2025 (12) TMI 91 - AT - Central Excise

Gas-based mega power project held eligible for exemption under N/N. 06/2006-CE read with 21/2002-Cus circular

CESTAT Chennai allowed the assessee's appeal, holding that the gas-based power project qualified as a 'Mega Power Project' for exemption under N/N. ... Eligibility to avail exemption under N/N. 06/2006-CE dated 01.03.2006 read with N/N. 21/2002-Cus. dated 01.03.2002 - Combined Cycle Gas Turbine Mega Power Project for ONGC Tripura Power Company Ltd. - case of Revenue is that the Tripura Power Plant could not be considered as a Mega Thermal Power Plant since the capacity was only 726.6 MW - HELD THAT:- The officer has considered the issue by ignoring the spirit of Notification/circular dated 14.12.2009. It is very unfortunate that without discussing about the circular issued by the Ministry of Power, the First Appellate Authority has only held that ‘the benefit of Notfn. No. 21/2002-Cus cannot be extended for the simple reason that the threshold capacity therein for Thermal Power Plant has been mentioned as 1000 MW or more as certified by an officer not below the rank of Joint Secretary to the Government of India, Ministry of Power’ - It is afraid this observation of the lower Appellate Authority is contrary to his observation just above these lines in the OIA wherein he himself acknowledges the capacity of Tripura Project. When the capacity is clearly satisfied, it is failed to understand the difficulty of the officer in giving proper reasons for not accepting the subsequent Circular, which only drives us to hold that the order has not been passed with an open mind. This is sufficient to hold that the impugned order suffers from serious legal infirmity and hence, the same is required to be set aside. Appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether supplies made to the Combined Cycle Gas Turbine Mega Power Project (726.6 MW) of ONGC Tripura Power Company Ltd. qualify for exemption under Notification No. 06/2006-CE dated 01.03.2006 read with Sl.No. 400 of Notification No. 21/2002-Cus. dated 01.03.2002, in light of the revised Mega Power Project Policy issued by the Ministry of Power on 14.12.2009 and the project capacity certification issued by the competent authority. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Eligibility of exemption for supplies to the 726.6 MW Combined Cycle Gas Turbine Mega Power Project at Tripura Legal framework 2.1 The exemption was claimed under Notification No. 06/2006-CE dated 01.03.2006, read with Sl.No. 400 of Notification No. 21/2002-Cus. dated 01.03.2002, for supplies to a 'Mega Power Project'. The Department denied exemption on the ground that the Tripura project was not a qualifying 'Mega Thermal Power Plant' as its capacity was less than 1000 MW, as mentioned in the customs notification. 2.2 The Court examined the Office Memorandum dated 14.12.2009 issued by the Ministry of Power under No. A-118/2003-IPC, described as the 'Revised mega power project policy'. Clause (i)(b) therein provides that a thermal power plant of capacity of 700 MW or more located in specified States, including Tripura, is eligible for the benefit of the Mega Power Policy. 2.3 The Court also took note of a certificate issued by the Ministry of Power (officer not below the rank of Joint Secretary to the Government of India), certifying the capacity of the Tripura power project as 726 MW. Interpretation and reasoning 2.4 The Court found that the authorities below had proceeded on the sole reasoning that the Tripura plant did not meet the 1000 MW threshold and therefore could not be considered a Mega Thermal Power Plant. This approach was held to be contrary to the 'spirit' and express terms of the revised Mega Power Project Policy dated 14.12.2009. 2.5 On a plain reading of clause (i)(b) of the revised policy, the Court held that a thermal power plant of 700 MW or more located in the State of Tripura is expressly eligible for Mega Power status. Since the Tripura project's capacity was 726 MW, as certified by the Ministry of Power, the threshold requirement stood satisfied. 2.6 The Court observed that the first appellate authority acknowledged the project capacity but still denied the benefit solely by referring to the earlier 1000 MW threshold in Notification No. 21/2002-Cus., without discussing or giving reasons for ignoring the subsequent policy/circular of 14.12.2009. This was held to indicate a failure to consider the revised policy in proper perspective and to demonstrate absence of an 'open mind' in adjudication. 2.7 The Court emphasized that where an assessee relies on a Government circular conferring a benefit, such circular must be understood in the context of the Government's intention to encourage participation in public welfare projects. Once a subsequent circular clarifies the qualifying capacity and a competent authority (Joint Secretary, Ministry of Power) certifies that the power project meets that capacity, 'nothing else remains' for denial of the benefit. 2.8 The Court held that an officer of the rank of Commissioner (Appeals) cannot 'sit in judgement over the character' of such a capacity certificate issued by the competent authority, and cannot disregard or undermine the effect of the revised policy in the face of an undisputed factual certification. Conclusions 2.9 The Court concluded that the Tripura Combined Cycle Gas Turbine project, with an undisputed capacity of 726 MW and located in the State of Tripura, squarely falls within clause (i)(b) of the Revised Mega Power Project Policy dated 14.12.2009 and thereby qualifies for the benefit of the Mega Power Policy. 2.10 Consequently, supplies made by the appellant to the said project are eligible for exemption under Notification No. 06/2006-CE read with Sl.No. 400 of Notification No. 21/2002-Cus. 2.11 The impugned appellate order, having ignored the relevant revised policy and the certification by the Ministry of Power, was held to suffer from serious legal infirmity and was set aside. 2.12 The appeal was allowed with consequential benefits, if any, in accordance with law.