Project capacity for power exemption is tested on aggregate unit capacity, not each generating unit separately.

Eligibility for exemption under Notification No. 46/2008 read with Notification No. 6/2006-CE is determined by the installed capacity of the power project as a whole, not by the capacity of each generating unit separately. Where multiple units form one project, their combined capacity is relevant for testing the prescribed threshold for a mega or ultra mega power project. On that basis, a project with aggregate capacity meeting the threshold qualifies for the exemption, even if each individual unit is below the limit.

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Issues: Whether, for eligibility to exemption under Notification No. 46/2008 dated 14-08-2008 read with Notification No. 6/2006-CE dated 01-03-2006, the installed capacity is to be tested with reference to each individual unit or with reference to the total capacity of all units comprising the project.

Analysis: The exemption was claimed for supplies made to a power project consisting of multiple generating units, each of 800 MW, with an aggregate capacity of 4000 MW. The relevant test under the exemption scheme was whether the project satisfied the prescribed capacity threshold for a mega or ultra mega power project. Earlier decisions had already held that the capacity of the project as a whole is , and not the capacity of each individual unit. On that basis, projects made up of multiple units whose combined capacity meets the threshold were treated as eligible for the exemption.

Conclusion: The relevant capacity is the total capacity of the project and not the capacity of each unit. The project satisfied the prescribed threshold, and the exemption was admissible; the finding is in favour of the assessee.

Ratio Decidendi: For exemption linked to the capacity of a power project, eligibility is determined by the combined capacity of all units forming the project, not by the capacity of each unit taken separately.

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