Mega power project exemption upheld for gear boxes supplied under international competitive bidding; duty, interest and penalty fell away.

Exemption under Notification No. 06/2006-C.E. was upheld for clearances of gear boxes and parts supplied to certified mega power projects through international competitive bidding. The appellant's contemporaneous project certificates, governmental confirmations and prior intimations to the Department established that the goods were actually received by identified mega power projects and that the notification conditions were satisfied. The objection that the goods were not covered because they were cleared under Heading 8483 rather than Heading 98.01 was rejected as a technical ground that could not defeat the substantive exemption. The duty demand was set aside, and the related interest and penalty also could not survive.

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Issues: Whether the appellant was entitled to exemption under Notification No. 06/2006-C.E. dated 01.03.2006 for clearances of gear boxes and parts thereof supplied to mega power projects, and consequently whether the demand of duty, interest and penalty could be sustained.

Analysis: The appellant produced project authority certificates, certificates from the competent governmental authorities and intimations given to the Department before clearance of the goods. The record showed that the supplies were made to identified mega power projects pursuant to international competitive bidding, including supplies made through contractors and subcontractors. The documents furnished established that the projects were certified as mega power projects and that the goods were actually received by the concerned projects. On that basis, the conditions prescribed in the exemption notification were found to have been satisfied. The objection that the goods did not fall under Heading 98.01 in the notification concerning international competitive bidding was not accepted, as the goods cleared under Heading 8483 were held to be covered by the scope of the relevant exemption scheme.

Conclusion: The appellant was held eligible for the exemption under Notification No. 06/2006-C.E. dated 01.03.2006. The duty demand was set aside, and the consequential levy of interest and penalty also could not survive.

Ratio Decidendi: Where the assessee establishes, through contemporaneous certificates and intimation to the Department, that the clearances were made to certified mega power projects under international competitive bidding, the exemption cannot be denied merely on a technical objection if the substantive conditions of the notification are otherwise met.

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