2014 (8) TMI 703 - AT - Central Excise

Mega Power project - Exemption to sub-contractor - Benefit of duty exemption under Notification 6/2006-CE dated 01/03/2006 - Revenue contends that as a sub-contractor, assessee had not been awarded the contract under ICB process and the goods which the appellant supplied did not qualify for Customs duty exemption under Notification 21/2002-Cus dated 01/03/2002 - Held that - Notification 6/2006 nowhere stipulates that the supplier of the goods should participate in the tariff based competitive bidding. The only condition stipulated is that the ultra mega power projects for which the goods are supplied and from which the power procurement had been tied up should be through tariff based competitive bidding and an officer not below the rank of Chief Engineer in Central Electricity Authority certifies that the goods are required for the ultra mega power project and the Chief Executive Officer in the Project gives an undertaking. In the present case, there is no dispute that the Chief Engineer in the Central Electricity Authority has given the required certification and the Chief Executive Officer has given the requisite undertaking. Certificates against which the supplies made, have not been produced before the adjudicating and appellate authorities for their consideration. Benefit of Notification 6/2006 would be available even for a sub-contractor whose name figures in the contract, in respect of the goods to be supplied giving the details of the quantity, description, etc. so long as the contract is awarded under international competitive bidding process and there is no requirement of the sub-contractor participating in the international competitive bidding. Therefore, the benefit of exemption cannot be denied to the appellant in the present case so long as they fulfil the terms and conditions of the exemption Notification - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Appeal against confirmation of duty demands, duty exemption under Notification 6/2006-CE, sub-contractor status, denial of exemption based on bidding process, certificates required for exemption, jurisdictional adjudicating authority's role in verifying certificates.

Analysis:
The appeals challenged Orders-in-Appeal confirming duty demands and penalties against the appellant, a manufacturer of nozzles and fire fighting equipment. The appellant claimed duty exemption under Notification 6/2006-CE for supplying goods to contractors of Ultra Mega Power Projects. The department denied the exemption, alleging the appellant, as a sub-contractor, did not meet the ICB process requirement and goods did not qualify for Customs duty exemption under Notification 21/2002. The appellant contended they fulfilled all conditions for exemption and produced necessary certificates and undertakings. The appellant argued that participating in the bidding process was not a condition for suppliers, as long as the main contractor did. The appellant also cited precedents where sub-contractors were eligible for exemption under similar circumstances.

The appellant's counsel highlighted that the goods supplied for power projects were exempt under Notification 21/2002, certified by the Joint Secretary in the Ministry of Power. The appellant submitted certificates from the Chief Engineer and the Chief Executive Officer of the projects, fulfilling the conditions of the exemption notifications. The appellant emphasized that certificates were crucial for availing exemptions and argued that the appellant's role as a sub-contractor did not disqualify them from exemption benefits.

The Tribunal noted that the certificates supporting the supplies were not presented before the adjudicating and appellate authorities for review. Referring to precedents, the Tribunal clarified that sub-contractors could benefit from exemptions if the main contract was awarded through competitive bidding, irrespective of the sub-contractor's participation in the bidding process. The Tribunal directed the appellant to submit all certificates to the adjudicating authority for verification and a fresh decision on the entitlement to exemption under Notification 6/2006. The appellant was granted a fair hearing in the process.

In conclusion, the appeal was allowed for remand, emphasizing the importance of providing all necessary certificates for verifying exemption eligibility under the relevant notifications. The decision highlighted the significance of fulfilling exemption conditions and the role of the adjudicating authority in reviewing supporting documents for exemption claims.