2025 (4) TMI 312 - AT - Central Excise

Sub-contractor wins excise duty exemption under N/N. 6/2006-CE for NTPC power project supplies through main contractor's competitive bidding

M/s Astha Polymer Products Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Haldia

CESTAT Kolkata allowed the appeal, granting excise duty exemption under N/N. 6/2006-CE to a sub-contractor supplying goods for NTPC power project. The ... Goods supplied to NTPC for a power project executed by ABB Limited - Benefit under N/N. 6/2006-CE dated 1.3.2006, denied to appellant, being sub-contractor - requirement of supply against International Competitive Bidding - denial of exemption on the grounds that the appellant did not participate directly in the International Competitive Bidding - HELD THAT:- The appellants have enclosed copy of the order given to them by ABB which clearly shows that these are meant for thermal power projects of NTPC at various places. It is also seen that ABB was awarded the contract based on the International Competitive bidding. Therefore, the supplies are covered by Notification No. 6/2006-CE dated 1.3.2006 for the exemption of Excise Duty for clearances made to such projects. The appellant met all necessary conditions for the exemption, as the goods were supplied for a project awarded through International Competitive Bidding, and the main contractor had complied with the necessary certification requirements. Similar issue was before the Coordinate Bench of CESTAT, Kolkata in the case of BPIL Ltd versus CCE Kolkata III [2024 (11) TMI 986 - CESTAT KOLKATA] where it was held that appellant was entitled to the benefit of the Notification, and the demands made in the impugned order were deemed unsustainable. Conclusion - The sub-contractors can benefit from the exemption if the main contractor fulfills the bidding condition. Appeal allowed. ISSUES PRESENTED and CONSIDEREDThe primary legal issue considered was whether the appellant was entitled to the benefit of the Excise Duty exemption under Notification No. 6/2006-CE dated 1.3.2006 for goods supplied to NTPC for a power project executed by ABB Limited. The core question was whether the conditions for such exemption, particularly the requirement of supply against International Competitive Bidding, were fulfilled.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe case hinged on the interpretation of Notification No. 6/2006-CE, which provides an exemption from Excise Duty for goods supplied against International Competitive Bidding. The relevant condition for this exemption is that the goods must also be exempt from duties under the Customs Tariff Act when imported into India, as outlined in Condition 19 of the notification.The Tribunal referenced a similar case, BPIL Ltd versus CCE Kolkata III, where the exemption was granted under similar circumstances. The precedent established that goods supplied to a mega power project, even by a sub-contractor, could qualify for the exemption if the main contractor had participated in International Competitive Bidding.Court's Interpretation and ReasoningThe Tribunal considered the documentation provided by the appellant, which included an order from ABB Limited indicating that the goods were intended for NTPC's thermal power projects. The Tribunal found that ABB Limited was awarded the contract through International Competitive Bidding, satisfying the exemption condition under Notification No. 6/2006-CE.The Tribunal noted that the adjudicating authority had denied the exemption on the grounds that the appellant did not participate directly in the International Competitive Bidding. However, the Tribunal emphasized that the exemption applies to goods supplied to a project executed by a contractor who participated in such bidding, regardless of whether the supplier was a direct participant.Key Evidence and FindingsThe Tribunal examined the order from ABB Limited and the relevant notifications. It found that the goods supplied by the appellant were indeed meant for a mega power project and were covered by the exemption notification. The Tribunal also considered the precedent set in the BPIL Ltd case, which supported the appellant's position.Application of Law to FactsThe Tribunal applied the legal framework of Notification No. 6/2006-CE and the conditions therein to the facts of the case. It concluded that the appellant met all necessary conditions for the exemption, as the goods were supplied for a project awarded through International Competitive Bidding, and the main contractor had complied with the necessary certification requirements.Treatment of Competing ArgumentsThe Tribunal addressed the arguments presented by the adjudicating authority, which focused on the appellant's lack of direct participation in the bidding process. The Tribunal rejected this argument, stating that the exemption applies as long as the main contractor, ABB Limited, participated in International Competitive Bidding and the goods were supplied for the execution of the project.ConclusionsThe Tribunal concluded that the appellant was entitled to the Excise Duty exemption under Notification No. 6/2006-CE, as all conditions were satisfied. It set aside the demands made in the impugned order.SIGNIFICANT HOLDINGSThe Tribunal held that the appellant was eligible for the benefit of Notification No. 6/2006-CE, as they fulfilled all conditions required to avail the exemption. The Tribunal emphasized that the exemption applies to goods supplied for projects executed by contractors who participated in International Competitive Bidding, regardless of the supplier's direct involvement in the bidding process.Key legal reasoning included the interpretation that the condition of International Competitive Bidding is satisfied if the main contractor is the bidder, and the goods are supplied for the execution of the project. The Tribunal's decision aligns with the precedent set in BPIL Ltd versus CCE Kolkata III, reinforcing the principle that sub-contractors can benefit from the exemption if the main contractor fulfills the bidding condition.The Tribunal allowed the appeal with consequential relief, setting aside the impugned orders and confirming the appellant's entitlement to the exemption.