Exemption for power project supplies upheld where specific bidding conditions and component-based coverage were satisfied.

Goods supplied against international competitive bidding remained eligible for exemption where the prescribed certificates were produced, and the existence of a separate mega power project entry did not override that specific exemption. Structural items such as General Fabrication Structures, Auto welded Beams and Boxes were also treated as covered where they functioned as components or raw materials for exempted machinery and equipment, and the relevant undertakings and certificates were in place. The result was that the exemption claims for all disputed supplies were upheld, with the related demand and penalty unable to survive.

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Issues: (i) Whether goods supplied to Kawai Thermal Power Project, Sagardighi Thermal Power Project and Shree Singaji Thermal Power Project were entitled to exemption under the entries for goods supplied against international competitive bidding, despite the Department's view that the entries for mega power projects applied instead; (ii) Whether General Fabrication Structures, Auto welded Beams and Boxes supplied to Prayagraj Super Thermal Mega Power Project were covered as components or raw materials for the exempted machinery and equipment entries.

Issue (i): Whether goods supplied to Kawai Thermal Power Project, Sagardighi Thermal Power Project and Shree Singaji Thermal Power Project were entitled to exemption under the entries for goods supplied against international competitive bidding, despite the Department's view that the entries for mega power projects applied instead.

Analysis: The goods supplied to the three projects were against international competitive bidding and the requisite customs exemption condition was satisfied by production of the prescribed certificates. The availability of another exemption entry for mega power projects did not displace the specific entry covering goods supplied against international competitive bidding. Once the conditions of that entry were met, the exemption could not be denied on the ground that the projects also fell within a different category.

Conclusion: The denial of exemption for the supplies to the three projects was unsustainable and the assessee was entitled to the benefit of the exemption.

Issue (ii): Whether General Fabrication Structures, Auto welded Beams and Boxes supplied to Prayagraj Super Thermal Mega Power Project were covered as components or raw materials for the exempted machinery and equipment entries.

Analysis: The project was a mega power project awarded through tariff based competitive bidding and the prescribed certificates and undertakings for the exemption had been produced. The goods, though structural in form, were meant for use as supporting structures for machinery. The exemption entry was wide enough to include components, whether finished or not, and raw materials for manufacture of the specified machinery and equipment, so the goods could not be excluded merely because of their structural description.

Conclusion: The goods supplied to Prayagraj Super Thermal Mega Power Project were covered by the exemption and the denial was unsustainable.

Final Conclusion: The exemption claims were upheld for all the disputed supplies, the demand and penalty could not survive, and the appeal succeeded in full.

Ratio Decidendi: Where the conditions of a specific exemption entry are satisfied, exemption cannot be denied merely because the goods or project may also fall within another entry, and an exemption covering components and raw materials extends to structural items used as component parts of exempted machinery.

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