Inapplicable exemption conditions cannot block benefits for a certified mega power project under linked customs and excise notifications.

An exemption condition that is expressly inapplicable to an independent power project cannot be insisted upon to deny exemption benefits. Where the supply was made for a Ministry of Power-certified mega power project and the certifying authority clarified that the third stipulation in condition No. 86(a)(iii) was not applicable, denial of the customs-linked exemption was unsustainable. The commentary also notes that a condition requiring recourse to State central plan allocations could not be applied on the facts. The resulting legal effect was that the exemption under Notification No. 6/2006-CE read with Notification No. 21/2002-Cus was available, and the related duty demand and interest were set aside.

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Issues: Whether the exemption under Notification No. 6/2006-CE could be denied for goods supplied against international competitive bidding on the ground that condition No. 86(a)(iii) of Notification No. 21/2002-Cus was not certified, and whether the assessee was entitled to the benefit of the customs exemption linked to the mega power project certificate.

Analysis: The supply was made for a mega power project certified by the Ministry of Power, and the certifying authority had clarified that the third stipulation in condition No. 86(a) was not applicable to independent power projects. Once the non-applicability of that condition was established, insistence on its certification was impermissible, since the law does not require performance of an impossible condition. The Tribunal also relied on prior precedent holding that where the relevant condition is inapplicable to the project or to the domestic supplier in the facts of the case, denial of exemption is unsustainable.

Conclusion: The condition under Notification No. 21/2002-Cus relating to recourse to the State's central plan allocations was inapplicable, and the assessee was entitled to the exemption under Notification No. 6/2006-CE read with Notification No. 21/2002-Cus.

Final Conclusion: The duty demand and interest were set aside, and the appeal was allowed with consequential relief.

Ratio Decidendi: A exemption condition that is expressly inapplicable to the project in question cannot be insisted upon as a prerequisite for denying the benefit of an exemption notification, particularly where the project is certified as an independent power project.

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