Mega power exemption follows revised policy and ministry certificate for qualifying thermal project supplies

Exemption for supplies to a mega power project was held available where the revised mega power policy extended benefits to a thermal plant in Tripura meeting the prescribed capacity threshold, and the Ministry of Power certificate confirmed a capacity of 726 MW. The Tribunal found that the revenue authorities had ignored the governing Office Memorandum and the competent certificate, and had applied the threshold requirement incorrectly. On that basis, denial of exemption was unsustainable, and the demand and penalty could not be maintained.

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Issues: Whether the assessee was entitled to exemption under Notification No. 06/2006-CE dated 01.03.2006 read with Notification No. 21/2002-Cus. dated 01.03.2002 for supplies made to the Combined Cycle Gas Turbine Mega Power Project of ONGC Tripura Power Company Ltd.

Analysis: The exemption dispute turned on whether the project satisfied the revised mega power policy threshold for a thermal plant located in Tripura. The Tribunal noted that the revised policy in the Office Memorandum dated 14.12.2009 treated a thermal power plant of 700 MW or more in the specified States, including Tripura, as eligible for mega power benefits. The record also contained a certificate from the Ministry of Power showing the project capacity as 726 MW, and that factual position was not disputed. The appellate authority had not given proper effect to the revised policy or the competent certificate and had proceeded on an incorrect understanding of the threshold requirement.

Conclusion: The assessee was eligible for the exemption and the denial of benefit was unsustainable.

Final Conclusion: The impugned demand and penalty could not be sustained, and the appeal succeeded with consequential reliefs as permissible in law.

Ratio Decidendi: Where a revised mega power policy expressly extends exemption eligibility to a thermal project meeting the prescribed regional capacity threshold and the competent Ministry certificate confirms such capacity, the revenue authorities cannot deny the exemption by ignoring the governing policy and certificate.

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