CESTAT allows exemption under Notification 6/2006-CE for goods supplied against International Competitive Bidding for Mega Power Projects

CESTAT Hyderabad allowed the appeal regarding exemption under Notification No. 6/2006-CE for goods supplied against International Competitive Bidding. The revenue denied exemption claiming Project Authority Certificates were not issued by the prescribed authority (Chairman and Managing Director of NTPC) as required under Condition No. 86(b) of Serial No. 400 of Customs Notification No. 21/2002-Cus. The tribunal held that supplies made by appellants through sub-contractor via main contractor BHEL met all stipulated criteria for Mega Power Projects. The exemption was available for domestically procured goods supplied against ICB, without requiring specific certificate signing by PSU Chairman. No duty was leviable on clearances made to these projects, and consequently no penalty was imposable on appellants.

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Issues Involved:
1. Eligibility for exemption under Notification No. 6/2006-CE.
2. Compliance with conditions under Customs Notification No. 21/2002-CUS.
3. Validity of Project Authority Certificates and sub-contractor status.
4. Imposition of duty and penalty.

Summary:

1. Eligibility for exemption under Notification No. 6/2006-CE:
The main issue was whether the Appellants were eligible for exemption under Notification No. 6/2006-CE. The Appellants supplied goods to Simhadri Super Thermal Power Project and NTPC Tamilnadu Energy Company Ltd. through BHEL, who was awarded the contract under International Competitive Bidding (ICB). The Tribunal noted that the projects were granted Mega Power Project (MPP) status by the Ministry of Power and that the Appellants provided the necessary Project Authority Certificates and amendments including their name as sub-contractors. The Tribunal concluded that the exemption should be available irrespective of whether the certificate was signed by the Chairman & Managing Director or an authorized person, as there is no specific prescribed procedure for certification under Notification No. 6/2006.

2. Compliance with conditions under Customs Notification No. 21/2002-CUS:
The Department contended that the Project Authority Certificates were not issued by the prescribed authority as required under Condition No. 86(b) of Serial No. 400 of Customs Notification No. 21/2002-CUS. The Tribunal observed that Notification No. 21/2002-CUS exempts goods imported for setting up MPPs, subject to certification by certain officers. The Tribunal noted that there is no cross-reference between the customs and central excise notifications and that the conditions for imported goods cannot be applied ipso facto to domestic goods.

3. Validity of Project Authority Certificates and sub-contractor status:
The Appellants argued that the conditions of the Customs Notification are not applicable to domestic supplies under the Central Excise Notification unless specifically mentioned. They provided certificates from the General Manager of Simhadri Super Thermal Power Project and the CEO of NTPC Tamilnadu Energy Company Ltd., certifying that BHEL was awarded the contract under ICB. The Tribunal found that the supplies were made against ICB and that the projects were eligible for exemption as MPPs. The Tribunal also noted that sub-contractors are entitled to the same benefits as the main contractor.

4. Imposition of duty and penalty:
The Department issued a Show Cause Notice demanding duty of Rs. 8,88,913/- and proposed a penalty. On adjudication, the demand was confirmed, and an equal penalty was imposed, which was later reduced to Rs. 1,50,000/- by the Commissioner (Appeals). The Tribunal concluded that the Appellants were entitled to the exemption under Notification No. 6/2006 and that no duty was leviable. Consequently, the penalty was also not imposable.

Conclusion:
The appeal was allowed with consequential benefits, as the Appellants met the criteria for exemption under Notification No. 6/2006, and no duty or penalty was leviable on the clearances made to the two projects through BHEL.

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