Mega power project exemption upheld where certificate requirements were met and subcontracted supplies supported International Competitive Bidding eligibility.

Exemption under the mega power project notification was available where the prescribed certificate showed that the power-purchasing State had constituted a Regulatory Commission with tariff-fixing powers and had, in principle, undertaken distribution privatisation in cities above one million population; the certificate requirement was therefore met and denial on that ground was unsustainable. Supplies routed through a sub-contractor were also eligible where the goods were ultimately for execution of a project awarded under International Competitive Bidding; routing through the sub-contractor did not defeat the exemption claim. The appellate order sustaining duty demand was set aside and the exemption claim was accepted.

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Issues: (i) Whether the appellant had fulfilled the certificate requirement for availing exemption under the relevant mega power project notification. (ii) Whether supplies made to a sub-contractor could be treated as supplies made against International Competitive Bidding for the purpose of exemption.

Issue (i): Whether the appellant had fulfilled the certificate requirement for availing exemption under the relevant mega power project notification.

Analysis: The notification condition stood substituted by the amended customs notification, which required a certificate showing that the power purchasing State had constituted the Regulatory Commission with full powers to fix tariffs and had undertaken, in principle, to privatize distribution in all cities of that State having population above one million. The record contained the certificate issued by the Joint Secretary, Ministry of Power, certifying these requirements.

Conclusion: The certificate requirement was satisfied, and the denial of exemption on this ground was unsustainable.

Issue (ii): Whether supplies made to a sub-contractor could be treated as supplies made against International Competitive Bidding for the purpose of exemption.

Analysis: The Tribunal applied the settled view that where a sub-contractor supplies goods for execution of a mega power project awarded under International Competitive Bidding, such supply is eligible for the benefit of exemption. The nature of the supply to the main contractor did not defeat the exemption claim.

Conclusion: Supplies to the sub-contractor were eligible for the exemption, and the objection on this ground failed.

Final Conclusion: The denial of exemption was unjustified, the appellate order confirming duty demand was set aside, and the assessee's exemption claim was accepted.

Ratio Decidendi: Where the prescribed certificate is produced and the supply is ultimately for execution of a project awarded under International Competitive Bidding, exemption cannot be denied merely because the goods were routed through a sub-contractor.

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