PROCUREMENT OF MATERIALS WITHOUT ED

[SENTHIL KUMAR]

Dear Sir

I am one of the subcontractor to M/s.BHEL,TRICHY doing fabrication works of Boiler components for various power projects.

Now BHEL insists us to send the finished components to MEGA POWER PROJECT SITE WITH IN INDIA(EX.GADARAWARA, DARLIPAALI, NEYVELI ETC.,) which are excise duty exempted projects.

Now we are despatching the materials to site without ED but procuring raw materials(ex.STEEL) with ED.

01. WHETHER BHEL CAN ISSUE US PAC (PROJECT AUTHORITY CERTIFICATE)

02. IF PAC ISSUED WHETHER WE CAN PROCURE RAW MATERIALS WITH OUT ED.

Kindly clarify us above said points.

Regards

S.SENTHIL KUMAR

[Mahir S]

1) Yes

2) Yes

[SENTHIL KUMAR]

thank you mr. naveed. But could u pl elaborate

Is BHEL competent to give us PAC. BHEL is the equipment supplier to the Mega Power Project. We are one degree lower, we supply to BHEL components which form part of their final product.

Can BHEL give PAC to us, since we are in the value chain?

Secondly, with that PAC, if i produce the PAC, will the supplier of materials supply to me without Excise Duty?

Could you pl elaborate onthe above with some details?

Regards

Senthilkumar

[Mahir S]

Sir,

The purchase orders shall be given by BHEL on an Excise Exempt basis and Project Authority Certificate (PAC) shall also be provided to you with your name as a Supplier to enable you to invoice the client directly without Excise.

Based on the above documents you can procure duty free goods, else it would be appropriate to purchase duty paid goods and subsequently clear the goods without payment of duty. The cenvat credit availed may be utilized for the purpose of clearance of duty paid goods..

Since companies like BHEL are regularly supplying goods under various exemptions including Noti. No. 108/95 CE and also procuring goods from various sub contractors/ vendors since decades, therefore they are well aware of the rules and procedures and they shall guide you in the matter right from purchase order stage to clearance of goods.

AI Summary

Project Authority Certificate enables duty-free procurement and direct invoicing for suppliers to excise-exempt projects. Where a prime contractor issues purchase orders on an excise-exempt basis and provides a Project Authority Certificate naming the subcontractor as supplier, the subcontractor may invoice the project client without charging excise duty and procure inputs duty-free; absent exemption documentation at purchase, inputs may be bought duty-paid and cleared without payment of excise duty using available Cenvat credit.