Exemption under Customs Notification No. 21/2002-CUS.
4. Determination of Duty Liability and Penalty.

Summary:

1. Eligibility for Excise Duty Exemption under Notification No. 6/2006-CE:
The Appellants, sub-contractors for M/s. BHEL and M/s. L&T, supplied components for Mega Power Projects and claimed exemption from Central Excise Duty under Notification No. 6/2006-CE. They argued that goods supplied against International Competitive Bidding and exempted from customs duty should also be exempt from excise duty. The Tribunal referenced previous cases, including Cords Cable Industries Pvt. Ltd. and Sarita Steels and Industries Ltd., supporting this exemption.

2. Classification of Goods under the Central Excise Tariff Act:
The Appellants contended that the classification under the Customs Tariff Act (Heading 98.01) should be relevant for determining eligibility for exemption, not the classification under the Central Excise Tariff Act. The Tribunal agreed, noting that goods falling under any chapter of the Central Excise Tariff are exempt if supplied against International Competitive Bidding and exempt from customs duty.

3. Fulfillment of Conditions for Exemption under Customs Notification No. 21/2002-CUS:
The Appellants provided certificates from the Joint Secretary, Ministry of Power, certifying the projects as Mega Power Projects, fulfilling the conditions under Notification No. 21/2002-CUS. The Tribunal observed that the goods, if imported, would be eligible for exemption as project imports, reinforcing the Appellants' claim for exemption from excise duty.

4. Determination of Duty Liability and Penalty:
The Tribunal found that the Appellants met the conditions for exemption under Notification No. 6/2006-CE and that the denial of exemption by the Commissioner was not legally sustainable. The duty demand and penalty imposed were set aside, and the appeal filed by the assessee was allowed.

Conclusion:
The Tribunal concluded that the Appellants were entitled to exemption from Central Excise Duty for goods supplied to Mega Power Projects under International Competitive Bidding, as they fulfilled the necessary conditions. The impugned order by the Commissioner was dismissed, and the appeal was allowed.