Exemption for power project supplies upheld where cables for initial setting up met project certification and tariff heading requirements.

Electric wires and cables supplied under international competitive bidding for initial setting up of a 1000 MW or more power project were held to fall within the exemption under Notification No. 6/2006-CE. The certification requirement was satisfied by a Project Authority Certificate issued by an authorised NTPC officer, and the objection that the goods were not classifiable under Chapter Heading 9801 was rejected because that heading covers machinery, components and raw materials for initial setting up of specified projects. The denial of central excise duty exemption was therefore unsustainable and the demand was set aside.

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Issues: Whether electric wires and cables supplied under International Competitive Bidding for a mega power project were entitled to exemption under Notification No. 6/2006-CE dated 01.03.2006, and whether the conditions for the exemption stood fulfilled.

Analysis: The goods were supplied for setting up a power project of 1000 MW or more and were covered by the relevant exemption entry. The Project Authority Certificate was issued by an authorised officer of NTPC, satisfying the certification requirement. The objection that the goods were not classifiable under Chapter Heading 9801 was rejected, since Chapter Heading 98.01 covers machinery, components, and raw materials required for initial setting up of specified projects. On that basis, the goods fell within the scope of the exemption notification.

Conclusion: The appellant was entitled to the benefit of Notification No. 6/2006-CE dated 01.03.2006.

Final Conclusion: The denial of central excise duty exemption was unsustainable, and the demand was set aside.

Ratio Decidendi: Goods supplied for initial setting up of a specified power project, supported by an authorised project authority certificate and covered by the relevant tariff heading, qualify for exemption under the notification governing such supplies.

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