Captive power plant exemption denied where turbines served manufacturing use and surplus electricity export did not change project character.

Imported turbines installed in a sugar factory for a captive power plant did not qualify for concessional duty under Notification No. 21/2002, because the notification covered goods required for power generation projects and excluded captive power plants set up by entities engaged in non-power activities. The plant's essential character remained that of a captive facility supporting manufacturing operations, and the sale of surplus electricity to the grid did not convert it into a standalone power generation project. Exemption was therefore rightly denied.

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Issues: Whether the imported turbines were eligible for the concessional rate of duty under Notification No. 21/2002 for goods required for a power generation project, when the plant was installed in the assessee's sugar factory and part of the generated power was consumed captively while the surplus was supplied to the grid.

Analysis: The entry in the notification extended the benefit to goods required for power generation projects, while specifically excluding captive power plants set up by projects engaged in activities other than power generation. The plant in question was installed within the sugar factory to meet the factory's power requirements. The fact that surplus electricity was sold to the grid did not alter the essential character of the project. On the record, the plant remained a captive power plant associated with the assessee's manufacturing activity and was not a standalone power generation project.

Conclusion: The imported turbines were not eligible for the concessional benefit under Notification No. 21/2002 and the denial of exemption was correct.

Ratio Decidendi: A captive power plant set up within a manufacturing unit engaged in activities other than power generation does not qualify for exemption meant for power generation projects merely because surplus electricity is exported to the grid.

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