2016 (12) TMI 1165 - AT - Central Excise

Appeal success: Exemption granted for goods supplied to Mega Power Plant project.

The appellant-assessee appealed against the denial of exemption under Notification No.6/2006-CE for goods cleared for a Mega Power Plant erection. The ... Denial of benefit of notification - N/N.06/2006-CE read with N/N.21/2002-CUS - denial on the ground that as required in N/N.6/2006-CE, the appellant does not fulfill the related conditions in Notification No.21/2002-CUS being - the power purchasing state has agreed to provide recourse to that state’s share of Central plan allocations and other devolutions towards discharge of any outstanding payment in respect of purchase of power. Held that: - reliance placed on the decision of the case of Jindal Steel & Power Ltd. [2015 (6) TMI 657 - CESTAT NEW DELHI], where it was held that When a particular condition prescribed in Notification No. 21/02-Cus. for full customs duty exemption is not applicable and for this reason, the condition cannot be satisfied, its fulfilment cannot be insisted in accordance with the principle of lex non cogit ad impossiblia which is applicable to the tax matters also - the denial of exemption under Notification No.6/02 -CE and 6/06-CE on the ground that the goods imported would not be eligible for customs duty exemption under Notification No.21/03-Cus. is not correct. It was further held that condition No.29 of N/N.21/2002-CUS applies to importer of goods and not to domestic manufacturer of said goods. Appeal allowed - decided in favor of appellant-assessee. Issues:1. Denial of exemption under Notification No.6/2006-CE for goods cleared for erection of Mega Power Plant.2. Requirement of fulfilling conditions in Notification No.21/2002-CUS for exemption eligibility.3. Certification of conditions for exemption under Notification No.21/2002-CUS.4. Applicability of conditions for independent power projects under Notification No.21/2002-CUS.5. Precedent rulings and their application to the current case.Issue 1:The appellant-assessee appealed against the denial of exemption under Notification No.6/2006-CE for goods cleared for the Mega Power Plant erection. The exemption was denied as the appellant did not fulfill the related conditions in Notification No.21/2002-CUS. The appellant cleared finished excisable goods to M/s Jindal Power Ltd. for their Mega Power Project under Nil rate of duty, as per Notification No.6/2006-CE, which required goods supplied against International Competitive bidding (ICB) for exemption.Issue 2:For exemption under Notification No.6/2006-CE, it was crucial to determine if the goods were exempt under Serial No.400 of Notification No.21/2002-CUS. This notification grants exemption to goods needed for setting up Mega Power projects, such as Inter-State Thermal or Hydel Power Plants of specific capacities, certified by an officer. The appellant's goods were certified for the Mega Power project, but the certification lacked confirmation of all conditions, particularly condition No.(iii) related to the power purchasing state's agreement to provide recourse towards outstanding payments.Issue 3:The appellant faced scrutiny as they did not receive proper certification for condition No.(iii) under Notification No.21/2002-CUS, impacting their eligibility for exemption. The appellant argued that the condition was inapplicable to independent power projects, supported by a clarification from the Joint Secretary, Ministry of Power. Additionally, the condition was deleted post a certain date, as highlighted by the appellant's counsel, citing a precedent ruling in a similar case.Issue 4:The Tribunal considered precedent rulings to determine the applicability of conditions for independent power projects under Notification No.21/2002-CUS. Rulings in cases involving similar circumstances supported the appellant's contention that certain conditions were not applicable to independent power projects, leading to a favorable decision for the appellant based on the principle of 'lex non cogit ad impossibilia'.Issue 5:The Tribunal referred to past judgments to support the appellant's case, emphasizing the importance of fulfilling specific conditions for exemption eligibility under relevant notifications. The rulings highlighted that conditions not applicable to certain projects or importers should not be insisted upon, ensuring a fair and consistent application of exemption provisions. The Tribunal allowed the appeal, setting aside the impugned order and granting consequential benefits to the appellant based on the established legal principles and precedents.