2007 (6) TMI 162 - AT - Central Excise

Tribunal allows appeals, sets aside order on exemption Notification, considers subcontractor eligibility in Mega Projects.

CST LIMITED & ANR. Versus CC & CE, HYDERABAD-I

CST LIMITED & ANR. Versus CC & CE, HYDERABAD-I - 2008 (85) RLT 298 (CESTAT - Ban.) Issues involved:Interpretation of Notification No. 6/2002-CE and Notification No. 48/2004 - Exemption from payment of duty under International Competitive Bidding - Central Excise duty demand - Penalty imposition under Section 11AC and Rule 26 of Central Excise Rules, 2002.Analysis:The case involved a challenge against an Order-in-Original passed by the Commissioner of Customs & Central Excise, Hyderabad-I Commissionerate, regarding the clearance of Welded Austenitic Stainless Steel Tubes to M/s. BHEL under NIL rate of duty claimed under Notification No. 6/2002-CE. The Revenue contended that the NIL rate of duty was only permissible for supplies made against International Competitive Bidding, which the appellants had not participated in. The Adjudicating Authority confirmed a demand for Central Excise duty, interest, and imposed penalties under various sections. The appellants strongly contested the order, leading them to appeal before the Tribunal for relief.During the hearing, the appellants' advocate highlighted the conditions of the exemption Notification, specifically referring to Notification No. 48/2004. Condition 64 of the Notification exempted goods supplied against International Competitive Bidding. The Tribunal examined whether the goods supplied by the appellants to M/s. BHEL, who were executing a Mega Project through International Bidding, qualified as 'goods supplied against International Competitive Bidding.' The Tribunal noted that the appellants were sub-contractors of M/s. BHEL, who was the main contractor for the project. The Tribunal emphasized that in large projects, main contractors often engage numerous sub-contractors, and the goods supplied by sub-contractors should not be denied exemption merely because they were not the bidders themselves. Citing a relevant case precedent, the Tribunal held that the benefit of exemption is available to sub-contractors when the main contractor is involved in an approved project. Consequently, the Tribunal set aside the impugned order, allowing the appeals with consequential relief.In conclusion, the Tribunal's decision centered on the interpretation of the exemption Notification and the eligibility of goods supplied against International Competitive Bidding. By considering the contractual relationships in Mega Projects and the precedent case law, the Tribunal ruled in favor of the appellants, overturning the demand for Central Excise duty and penalties imposed, thereby providing them with relief.Judgment:The Tribunal, comprising Dr. S.L. Peeran and Shri T.K. Jayaraman, allowed the appeals, setting aside the impugned order and providing consequential relief to the appellants based on the interpretation of the exemption Notification and the involvement of the main contractor in International Competitive Bidding for the Mega Project.