2014 (2) TMI 633 - AT - Central Excise

Exemption of goods vide serial No. 214 of Customs Notification No. 21/2002 dated 01/03/2002 - goods supplied against International Competitive Bidding (ICB) - Lower appellate authority had denied the benefit on the ground that the appellant has not produced essentiality certificate from the DGHC - Imposition of of interest and equivalent amount of penalties - Held that - From the certificate given by the Project Implementing Authority, it is clear that the appellant has made the supply in respect of a contract awarded under International Competitive Bidding and the goods are required in connection with the petroleum operations undertaken under petroleum exploration licence or mining leases and the certificate had been issued by the General Manager (Project), Oil and Natural Gas Corporation. Therefore, it is clear that the goods have been supplied against a contract granted under International Competitive Bidding. From the said certificate is also seen that the appellant s name figures as a sub-contractor and the goods supplied by the appellant is also covered by the said certificate. It is clear from the project authority certificate that the goods are required in petroleum operations undertaken by ONGC. As regards the condition No.29 referred to in Notification No.21/2002, those conditions have been stipulated to be complied by the importers of goods and do not apply to domestic manufacturers. So long as the goods are exempt, the condition to be satisfied by the domestic suppliers is that they should be supplied under International Competitive Bidding which the appellant has fulfilled in these appeals. Therefore, we have to uphold the contention of the appellant and reject the contention of the Revenue - Following decision of CST LTD. Versus COMMISSIONER OF CENTRAL EXCISE, HYDERABAD 2008 (2) TMI 755 - CESTAT, BANGALORE - Decided in favour of assessee.

Summary

Issues:
- Appeal against Orders-in-Appeal No. AKP/NSK/154/2011 & RPS/99/NSK/2012 passed by the Commissioner of Central Excise & Customs, Nasik.
- Claim for exemption under Notifications 6/2006 and 21/2002.
- Rejection of benefit due to non-compliance with conditions.
- Duty demands, interest, and penalties imposed.
- Interpretation of conditions related to International Competitive Bidding and essentiality certificate.

Analysis:
1. Exemption Claim under Notifications 6/2006 and 21/2002:
The appellant, a supplier of Globe Control Valves, claimed exemption under Notification 6/2006 for goods supplied against International Competitive Bidding. The exemption under Notification 21/2002 was also relevant, covering valves required for petroleum operations. The appellant's claim was rejected due to non-compliance with conditions, leading to duty demands and penalties.

2. Compliance with Conditions:
The appellant argued that supplies were indeed made against International Competitive Bidding, supported by a Project Certificate from Oil and Natural Gas Corporation. The appellant's name featured as a sub-contractor, satisfying the condition. Additionally, the valves supplied were covered under Notification 21/2002, exempting such valves. The condition of an essentiality certificate from DGHC was deemed irrelevant for domestic manufacturers.

3. Legal Interpretation and Precedent:
The Tribunal analyzed the conditions stipulated in the notifications, emphasizing that the requirement for an essentiality certificate applied to importers, not domestic manufacturers. The Tribunal referred to a previous decision supporting the appellant's position, where goods supplied under International Competitive Bidding were eligible for exemption.

4. Decision and Ruling:
After considering both parties' arguments, the Tribunal upheld the appellant's contentions. The Project Certificate confirmed compliance with International Competitive Bidding requirements, and the supplied valves were eligible for exemption under Notification 21/2002. The condition related to the essentiality certificate was found inapplicable to domestic manufacturers. Consequently, the impugned orders were set aside, and the appeals were allowed, providing relief as per the law.

This detailed analysis of the legal judgment highlights the key issues, arguments presented by both parties, the Tribunal's interpretation of relevant conditions, and the final decision in favor of the appellant based on compliance with exemption requirements.