Central excise exemption for ONGC sub-contractors upheld despite absence of Hydrocarbons certificate under customs conditions.

A domestic sub-contractor supplying goods for ONGC petroleum operations was held entitled to central excise exemption under Notification No. 6/06-CE despite not producing the Directorate General of Hydrocarbons certificate linked to the customs exemption conditions. The dispute turned on whether condition No. 29 of Notification No. 21/02-CUS applied to an Indian manufacturer acting as a sub-contractor. The Tribunal followed the earlier view that this certificate requirement does not apply to such sub-contractors, so denial of exemption on that ground was unsustainable. The demand, interest, and penalty were set aside.

---

---

Issues: Whether a domestic sub-contractor supplying goods for ONGC petroleum operations was entitled to central excise exemption under Notification No. 6/06-CE despite non-production of the Directorate General of Hydro Carbons certificate contemplated by the customs exemption condition.

Analysis: The goods were supplied against international competitive bidding for use in ONGC petroleum operations, and the corresponding customs exemption under Notification No. 21/02-CUS applied to the imported goods subject to conditions. The dispute turned only on whether the certificate condition in condition No. 29 of the customs notification had to be satisfied by a domestic sub-contractor. The Tribunal applied the earlier view that this condition is not applicable to sub-contractors who are Indian manufacturers, and therefore denial of the excise exemption on that ground was unsustainable.

Conclusion: The exemption could not be denied to the appellant for want of the Directorate General of Hydro Carbons certificate, and the demand, interest, and penalty were set aside.

---