oInput credit taking against supply of materials to Power project

[Varghese Kurian]

Sir,

We are manufacturer and supplier to BHEL. BHEL has given us PAC to supply of materials to NTPC MEJA Power projects. We have taken Excise credit for Inputs and supplied to BHEL ,NTPC site under nil duty. Excise auditor says only imports are allowed to take credit as per Rule 6(6)vii ,local supply input excise duty cannot be taken credit.Kindly help us to counter the argument

[Himansu Sekhar]

Rule 6 (6) of CCR -The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either -

(vii) all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under sub-section (1) of section 3 of the said Customs Tariff Act when imported into India and are supplied, -

(a) against International Competitive Bidding; or

(b) to a power project from which power supply has been tied up through tariff based competitive bidding; or

(c) to a power project awarded to a developer through tariff based competitive bidding,

in terms of Notification No. 12/2012-Central Excise, dated the 17th March, 2012;

(viii) supplies made for setting up of solar power generation projects or facilities.

Credit on the local supplies also can be taken made to Mega power projects. The Notification has clearly mentioned this. These clearances are treated as deemed export. Please go through the above Rules, Examine the same.

AI Summary

Input credit entitlement where supplies to tariff based power projects are treated as deemed exports, enabling credit on local inputs. Input tax credit is permissible where excisable goods removed without payment of duty are supplied to power projects procured through tariff-based competitive bidding or against international competitive bidding; such clearances are treated as deemed exports and therefore eligible for input credit, extending eligibility to local supplies made to qualifying power projects under the governing notification.