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2024 (5) TMI 988
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....larify the Sl.No. under which they have availed 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.Rebar....
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....e million. The Mega Power Project was later renamed 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 Po....
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....ition is that the goods should be supplied to a project awarded under the procedure of International 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 s....
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....ified in the Exemption Notification. MS Rebars, if imported as being required for setting up of Mega Thermal Power Project are eligible for exemption from levy 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 ....
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....emption is also available to sub-contractors for manufacture and supply of goods for or on behalf of the main contractor (who has won the bid for the project through ICB) for execution of the 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 ....
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....g on submissions made with regard to the demand being barred by limitation in Para 24.01 of the impugned order. 5.22 The Appellants submit that the findings of the Commissioner are evidently contrary to the documents on record. The Appellants in their letter dated 29.10.2007 addressed to the Jurisdictional Superintendent 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 Head....
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....Nagarjuna Thermal Power Project, Udupi. (ii) The appellant has availed exemption under Condition No.19 of the Notification No.6/2006-CE dated 01.03.2006. As per this condition, the goods shall be exempted from the Customs duty under Customs Tariff Act, 1975 when imported into India. The goods referring to Chapter 98.01, are not eligible 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 exempte....
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....ctorate General of Hydro Carbons (DGHC). In one of the appeals the claim for benefit of exemption under Notification 6/2006 has been rejected on the ground that the supply is not against International Competitive Bidding. In another appeal, the lower appellate authority had denied the benefit on the ground that the appellant has not produced essentiality certificate 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 1-3-20....
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....nal Competitive Bidding so long as the goods are supplied to such contract was awarded to a person who took part in the International Competitive Bidding and it is proved that the goods were in fact supplied to such power project and the equipments were installed at the project site. What we noticed is that neither the benefits under Notification No. 21/2002-Cus. (Sr. No. 400) nor the exemption under Notification 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 cond....
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....ta Steels and Industries Limited Vs Commissioner of Central Excise, Vizag 2011 (264) ELT 313 (Tri-Bangalore) the issue considered was that whether the angles, channels, beams, etc. supplied by the assesse to M/s.Bharat Heavy Electricals Limited, was eligible for exemption under Notification No.6/2006. The goods having been intended to use for the Mega Power Project, the Tribunal held that the goods would be relatable to Chapter 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....
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....nal Competitive Bidding, the condition of the Notification is satisfied and there is no justification for denying the exemption notification to the appellant. The Tribunal, in the case of Automatic Electric Ltd. v. CCE, Mumbai - 2004 (178) E.L.T. 524 (Tri.-Mumbai), has held that the benefit of exemption under Notification 108/95-C.E. is available to a sub-contractor when M/s. BHEL is the main contractor of an approved project. The fact that there was 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" whic....
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....ication No. 12/2012-C.E., dated 17-3-2012 which would be applicable for which the conditions are different and the same have not been satisfied. We are of the view that when exemption is available to the appellant in terms of two Sl. Nos. 91 as well as 91B Notification No. 6/2006-C.E. and 336 as well as 338 of the table to Notification No. 12/2012-C.E. and since the appellant satisfy the conditions of the Notification No. 6/2006-C.E./(Sl. No. 91) and Notification No. 12/2012-C.E. (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 g....
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....nd in para 24 of the order he held that certificates are not in dispute and condition No. 86 stands satisfied. The Commissioner has denied the exemption under Notification No. 6/2006, dated 1-3-2006 on the ground that S. No. 400 of the Notification No. 21/2002, dated 1-3-2006 applies to goods classifiable under Chapter 98.01 of the Customs Tariff and for availing the benefit of Notification 21/2002 for goods of 98.01 requirements of Project Import Regulation, 1986 are to be satisfied and he denied the benefit of Notification to their goods Gate & Gate Parts classifiable under Chapter 73 of the Tariff for non-fulfilment of Project Import Regulation, 1986. 9. We find that goods in question are classifiable under Chapter 73 of the Tariff. Under Central Excise Tariff there is no Heading 98.01 and which exists in Customs Tariff only. Since the goods manufactured in India can not be classified under 98.01 of the Central Excise Tariff, denial of the exemption on the ground of non-fulfilment of condition of Project Import Regulation is not sustainable particularly when condition No. 86 of the Notification No. 21/2002, dated 1-3-2002 is fulfilled by them. Similar submissions were m....