TaxTMI 
TaxTMI 
Supreme Court on FTP–PPA interface: Power plant not “goods”
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....upreme Court on FTP–PPA interface: Power plant not “goods”<br>By: - Navjot Singh<br>Customs - Import - Export - SEZ<br>Dated:- 27-8-2025<br>Citation: 2025 (8) TMI 1084 (SC) in the matter of Nabha Power Ltd (NPL) Procedural posture Appeals under section 125 of the Electricity Act against APTEL's common judgment (04 Jul 2017) rejecting claims by Nabha Power Ltd (NPL) and Talwandi Sabo Power Ltd (TSPL) for deemed-export benefits under FTP 2009-14 and "Change in Law" relief under Article 13 of their PPAs with PSPCL. Appeals dismissed. Issues and holdings (issue-wise) Issue Holding 1) Were deemed-export benefits under Para 8.3, FTP 2009-14, available to the appellants as on the bid cut-off date? No. FTP Chapter 8 bene....
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....fits are confined to "supply of goods" manufactured in India under ICB. A coal power station assembled in-situ is an immovable integrated asset, not "goods"; appellants also failed to prove ICB procurement of goods at IPP/EPC stages per Para 8.4.4(iv). 2) Did DGFT public notices/notifications (2011, 2012) and the Cabinet Press Release (01 Oct 2009) constitute "Change in Law" under PPA Article 13? No. Press Release is not law; only Customs Notifications dated 11 Dec 2009 and 14 Dec 2009 qualify as "law." The DGFT instruments were clarificatory; even assuming change, it's academic because appellants were never eligible for FTP benefits. 3) Entitlement to restitution/compensation under Article 13? No. Without eligi....
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....bility for FTP benefits, no restitutionary relief lies; PSPCL owes no compensation. Appeals dismissed. Ratio decidendi (core reasons) A. FTP Chapter 8 is goods-centric; power plants are not "goods" * Chapter 8 benefits apply to supply of goods that "do not leave the country" but are manufactured in India, with ICB as a mandatory procedure for power projects under Paras 8.2(g) and 8.4.4(iv). * A thermal power plant, assembled/erected on site, is an immovable composite asset and fails the marketability test for "goods". Splitting the plant into components to claim benefits defeats the scheme. B. ICB requirement not met * Record showed procurement via related entities/JVs; no proof of ICB at IPP or E....
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....PC stage for the supply of goods. Tariff-based competitive bidding for selecting the developer is not ICB for goods procurement under Para 8.4.4(iv). C. "Change in Law" under PPA Article 13 * Following the 3-Judge decision in Nabha Power 2025 (8) TMI 1084 - SC ORDER (and earlier LB reference), a Press Release (01.10.2009) is not "law"; only duly promulgated and gazetted notifications (11.12.2009, 14.12.2009) qualify. Hence, no "Change in Law" arose from the Press Release. DGFT's later instruments were clarificatory. Contract and policy text applied (concise mapping) Text Court's reading Consequence FTP 2009-14, Para 8.2(g), 8.4.4(iv), 8.6; definitions 9.12 (Capital goods), 9.36 (Manufacture) ....
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....Deemed-export benefits require manufactured goods supplied under ICB; "manufacture" entails a new movable product with distinct name, character, or use. Power plant ? "goods"; no ICB proof; no benefits under Para 8.3. PPA Article 13 (Change in Law) "Law" = enacted/promulgated norms; change must be post cut-off and cause cost impact. Press Release is not law; DGFT clarifications do not trigger Article 13; no tariff adjustment/compensation. Key factual findings * Plant is immovable; appellants' attempt to rely on component-wise treatment rejected. * ICB not demonstrated for procurement of goods; developer selection bidding ? ICB under FTP. * Procurement via subsidiaries/JVs/related parties undermi....
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....ned ICB claim. * Even hypothetically treating DGFT instruments as "Change in Law," claim fails for want of underlying entitlement to FTP benefits. Timeline (material dates) Event Date FTP 2009-14 notified 27 Aug 2009 Bid deadline (PPA cut-off is 7 days prior) 09 Oct 2009 (cut-off 02 Oct 2009) Cabinet decision press release (Mega Power Policy changes) 01 Oct 2009 Customs Notifications (benefits actually brought into force) 11 & 14 Dec 2009 PPA execution 18 Jan 2010 MPP status to NPL 30 Jul 2010 PIC view restricting FTP benefits 15 Mar 2011 Essentiality Certificate issued 13 Jun 2011 DGFT public notices/notifications 27-28 Apr 2011; 28 Dec 2011; 21 Mar 2012 APTEL judgment 04 Jul 2017 Supreme Court judgment (present) ....
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.... 19 Aug 2025 All as summarized from the order. Disposition * Appeals dismissed. * No entitlement to deemed-export benefits under FTP 8.3. * No "Change in Law" under PPA Article 13. * no restitution/compensation payable by PSPCL. Why these matters (practical takeaways) * For power projects, developer selection bidding does not satisfy FTP's ICB requirement for goods procurement. * Press releases and clarificatory notices won't trigger Change in Law clauses absent formal, gazetted legal change. * Attempting to bootstrap FTP benefits by disaggregating an immovable plant into parts is unlikely to succeed. Annexure Article 13 (PPA) -....
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.... exact extract for citation "ARTICLE 13: CHANGE IN LAW" "13.1.1 'Change in Law' means the occurrence of any of the following events after the date, which is seven (7) days prior to the Bid Deadline: (i) the enactment, bringing into effect, adoption, promulgation, amendment, modification or repeal, of any Law or (ii) a change in interpretation of any Law by a Competent Court of law, tribunal or Indian Governmental Instrumentality... or (iii) change in any consents, approvals or licenses... which results in any change in any cost of or revenue... or (iv) any change in the (a) Declared Price of Land... (b)... resettlement and rehabilitation... (c) Environmental Management Plan... (d) Deleted... ." "13.2 App....
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....lication and Principles..." "While determining the consequence of Change in Law... the purpose... is to restore... the affected Party to the same economic position as if such Change in Law has not occurred." "13.3 Notification of Change in Law" - notice obligations on Seller; and 13.4 - tariff adjustment effective from date of legal change or interpretive order. FTP 2009-14 - exact extracts for quick cites 8.2 Categories of Supply (relevant portion) "(g) Supply of goods to power projects and refineries not covered in (f) above; ... Benefits of deemed exports shall be available under paragraphs (d), (e), (f) and (g) only if the supply is made under procedure of ICB."&n....
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....bsp; 8.4.4(iv) - the ICB prerequisite at supply stage "(iv) Supply of Capital goods... to power projects in terms of paragraph 8.2(g), shall be entitled for deemed export benefits provided the ICB procedures have been followed at Independent Power Producer (IPP) / Engineering and Procurement Contract (EPC) stage. ... Supplier shall be eligible for benefits listed in paragraph 8.3(a) and (b)... However, supply of goods required for setting up any mega power projects... shall be eligible... if such mega power project complies with the threshold generation capacity specified therein." <br> Scholarly articles for knowledge sharing by authors, experts, professionals ....