TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 988
X X X X Extracts X X X X
X X X X Extracts X X X X
....vailed the exemption. The appellant vide letter dated 07.02.2010, informed that they had cleared the goods without payment of duty to M/s.Nagarjuna Thermal Power Project, Udipi, Karnataka for setting up of a Mega Power Project, claiming exemption under Sl.No.91 and 91B of the Notification No.06/2006-CE dated 01.03.2006. 2. The department was of the view that the supply of M.S.Rebars is not against the International Competitive Bidding, as the appellant is only a sub-contractor and thus the exemption has been wrongly availed by them. Further, the notification exempts goods falling under Chapter heading No.98.01 of the First Schedule to the Customs Tariff Act. M.S.Rebars supplied by the appellant do not fall under Chapter heading No.98.01 and therefore are not eligible for exemption. The Show Cause Notice dated 16.11.2012, was issued to the appellant alleging wrongful availment of exemption Notification No.6/2006-CE dated 01.03.2006 and proposing to demand duty, interest and for imposing penalties. 3. After due process of law, the Original authority vide Order dated 20.11.2013, confirmed part of the demand being the quantity of M.S.Rebars, cleared in excess of the quantity allotted....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as M/S Udupi Power Corporation Ltd as per the Fresh Certificate of incorporation consequent to change of name. 5.2 The Appellants claimed exemption from payment of Excise Duty on MS Rebars supplied to the Mega Power Project at Udupi under SI. No. 91 of Notification No. 6/2006-CE dated 01.3.06. 5.3 The Commissioner in the impugned de novo Order has denied exemption for MS Rebars supplied for execution of the Mega Power Project as recorded in Para 22 and 23 of the Impugned order. 5.4 The Commissioner has recorded in Para 22.02 of the impugned order that in order to avail exemption in terms of Sl No 91 of Notification No 6/2006 CE dated 1.3.2006, the manufacturer/supplier of goods should have participated in the International Competitive Bidding and get the contract for supply of goods. In the instant case, M/S Lanco Infratech Ltd have participated in the tendering process of International Competitive Bidding and won the bid for supply of goods to Mega Power Project. JSW Steel Ltd have not participated in the bidding process, but got orders from M/S Lanco Infratech Ltd for supply of MS Rebars to the project to set up Mega Power Plant. Thus, the supply of MS Rebars by JSW Steel Ltd....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nternational Competitive Bidding. There is no condition that each supplier of the goods ought to have participated in the International Competitive Bidding and awarded the contract of supply. Such a condition not stipulated, but considered by the Commissioner in the impugned order, is impossible for performance. The Project Authority Certificate NPCL/HO/PAC/001-A dated 06.09.2007 issued by the Chief Executive Officer, M/S Nagarjuna Power Corporation Limited confirms that the said Mega Power Project was awarded against International Competitive Bidding. The Project Authority Certificate NPCL/HO/PAC/001-A dated 06.09.2007 has also certified that M/S Lanco Infratech Ltd has been awarded a contract for supply of goods of value, quantity and description as mentioned therein under Contract dated 24.12.2006. The PAC contains the names of sub-contractors. JSW Steel Ltd having its Depot at Bangalore (M/S Southern Iron & Steel Company Ltd as it was then known) is required to supply "Fe-500 Grade Reinforcement Steel"/"Fe-415 Grade Reinforcement Steel" of different dimensions. The supply of MS Rebars thus satisfies the conditions prescribed under Notification No 6/2006 CE dated 01.03.2006. 5.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Customs Duties under Sl No 400 of Notification No 21/2002 Cus dated 1.3.2002. Therefore, Condition No 19 of Notification No 6/2006 CE dated 1.3.2006 stands fully satisfied. 5.12 The observation in Para 23 of the order that Notification 21/2002 Cus dated 1.3.2002 exempts goods falling under CTH 98.01 of the First Schedule to the Customs Tariff Act, 1975 and that CTH 98.01 does not include MS Rebars is an improper reading of the Notification. 5.13 It is submitted that CHH 98.01 is for "project import" to facilitate import of the goods under a common Chapter Heading and concessional rate of Customs Duty without considering the classification of individual goods required for the project as specified. Chapter Notes 1 and 2 under Chapter 98 of the Customs Tariff Act, 1975 are as under: Note 1: - This Chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein, even though they may be covered by a more specific heading elsewhere in this Schedule. Note 2: - Heading 9801 is to be taken to apply to all goods which are imported in accordance with the regulations made under Section 157 of the Customs Act, 1962 and expressions used in this heading shal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said project, subject to compliance of conditions specified, if any. 5.18 The Appellants rely on the following judgments on the same issue and similar facts: (i) Kent Introl Pvt Ltd Vs CCE, Nashik 2014 (301) ELT 84 (Tri - Mum) Affirmed by the Hon High Court of Bombay 2016 (331) ELT 77 (Bom) (ii) Toshniwal Indus Pvt Ltd Vs CCE, Jaipur II 2017 (5) GSTL 179 (Tri - Del) (iii) Sarita Steels & Industries Ltd Vs CCE, Vizag 2011 (264) ELT 313 (Tri - Bang) (iv) CST Ltd Vs CCE, Hyderabad I Commissionerate 2007 (217) ELT 513 (T) Department's Appeal dismissed for non-prosecution 2016 (339) ELT A 151 (AP) (v) Crompton Greaves Ltd Vs CCE, Mumbai III 2015 (317) ELT 600 (Tri - Mum) (vi) CST Limited Vs Commissioner of Customs & Central Excise, Hyderabad - 2008 (230) ELT 85(Tri. - Bang.) (vii) Ganges International Pvt Limited Vs CCE, Raipur 2014 (308) ELT 106 (T) (viii) Om Metals Vs CCE & ST, Jaipur 2013 (298) ELT 79 (T) The ratio of the above judgments applies to the facts of the case. 5.19 Goods supplied in excess of the Project Authority Certificate: 5.19.1 The Appellants have submitted the details of the quantity of MS Rebars supplied to M/S Lanco Infratech Ltd, the quantity ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erintendent of Central Excise, Mettur II informed that they have received order from Lanco Infratech Ltd for supply of MS Rebars for Mega Power Project, M/S Nagarjuna Thermal Power Project 2 x 507.5 MW, Udupi and enclosed copies of the documents, as stated in the letter, and sought permission, if necessary, with regard to exemption for the goods to be supplied. There was however, no response from the Department. 5.23 The clearance of MS Rebars under Notification No 6/2006 CE dated 1.3.2006 are recorded in the Invoices, Books of accounts and monthly ER 1 Returns. 5.24 The Internal Audit Party has audited the Books on 3 occasions during the period from February 2008 to November 2010 and Central Excise Revenue Audit on 2 occasions between January 2010 and February 2010. 5.25 The Department vide letter dated 19.11.2010 contended that MS Rebars is not covered under Heading 98.01 of the First Schedule to the Customs Tariff Act, 1975 and directed payment of duty on the goods cleared from October 2009 to December 2009 along with interest. In response, the Appellants submitted letter dated 07.12.2010 explaining their stand and eligibility for exemption under Notification No 6/2006 CE dat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e for exemption as per Notification No.21/2002 Cus dated 01.03.2002. 10. We may now proceed to analyse the allegations and submissions. Admittedly, the appellant is a sub-contractor who has supplied goods to the main contractor, M/s.Lanco Infratech Ltd, who has participated in the International Competitive Bidding. The issue whether the sub-contractor, who has supplied the goods to the main contractor, who has participated in the International Competitive Bidding is eligible for exemption has been clarified by vide Board Circular dated 10.07.2014. The relevant part of the Circular reads as under: All goods falling under any Chapter supplied against International Competitive Bidding (ICB) are fully exempt from excise duty [Sl.No.336 of notification No.12/2012-CE dated 17.03.2012], subject to the condition: "If the goods are exempted from the duties of customs leviable under the First Schedule to Customs Tariff Act 1975 and the additional duty leviable under Section 3 of the said Customs Tariff Act when imported into India". A doubt has been raised whether the excise duty exemption under this notification is available to sub-contractors who supply goods to the main contractor who ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cate from the DGHC. Accordingly, duty demands of Rs. 11,33,279/- and Rs. 9,10,818/- were confirmed along with interest thereon and also imposing equivalent amount of penalties. Aggrieved of the same, the appellant is before us. 3.3 The Consultant also relies upon the decision of this Tribunal in the case of CST Ltd. v. Commissioner of Central Excise, Hyderabad - 2008 (230) E.L.T. 85 wherein also a similar issue came up in respect of supplies made by the appellant therein in respect of a project undertaken by M/s. BHEL to set up a super thermal power plant. In the said decision it was held that the goods supplied by a sub-contractor to main contractor who was executing mega project by International Competitive Bidding would also be eligible for the benefit of exemption under Notification No. 6/2002-C.E., dated 1-3-2002 as amended by Notification No. 48/2004-C.E., dated 10-9-2004. Notification 6/2006 is the successor Notification to the Notification 6/2002 and therefore the ratio of the said decision would apply in respect of Notification 6/2006 also as the wordings of the exemption are identical. It is accordingly prayed that the appeals be allowed. 4. The learned Additional Com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otification No. 6/2006-C.E. (Sr. No. 91) is subject to any conditions stipulated in Foreign Trade Policy. BHEL as the main contractor could have imported the impugned goods without payment of Customs duty in view of Notification No. 21/2002-Cus. (Sr. No. 400). Notification No. 6/2006-C.E. Sr. No. 91 only makes it possible to procure such goods locally without payment of excise duty if BHEL so desires and BHEL opted for local procurement from the assessee-appellants. So, naturally the assessee-appellants should be eligible for exemption under Notification No. 6/2006-C.E. (Sr. No. 91). Prima facie, the deemed export benefits dealt within para 8.6.1 and 8.6.2 deal with incentive granted by DGFT and not exemption granted by Ministry of Finance and there is no reason to refer to those conditions so long as they are not referred to in the Notification claimed. The main point to be noticed is that relief from excise duty is not granted through the mechanism of deemed export but administered through exemption notification issued. We note that Revenue has not made any case that any of the conditions specified in the exemption notification is not fulfilled. It is already decided by the Tribu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pter Heading 98.01 and would be eligible for Benefit of Exemption of under Notification No.21/2002. This being the fact that such angles, channels, beams, etc. would fall under Chapter Heading 72 of Customs Tariff Act, 1985. "10. As has been stated by us earlier, it is undisputed that the mega power project which was sought to be executed by BHEL has complied with the conditions of getting a certificate from an officer not below the rank of Jt. Secretary, Govt, of India in the Ministry of Power. After being awarded a contract for setting up a mega power project, for the execution of the same, BHEL appointed M/s. Jindal Power Ltd. as sub-contractor. M/s. Jindal Power Ltd. in turn had procured angles, beams, channels etc from the appellant for execution of such meca power project. We find that the SSIL has not participated in the international competitive bidding, but had cleared the said goods to M/s. Jindal Power Ltd. for execution of mega power project. This being undisputed fact, we find that the decision of this Bench in the case of CST Ltd. (supra) squarely covers the issue. We may reproduce the said ratio which reads as under: "6. The learned Advocate brought to our notice....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a contract between the main contractor and the sub-contractor will ensure that supplies made eventually reach the project site. The ratio of the above case is clearly applicable to the present case. In these circumstances, we set aside the impugned order and allow the appeals with conseguential relief, if any." It can be seen that in the said case of CST Ltd., an identical issue was raised and again in respect of the very same executor of mega power project i.e. BHEL. We find that the ratio as reproduced hereinabove squarely covers the issue in favour of the assessee. 11. As regards submissions made by ld. SDR, we find that the wordings of the Notification No. 21/2002-Cus. categorically indicates that the "goods" which are required for execution of mega power project are exempted. It is undisputed in the case before us that channels, beams, angles are goods required for execution of mega power project. In view of this, the decision of the Hon'ble Supreme Court cited by the ld. SDR will not carry Revenue's case any further. 12. In view of the foregoing reasons, we hold that the impugned order is not in consonance with law and is unsustainable and is liable to be set aside and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(Sl. No. 338), the exemption in terms of this Sl. No. cannot be denied, as exemption under this Sl. No. is available to any goods supplied by a manufacturer in India against international competitive bidding. Therefore, the impugned order denying the exemption in respect of the three projects, mentioned above, is not sustainable. 7. As regards, the goods supplied to Prayagraj Super Thermal Mega Power Project, there is no dispute that the project is a mega power project awarded to a developer through tariff based competitive bidding and the appellant have claimed exemption in terms of Sl. No. 91B of Notification No. 6/2006-C.E. and Sl. No. 338 of Notification No. 12/2012-C.E. The Commissioner has given finding that the requisite conditions for this exemption are satisfied inasmuch as a certificate by an officer not below in the rank of Chief Engineer certifying that the said goods are meant for setting up of said mega power project and also an undertaking from Chief Executive officer of the project to the Deputy/Assistant Commissioner, that the goods would be used only in the said mega power project and in the event of non-compliance of this exemption, the duty would be payable by....