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TMI Blog2024 (5) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products and are registered with Central Excise department. On perusal of records of the appellants, it was noted by the department that they have cleared excisable goods, namely M.S. Rebars without payment of duty by wrongly availing exemption under Notification no.6/2006-CE dated 01.03.2006. The above notification provides for exemption /effective rate for goods falling under Chapter Heading Nos.84 to 98 of of the Central Excise Tariff Act, 1985. In the invoices, the exact Sl.No. of the Notification under which the exemption availed, was not mentioned. The appellant was asked to clarify the Sl.No. under which they have availed the exemption. The appellant vide letter dated 07.02.2010, informed that they had cleared the goods without payment of duty to M/s.Nagarjuna Thermal Power Project, Udipi, Karnataka for setting up of a Mega Power Project, claiming exemption under Sl.No.91 and 91B of the Notification No.06/2006-CE dated 01.03.2006. 2. 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. Further, the notification exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn as M/S Nagarjuna Thermal Power Project, Udupi. The Joint Secretary to the Government of India, Ministry of Power vide Certificate dated 11.04.2007 certified that Nagarjuna Power Project is being set up by M/S Nagarjuna Power Corporation Ltd and is an Inter-State Thermal Power Plant of Capacity of 1015 MW and that the Power Purchasing States have constituted the Regulatory Commissions with full powers to fix the tariff and that the power purchasing states undertake, in principle, to privatize distribution in all cities in that State which has a population of more than one million. The Mega Power Project was later renamed as M/S Udupi Power Corporation Ltd as per the Fresh Certificate of incorporation consequent to change of name. 5.2 The Appellants claimed exemption from payment of Excise Duty on MS Rebars supplied to the Mega Power Project at Udupi under SI. No. 91 of Notification No. 6/2006-CE dated 01.3.06. 5.3 The Commissioner in the impugned de novo Order has denied exemption for MS Rebars supplied for execution of the Mega Power Project as recorded in Para 22 and 23 of the Impugned order. 5.4 The Commissioner has recorded in Para 22.02 of the impugned order that in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: Sl No Chapter Heading Description of goods Rate Condition 91 Any Chapter All goods supplied against International Competitive Bidding Nil 19 Conditions: Condition No 19 If the goods are exempted from the duties of Customs leviable under the First Schedule to the Customs Tariff Act, 1975 and the additional duty leviable under Section 3 of the said Customs Tariff Act when imported in to India 5.9 The Appellants submit that Sl No 91 exempts all goods supplied against International Competitive Bidding. The condition is that the goods should be supplied to a project awarded under the procedure of International Competitive Bidding. There is no condition that each supplier of the goods ought to have participated in the International Competitive Bidding and awarded the contract of supply. Such a condition not stipulated, but considered by the Commissioner in the impugned order, is impossible for performance. The Project Authority Certificate NPCL/HO/PAC/001-A dated 06.09.2007 issued by the Chief Executive Officer, M/S Nagarjuna Power Corporation Limited confirms that the said Mega Power Project was awarded against International Competitive Bidding. The Project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of such project. 5.11 It is submitted that the conditions prescribed against Sl No 400 are self-contained and applies to all goods. In the present case, the Joint Secretary to the Government of India in the Ministry of Power has issued Certificate dated 11.4.2007 certifying the requirements as specified in the Exemption Notification. MS Rebars, if imported as being required for setting up of Mega Thermal Power Project are eligible for exemption from levy of Customs Duties under Sl No 400 of Notification No 21/2002 Cus dated 1.3.2002. Therefore, Condition No 19 of Notification No 6/2006 CE dated 1.3.2006 stands fully satisfied. 5.12 The observation in Para 23 of the order that Notification 21/2002 Cus dated 1.3.2002 exempts goods falling under CTH 98.01 of the First Schedule to the Customs Tariff Act, 1975 and that CTH 98.01 does not include MS Rebars is an improper reading of the Notification. 5.13 It is submitted that CHH 98.01 is for "project import" to facilitate import of the goods under a common Chapter Heading and concessional rate of Customs Duty without considering the classification of individual goods required for the project as specified. Chapter Notes 1 and 2 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Customs Tariff Act when imported into India". A doubt has been raised whether the excise duty exemption under this notification is available to sub-contractors who supply goods to the main contractor who has won the ICB contract. It is clarified that the said exemption is also available to sub-contractors for manufacture and supply of goods for or on behalf of the main contractor (who has won the bid for the project through ICB) for execution of the said project, subject to compliance of conditions specified, if any. 5.18 The Appellants rely on the following judgments on the same issue and similar facts: (i) Kent Introl Pvt Ltd Vs CCE, Nashik 2014 (301) ELT 84 (Tri - Mum) Affirmed by the Hon High Court of Bombay 2016 (331) ELT 77 (Bom) (ii) Toshniwal Indus Pvt Ltd Vs CCE, Jaipur II 2017 (5) GSTL 179 (Tri - Del) (iii) Sarita Steels & Industries Ltd Vs CCE, Vizag 2011 (264) ELT 313 (Tri - Bang) (iv) CST Ltd Vs CCE, Hyderabad I Commissionerate 2007 (217) ELT 513 (T) Department's Appeal dismissed for non-prosecution 2016 (339) ELT A 151 (AP) (v) Crompton Greaves Ltd Vs CCE, Mumbai III 2015 (317) ELT 600 (Tri - Mum) (vi) CST Limited Vs Commissioner of Customs & Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Lanco Infratech Limited during the period from November 2007 to December 2009. 5.21 The Appellants submit that the Commissioner has recorded finding on submissions made with regard to the demand being barred by limitation in Para 24.01 of the impugned order. 5.22 The Appellants submit that the findings of the Commissioner are evidently contrary to the documents on record. The Appellants in their letter dated 29.10.2007 addressed to the Jurisdictional Superintendent of Central Excise, Mettur II informed that they have received order from Lanco Infratech Ltd for supply of MS Rebars for Mega Power Project, M/S Nagarjuna Thermal Power Project 2 x 507.5 MW, Udupi and enclosed copies of the documents, as stated in the letter, and sought permission, if necessary, with regard to exemption for the goods to be supplied. There was however, no response from the Department. 5.23 The clearance of MS Rebars under Notification No 6/2006 CE dated 1.3.2006 are recorded in the Invoices, Books of accounts and monthly ER 1 Returns. 5.24 The Internal Audit Party has audited the Books on 3 occasions during the period from February 2008 to November 2010 and Central Excise Revenue Audit on 2 occasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have participated in the tendering process of International Competitive Bidding and won the bid for supply of goods to M/s.Nagarjuna Thermal Power Project, Udupi. (ii) The appellant has availed exemption under Condition No.19 of the Notification No.6/2006-CE dated 01.03.2006. As per this condition, the goods shall be exempted from the Customs duty under Customs Tariff Act, 1975 when imported into India. The goods referring to Chapter 98.01, are not eligible for exemption as per Notification No.21/2002 Cus dated 01.03.2002. 10. We may now proceed to analyse the allegations and submissions. 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. The relevant part of the Circular reads as under: All goods falling under any Chapter supplied against International Competitive Bidding (ICB) are fully exempt from excise duty [Sl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication also stipulated that the importer shall produce an essentiality certificate from the Directorate General of Hydro Carbons (DGHC). In one of the appeals the claim for benefit of exemption under Notification 6/2006 has been rejected on the ground that the supply is not against International Competitive Bidding. In another appeal, the lower appellate authority had denied the benefit on the ground that the appellant has not produced essentiality certificate from the DGHC. Accordingly, duty demands of Rs. 11,33,279/- and Rs. 9,10,818/- were confirmed along with interest thereon and also imposing equivalent amount of penalties. Aggrieved of the same, the appellant is before us. 3.3 The Consultant also relies upon the decision of this Tribunal in the case of CST Ltd. v. Commissioner of Central Excise, Hyderabad - 2008 (230) E.L.T. 85 wherein also a similar issue came up in respect of supplies made by the appellant therein in respect of a project undertaken by M/s. BHEL to set up a super thermal power plant. In the said decision it was held that the goods supplied by a sub-contractor to main contractor who was executing mega project by International Competitive Bidding would als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ega power projects should have participated in International Competitive Bidding so long as the goods are supplied to such contract was awarded to a person who took part in the International Competitive Bidding and it is proved that the goods were in fact supplied to such power project and the equipments were installed at the project site. What we noticed is that neither the benefits under Notification No. 21/2002-Cus. (Sr. No. 400) nor the exemption under Notification No. 6/2006-C.E. (Sr. No. 91) is subject to any conditions stipulated in Foreign Trade Policy. BHEL as the main contractor could have imported the impugned goods without payment of Customs duty in view of Notification No. 21/2002-Cus. (Sr. No. 400). Notification No. 6/2006-C.E. Sr. No. 91 only makes it possible to procure such goods locally without payment of excise duty if BHEL so desires and BHEL opted for local procurement from the assessee-appellants. So, naturally the assessee-appellants should be eligible for exemption under Notification No. 6/2006-C.E. (Sr. No. 91). Prima facie, the deemed export benefits dealt within para 8.6.1 and 8.6.2 deal with incentive granted by DGFT and not exemption granted by Ministry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied. 14.2 In the case of Sarita Steels and Industries Limited Vs Commissioner of Central Excise, Vizag 2011 (264) ELT 313 (Tri-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. This being the fact that such angles, channels, beams, etc. would fall under Chapter Heading 72 of Customs Tariff Act, 1985. "10. As has been stated by us earlier, it is undisputed that the mega power project which was sought to be executed by BHEL has complied with the conditions of getting a certificate from an officer not below the rank of Jt. Secretary, Govt, of India in the Ministry of Power. After being awarded a contract for setting up a mega power project, for the execution of the same, BHEL appointed M/s. Jindal Power Ltd. as sub-contractor. M/s. Jindal Power Ltd. in turn had procured angles, beams, channels etc from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernational Competitive Bidding, the condition of the Notification is satisfied and there is no justification for denying the exemption notification to the appellant. The Tribunal, in the case of Automatic Electric Ltd. v. CCE, Mumbai - 2004 (178) E.L.T. 524 (Tri.-Mumbai), has held that the benefit of exemption under Notification 108/95-C.E. is available to a sub-contractor when M/s. BHEL is the main contractor of an approved project. The fact that there was a contract between the main contractor and the sub-contractor will ensure that supplies made eventually reach the project site. The ratio of the above case is clearly applicable to the present case. In these circumstances, we set aside the impugned order and allow the appeals with conseguential relief, if any." It can be seen that in the said case of CST Ltd., an identical issue was raised and again in respect of the very same executor of mega power project i.e. BHEL. We find that the ratio as reproduced hereinabove squarely covers the issue in favour of the assessee. 11. As regards submissions made by ld. SDR, we find that the wordings of the Notification No. 21/2002-Cus. categorically indicates that the "goods" which are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., dated 17-3-2012 which would be applicable for which the conditions are different and the same have not been satisfied. We are of the view that when exemption is available to the appellant in terms of two Sl. Nos. 91 as well as 91B Notification No. 6/2006-C.E. and 336 as well as 338 of the table to Notification No. 12/2012-C.E. and since the appellant satisfy the conditions of the Notification No. 6/2006-C.E./(Sl. No. 91) and Notification No. 12/2012-C.E. (Sl. No. 338), the exemption in terms of this Sl. No. cannot be denied, as exemption under this Sl. No. is available to any goods supplied by a manufacturer in India against international competitive bidding. Therefore, the impugned order denying the exemption in respect of the three projects, mentioned above, is not sustainable. 7. As regards, the goods supplied to Prayagraj Super Thermal Mega Power Project, there is no dispute that the project is a mega power project awarded to a developer through tariff based competitive bidding and the appellant have claimed exemption in terms of Sl. No. 91B of Notification No. 6/2006-C.E. and Sl. No. 338 of Notification No. 12/2012-C.E. The Commissioner has given finding that the requisit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icates are not in dispute and condition No. 86 stands satisfied. The Commissioner has denied the exemption under Notification No. 6/2006, dated 1-3-2006 on the ground that S. No. 400 of the Notification No. 21/2002, dated 1-3-2006 applies to goods classifiable under Chapter 98.01 of the Customs Tariff and for availing the benefit of Notification 21/2002 for goods of 98.01 requirements of Project Import Regulation, 1986 are to be satisfied and he denied the benefit of Notification to their goods Gate & Gate Parts classifiable under Chapter 73 of the Tariff for non-fulfilment of Project Import Regulation, 1986. 9. We find that goods in question are classifiable under Chapter 73 of the Tariff. Under Central Excise Tariff there is no Heading 98.01 and which exists in Customs Tariff only. Since the goods manufactured in India can not be classified under 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. Similar submissions were made by Revenue for denying the benefit of Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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