Tribunal grants exemption to sub-contractor under Notification No.6/2006-CE for project supplies

The Tribunal allowed the appeal, setting aside the demand for Central Excise duty, interest, and penalty against the appellant. It was held that the sub-contractor was entitled to the exemption under Notification No.6/2006-CE for supplying goods in a project won through international competitive bidding, based on certificates from the main contractor authorizing the supplies. The decision was in line with previous rulings supporting sub-contractors' entitlement to exemption in such scenarios. Mrs. Archana Wadhwa, Member (Judicial) at the Appellate Tribunal CESTAT ALLAHABAD, pronounced the judgment on 24.08.2018.

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Issues:
Claim of exemption under Notification No.6/2006-CE for supply of goods as a sub-contractor against international competitive bidding.

Analysis:
The appellant, engaged in manufacturing galvanized steel tubes and pipes, sought exemption under Notification No.6/2006-CE for supplying goods for a specific project. The appellant's claim was initially rejected by the range Superintendent due to the absence of their name as a sub-contractor in the project awarded to the main contractor. However, the appellant provided a certificate from the main contractor authorizing the supplies, based on which they cleared goods without duty payment. Subsequently, the Revenue initiated proceedings against the appellant for wrongly availing the exemption, resulting in a demand for Central Excise duty, interest, and penalty. The original adjudicating authority confirmed the demand, which was upheld by the Commissioner (Appeals), leading to the present appeal.

Upon reviewing the case, it was found that the goods were directly consigned to the project site under certificates issued by the main contractor, authorizing the appellant's supplies for the project. The key issue revolved around whether the appellants, as sub-contractors, were entitled to the exemption under Notification No.6/2006-CE when the main contractor had won the project through international competitive bidding. The Tribunal referred to previous decisions, such as M/s. Sarita Steels & Industries Ltd. v. CCE, Visakhapatnam and CST Ltd. v. CCE, Hyderabad-I, which supported the entitlement of sub-contractors to the exemption for goods supplied for project execution under international competitive bidding. Additionally, a decision by the Kolkata Bench in Ramsarup Utpadak Unit-II v. CCE, Kolkata-III emphasized that denying the exemption to a sub-contractor supplying goods for the project setup due to non-participation in bidding was incorrect if the goods were supplied to bidders of international competitive bidding, meeting the Notification's conditions.

Based on the precedents and considering the appellant's case, the Tribunal found no merit in the Revenue's argument. Consequently, the impugned order was set aside, and the appeal was allowed, providing consequential relief to the appellant. The judgment was pronounced on 24.08.2018 by Mrs. Archana Wadhwa, Member (Judicial), at the Appellate Tribunal CESTAT ALLAHABAD.

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