Domestic supplies to a mega power project may qualify for exemption despite no Project Import Regulations registration.

Goods supplied domestically to a mega power project set up through international competitive bidding were treated as eligible for exemption under Notification No. 6/2006-C.E. The exemption turned on satisfaction of the notification's substantive conditions, including the requirement that the goods would have been exempt from customs duty if imported into India. Absence of registration under the Project Import Regulations, 1986 did not defeat the exemption, because that registration requirement was relevant to imported goods and not to domestically manufactured goods supplied under the notification. On the facts recorded, the exemption claim was sustained and the departmental challenge failed.

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Issues: Whether the respondent was entitled to exemption under Notification No. 6/2006-C.E. dated 01.03.2006 for goods supplied to a mega power project set up through international competitive bidding, and whether absence of registration under the Project Import Regulations, 1986 disentitled the exemption.

Analysis: The documents on record established that the goods were supplied to a mega power project and that the project was under international competitive bidding. The respondent's role as a sub-contractor in the project contract was also evidenced. Under the notification, goods supplied against international competitive bidding were eligible for nil rate of duty subject to the specified condition that the goods would be exempt from customs duties if imported into India. The requirement of registration under the Project Import Regulations, 1986 was held to be relevant for import of goods and not for domestically manufactured goods supplied under the notification. Since the substantive conditions of the exemption were satisfied, no infirmity was found in the adjudicating authority's order dropping the proceedings.

Conclusion: The respondent was entitled to the exemption, and the department's challenge failed.

Final Conclusion: The exemption claim was sustained on the facts found, and the departmental appeal was rejected.

Ratio Decidendi: Where goods are supplied domestically to a mega power project established through international competitive bidding and the notification conditions are otherwise fulfilled, exemption cannot be denied merely for want of registration under the Project Import Regulations, 1986.

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