Exemption- Admissibility to intermediate goods used in the manufacture of Cables supplied under ICB to Mega Power Project

[SHAHID HASHMI]

ISSUE: Notification No.67/95-CE dated 16/03/1995 provides duty exemption captively consumed inputs in the manufacture dutiable final products. Exception to this Notification is that this duty exemption is not applicable, if the final products are exempted from duty payment or attract nil rate of duty. An exception to this exception is when clearance of final products is made to a

1. to a unit in a Free Trade Zone, or
2. to a hundred percent Export Oriented Undertaking or
3. to a unit in an Electronic Hardware Technology Park, or
4. to a unit in a Software Technology Park, or
5. under notification No. 108/95-Central Excise Dated the 28^th August, 1995, or
6. by a manufacturer of dutiable and Exempted final products, after discharging the obligation prescribed in Rule 6 of the Cenvat Credit Rules, 2001'

Thus, when final products are supplied by a manufacturer of dutiable and Exempted final products, after discharging the obligation prescribed in Rule 6 of the Cenvat Credit Rules, 2001 etc. intermediate products continue to be exempted. Now, Rule 6 of the CENVAT Credit Rules, 2001 does not exist and existing have been Notified as Rule 6 of the CENVAT Credit Rules, 2004. The issue is whether the benefit of exemption to the intermediate product is available when final products are supplied to Mega Power Project under ICB after discharging obligation prescribed in Rule 6 (6)(vi) of the Cenvat Credit Rules, 2004.

AI Summary

Clarification on Duty Exemption for Intermediate Goods in Mega Power Projects under Rule 6(6)(vi) of CENVAT Credit Rules. The discussion addresses the applicability of duty exemption on intermediate goods used in manufacturing cables supplied to a Mega Power Project under International Competitive Bidding (ICB). The exemption, as per Notification No. 67/95-CE, is generally not applicable if the final products are duty-exempt or attract a nil rate. However, exceptions exist if the final products are supplied to specific units or under certain conditions. The query seeks clarification on whether this exemption applies under Rule 6 (6)(vi) of the CENVAT Credit Rules, 2004. The response confirms that the exemption is available if the intermediate products are certified as necessary for the project.