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2024 (5) TMI 988 - AT - Central ExciseExemption /effective rate for goods falling under Chapter Heading Nos.84 to 98 of of the Central Excise Tariff Act, 1985 under N/N. 6/2006-CE dated 01.03.2006 - Clearance of goods without payment of duty to M/s.Nagarjuna Thermal Power Project, Udipi, Karnataka for setting up of a Mega Power Project - demand on quantity of M.S.Rebars, cleared in excess of the quantity allotted to them by the Project Authority - Extended period of limitation. The department was of the view that the supply of M.S.Rebars is not against the International Competitive Bidding, as the appellant is only a sub-contractor and thus the exemption has been wrongly availed by them. Eligibility for benefit of Notification No.6/2006-CE dated 01.03.2006 for the goods supplied - HELD THAT - Admittedly, the appellant is a sub-contractor who has supplied goods to the main contractor, M/s.Lanco Infratech Ltd, who has participated in the International Competitive Bidding. The issue whether the sub-contractor, who has supplied the goods to the main contractor, who has participated in the International Competitive Bidding is eligible for exemption has been clarified by vide Board Circular dated 10.07.2014. Also, the Tribunal in the case of KENT INTROL PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE 2014 (2) TMI 633 - CESTAT MUMBAI has held that when the supply of goods are made to the main contractor who has participated in the International Competitive Bidding and has been awarded the contract; the sub-contractor is also eligible for exemption under Notification No.6/2006-CE dated 01.03.2006. The Tribunal in the case of M/S TOSHNIWAL INDUS. PVT. LTD. VERSUS CCE, JAIPUR-II 2017 (5) TMI 387 - CESTAT NEW DELHI has taken a similar view, which held that the sub-contractor is also eligible for the Benefit of Notification. Thus, the view taken by the Adjudicating Authority that the goods are not eligible for exemption for the reason that the appellant is only a sub-contractor is not justified. The second ground on which the Benefit of Exemption has been denied is by alleging that the appellant has not satisfied Condition No.19 of the Notification No.6/2006 - HELD THAT - The goods irrespective of their individual classification and rate of duty, if intended for use in execution of a project which is satisfied under CTH 98.01 are eligible for Benefit of Exemption from Customs duties. Thus, goods imported when intended for use in Mega Power Project are eligible for exemption from Customs duties, in terms of Sl.No.400 of Notification No.21/2002-CUS dt. 01.03.2002. The condition prescribed under Sl.No.91 of Notification No.6/2006 thus stands satisfied. In the case of SARITA STEELS INDUSTRIES LTD. VERSUS COMMR. OF C. EX., VISAKHAPATNAM 2010 (7) TMI 568 - CESTAT, BANGALORE the issue considered was that whether the angles, channels, beams, etc. supplied by the assesse to M/s.Bharat Heavy Electricals Limited, was eligible for exemption under Notification No.6/2006. The goods having been intended to use for the Mega Power Project, the Tribunal held that the goods would be relatable to Chapter Heading 98.01 and would be eligible for Benefit of Exemption of under Notification No.21/2002. The Tribunal in the case of M/S GANGES INTERNATIONAL PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR 14 (8) TMI 498 - CESTAT NEW DELHI considered the same issue and held that the case is in the nature of General Fabrication Structures, Auto Welded Beams and Boxes, cleared by appellants for use in the Mega Power Project would be eligible for benefit of notification. From the above, it is clear that the supply of goods required to set up mega power project is covered by Chapter Heading 98.01. The Project Authority Certificate issued to the appellant clearly states that the goods have been supplied for Nagarjuna Thermal Power Project, Udupi. This being the fact, the order passed by the adjudicating authority that M S Rebars do not fall under CH 98.01 is erroneous and not supported by any basis. Thus, the denial of exemption is without any legal or factual basis. The appellant is eligible for exemption under Notification No.6/2006-CE dated 01.03.2006. The Impugned Order is set aside - The appeal is allowed.
Issues Involved:
1. Eligibility for exemption under Notification No. 6/2006-CE dated 01.03.2006. 2. Applicability of International Competitive Bidding (ICB) conditions. 3. Classification of goods under Chapter Heading 98.01 of the Customs Tariff Act. 4. Validity of demand for excess quantity supplied beyond Project Authority Certificate. 5. Limitation and suppression of facts. Summary: 1. Eligibility for exemption under Notification No. 6/2006-CE dated 01.03.2006: The appellant claimed exemption for MS Rebars supplied for a Mega Power Project under Sl.No.91 of Notification No. 6/2006-CE dated 01.03.2006. The Original authority denied the exemption, stating the appellant did not participate in the International Competitive Bidding and the goods did not fall under Chapter heading 98.01 of the Customs Tariff Act. 2. Applicability of International Competitive Bidding (ICB) conditions: The Tribunal clarified that sub-contractors supplying goods to a main contractor who won the ICB contract are eligible for exemption. This was supported by the CBEC Circular dated 10.07.2014 and judgments in cases like Kent Introl Pvt Ltd Vs CCE, Nashik and Toshniwal Indus Pvt Ltd Vs CCE, Jaipur II. 3. Classification of goods under Chapter Heading 98.01 of the Customs Tariff Act: The Tribunal found that goods supplied for setting up a Mega Power Project are covered under Chapter Heading 98.01, facilitating project imports under a common heading with concessional duty rates. The Tribunal referenced cases like Sarita Steels and Industries Limited Vs CCE, Vizag and OM Metals Vs CCE & ST, Jaipur to support this interpretation. 4. Validity of demand for excess quantity supplied beyond Project Authority Certificate: The Tribunal noted that the demand for duty on excess quantity supplied, as recorded in the amended Project Authority Certificate, was beyond the scope of the Show Cause Notice (SCN). The SCN did not allege that excess quantity was ineligible for exemption, and thus, the demand was invalid. 5. Limitation and suppression of facts: The Tribunal found that the appellant had informed the Department about the supply of MS Rebars for the Mega Power Project and had submitted all relevant documents. The Department's audits did not raise any objections until much later, negating allegations of willful misstatement or suppression of facts. Therefore, the extended period for demand was not justified. Conclusion: The Tribunal set aside the impugned order and allowed the appeal, granting the appellant the benefit of exemption under Notification No. 6/2006-CE dated 01.03.2006, with consequential reliefs.
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