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2023 (12) TMI 246 - AT - Central ExciseEligibility for exemption under Notification No. 6/2006-CE, dated 01.03.2006 - goods supplied against International Competitive Bidding. Denial of exemption on the ground that Project Authority Certificates were not issued by the prescribed Authority i.e. Chairman and Managing Director of NTPC as required under Condition No. 86(b) of Serial No. 400 of Customs Notification No. 21/2002-Cus dated 01.03.2002. HELD THAT - The supplies made by the Appellants were for the projects, meets all the stipulated criteria specifically awarding of contract under ICB route. Further, there is a provision for supply through sub-contractor also, even though the sub-contractor might not have directly participated in the process of ICB for getting the contract, which was obtained by the main contractor namely BHEL in this case. It is also now clear that both these projects were Mega Power Projects in terms of certificates issued by the Ministry of Power and that these two projects would have been entitled for exemption under Customs Notification No. 21/2002-CU (serial no. 400). The wordings in the certificate issued by the Ministry of Power clearly matches with the wordings at serial no. 400 of this Notification. Therefore, there is no specific requirement for signing of the Certificate by Chairman not of the PSU which is only in relation to the goods imported into India. In the case of goods procured domestically, the exemption is available as long as the supplies have been made against ICB and projects are meeting the criteria. In this case, the supplies have been made by the sub-contractor through contractor to the project duly recognised for entitlement of exemption from the customs duty also, in case they import goods for said project. Thus, there are sufficient documents on record to prove that the Appellants were not required to pay any duty and were clearly entitled for benefit of Notification No. 6/2006. No duty is leviable on clearances made to these two projects through the main contractor M/s BHEL - Since the duty is not leviable, the penalty is also not imposable on the Appellants - Appeal allowed.
Issues Involved:
1. Eligibility for exemption under Notification No. 6/2006-CE. 2. Compliance with conditions under Customs Notification No. 21/2002-CUS. 3. Validity of Project Authority Certificates and sub-contractor status. 4. Imposition of duty and penalty. Summary: 1. Eligibility for exemption under Notification No. 6/2006-CE: The main issue was whether the Appellants were eligible for exemption under Notification No. 6/2006-CE. The Appellants supplied goods to Simhadri Super Thermal Power Project and NTPC Tamilnadu Energy Company Ltd. through BHEL, who was awarded the contract under International Competitive Bidding (ICB). The Tribunal noted that the projects were granted Mega Power Project (MPP) status by the Ministry of Power and that the Appellants provided the necessary Project Authority Certificates and amendments including their name as sub-contractors. The Tribunal concluded that the exemption should be available irrespective of whether the certificate was signed by the Chairman & Managing Director or an authorized person, as there is no specific prescribed procedure for certification under Notification No. 6/2006. 2. Compliance with conditions under Customs Notification No. 21/2002-CUS: The Department contended that the Project Authority Certificates were not issued by the prescribed authority as required under Condition No. 86(b) of Serial No. 400 of Customs Notification No. 21/2002-CUS. The Tribunal observed that Notification No. 21/2002-CUS exempts goods imported for setting up MPPs, subject to certification by certain officers. The Tribunal noted that there is no cross-reference between the customs and central excise notifications and that the conditions for imported goods cannot be applied ipso facto to domestic goods. 3. Validity of Project Authority Certificates and sub-contractor status: The Appellants argued that the conditions of the Customs Notification are not applicable to domestic supplies under the Central Excise Notification unless specifically mentioned. They provided certificates from the General Manager of Simhadri Super Thermal Power Project and the CEO of NTPC Tamilnadu Energy Company Ltd., certifying that BHEL was awarded the contract under ICB. The Tribunal found that the supplies were made against ICB and that the projects were eligible for exemption as MPPs. The Tribunal also noted that sub-contractors are entitled to the same benefits as the main contractor. 4. Imposition of duty and penalty: The Department issued a Show Cause Notice demanding duty of Rs. 8,88,913/- and proposed a penalty. On adjudication, the demand was confirmed, and an equal penalty was imposed, which was later reduced to Rs. 1,50,000/- by the Commissioner (Appeals). The Tribunal concluded that the Appellants were entitled to the exemption under Notification No. 6/2006 and that no duty was leviable. Consequently, the penalty was also not imposable. Conclusion: The appeal was allowed with consequential benefits, as the Appellants met the criteria for exemption under Notification No. 6/2006, and no duty or penalty was leviable on the clearances made to the two projects through BHEL.
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