Excise exemption for indigenous project goods cannot be denied for lack of customs Heading 9801 classification.

Central excise exemption under Notification No. 6/2002-CE was held available for indigenous goods supplied to a thermal power project against international competitive bidding. The Tribunal reasoned that the customs project-import classification under Heading 9801 could not be mechanically applied to an Indian manufacturer, because that heading was designed for imported goods and was not a literal precondition for domestic supply. The substantive requirement was supply of goods for the specified project, and that condition was satisfied. On that basis, denial of the exemption was unsustainable and the appellant was entitled to the notification benefit.

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Issues: Whether exemption under Notification No. 6/2002-CE could be denied to indigenous goods supplied for a thermal power project on the ground that such goods did not fall under Customs Tariff Heading 9801 and the project import condition was not literally satisfied.

Analysis: The dispute turned on the linkage between the central excise exemption and the corresponding customs exemption available for goods covered by Heading 9801 for setting up a mega power project. The goods were manufactured in India and supplied against international competitive bidding. The Tribunal followed its earlier decision in the same appellant's case and other coordinate bench decisions, holding that the customs project-import classification requirement could not be mechanically imposed on an Indian manufacturer for claiming the excise exemption. The reasoning treated the exemption as applicable where the substantive condition of supply for the specified project was satisfied, rather than insisting on a literal customs-heading classification which was inapplicable to indigenous goods.

Conclusion: The denial of exemption was unsustainable; the appellant was entitled to the benefit of Notification No. 6/2002-CE.

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