Custom, Excise & Service Tax Tribunal
M/S Ganges International Pvt. Ltd vs Cce, Raipur on 24 March, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I DATE OF HEARING/DECISION : 24/03/2014. Excise Stay Application No. 61486 of 2013 with Misc. Application No. 51286 of 14 in Appeal No. 60426 of 2013 [Arising out of the Order-in-Original No. Commissioner/RPR/ C.Ex./76/2013 dated 29/08/2013 passed by The Commissioner, Central Excise & Customs, Raipur.] For Approval and signature : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Ganges International Pvt. Ltd. Appellant Versus CCE, Raipur Respondent
Appearance Shri G. Natrajan, Advocate for the appellant.
Shri Jayant Sahai, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 51797/2014 Dated : 24/03/2014 Per. Rakesh Kumar :-
The facts leading to filing of this appeal, stay application, miscellaneous application are, in brief, as under.
1.1 The appellant are manufacturers of components of Boilers meant for use in power projects. The period of dispute in this appeal is from September 2011 to May 2012. During this period, the appellant supplied various goods, which according to them were boiler components, free of duty under Notification No. 6/2006-CE dated 01/03/06 and its successor Notification No. 12/2012-CE dated 17/03/12 to various contractors executing the power projects, namely, Kawai Thermal Power Projects, Rajasthan; Sagardighi Thermal Power Projects, Murshidabad (WB); Shree Singaji Thermal Power Project, Khandwa (M.P.); and Prayagraj Super Thermal Mega Power Project, Bara, Allahabad (U.P.). In respect of Kawai Thermal Power Projects, Rajasthan, Sagardighi Thermal Power Projects, Murshidabad (WB); and Shree Singaji Thermal Power Projects, Khandwa (M.P.), the supply of goods was against international competitive biding. The goods supplied were Pre-fabricated Structures for Crusher House [Kawai Thermal Power Project], General Fabrication Structures, Auto welded Beams and Boxes [for Sagardighi Thermal Power Project], and Auto welded Beams [for Shree Singaji Thermal Power Project]. During period till 16/03/12, Notification No. 6/2006-CE dated 01/03/06 was in force and. Sl. No. 91 of the table annexed to this Notification exempted all goods supplied against international competitive biding from whole of Central Excise duty subject to the condition that such goods if imported into India, are exempt from Customs duty. Notification No. 21/2002-CUS (Sl. No. 400) exempted the goods required for setting up of any mega power project so certified by an officer not below the rank of Joint Secretary to the Government of India in the Ministry of Power, that the thermal power plant is of capacity of 700 mega watt or more, if located in the State of Jammu & Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland or Tripura or is a thermal power plant capacity of 1,000 mega watt or more, if located in other States and an officer not below the rank of Joint Secretary to the Government of India in the Ministry of Power has given a certificate that the power purchasing States have constituted the regulatory commission to fix tariff and carry out distribution reforms as laid down by the Ministry of Power.
1.2 Sl. No. 91B of the Exemption Notification No. 6/2006-CE fully exempted from Central Excise duty, all the items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipments, power cables used within power generation plant, auxiliary equipment including those required for R&D testing and quality control, as well as all the components, whether finished or not, the raw material required for manufacture of aforesaid items and also their components, supplied to mega power projects from which supply of power has been tied up through tariff based competitive biding or a mega power project awarded to a developer on the basis of such biding. This exemption was subject to the condition No. 28 prescribed in the Notification according to which a certificate as required as per the condition, issued by an officer not below the rank of Chief Engineer in the Central Electricity Authority certifying that goods are required for setting up of the said mega power and also by the Chief Executive Officer of the Project giving an undertaking to the Deputy/Assistant Commissioner of Central Excise that the said goods will be used only in the said project and not for any other use and in the case of not compliance of these conditions the project developer will pay the duty leviable, are produced. Sl. No. 91C of the exemption Notification provided similar exemption in respect of same items required for expansion of an existing mega power project and this exemption was subject to the condition No. 29. In this case, the appellant in respect of the goods supplied to the Kawai Thermal Power Projects, Sagardighi Thermal Power Projects, Shree Singaji Thermal Power Projects, which were supplied against international competitive biding claimed the exemption under Sl. No. 91 of the table to the Notification No. 6/2006-CE and according to them the required certificates have been produced and in respect of goods supplied to Prayagraj Super Thermal Mega Power Project, they have claimed the exemption under Sl. No. 91B of the table to the Notification No. 6/2006-CE as the mega power project had been awarded to the developer on the basis of tariff based competitive biding. The Commissioner by the impugned order-in-original dated 29/08/13 has disallowed the exemption in respect of supplies to all the four projects and has confirmed the duty demand of Rs. 1,33,50,260/- against the appellant alongwith interest and imposed penalty equivalent to 50% of the duty demand confirmed under Section 11AC (b) of the Central Excise Act, 1944. The Commissioner has rejected the appellants claim for exemption under Sl. No. 91 of the table to the Notification No. 6/2006-CE on the ground that since in these projects, the requisite quantum of power has been tied up or the projects has been awarded through tariff based competitive biding, it is Sl. No. 91B which will be applicable and not 91, as for such projects there is no requirement of procurement of equipment against international competitive biding and the appellant do not satisfy the conditions No. 28 prescribed for Sl. No. 91B. He has also observed that the goods supplied against international competitive biding are deemed export in terms of the foreign trade policy and such deemed export are not eligible for Customs duty exemption under Notification No. 21/2002-CUS (Sl. No. 400). With regard to goods supplied to Prayagraj Super Thermal Mega Power Project, the Commissioner while holding that while the conditions prescribed condition No. 28 pertaining to Sl. No. 91B of the table, are satisfied, the goods supplied General Fabrication Structures, Auto welded Beams and Boxes are not the goods covered under the exemption notification, as the same are in the nature of supporting structures and not the parts and components of any item of machinery, instrument, apparatus, appliances, control gear, transaction equipment etc. 1.3 Against this order of the Commissioner, the present appeal has been filed alongwith stay application and miscellaneous application for interim stay.
2. Though this matter today is listed for hearing of the stay application, after hearing this matter for sometime, the Bench was of the view that since only a short issue regarding interpretation of exemption notification involved, the appeal itself can be heard for final disposal. Accordingly, the requirement of pre-deposit is waived and with the consent of both the sides, the matter is heard for final disposal.
3. Shri G. Natrajan, Advocate, the learned Counsel for the appellant, pleaded that during the period till 16/03/2012 Notification No. 6/2006-CE was in force and Sl. No. 91 of the table to this notification provided duty exemption to all the goods supplied against international competitive biding subject to the conditions that the same goods if imported into India are fully exempt from duty, that the goods meant for setting up of certain mega power project are fully exempt from Customs duty under Notification No. 21/2002-CUS (Sl. No. 400) subject to fulfillment of condition regarding production of certificate from the prescribed authority, that the goods have been supplied to Kawai Thermal Power Project, Sagardighi Thermal Power Project and Shree Singaji Thermal Power Project, against international competitive biding and the same if imported into India would be fully exempt from Customs duty under Notification No. 21/2002-CUS (Sl. No. 400), as the certificates required in terms of condition No. 86 of the exemption notification have been produced, that just because during the period of dispute Sl. No. 91B had also been introduced in the table to Notification No. 6/2006-CE, which covered the machinery, instruments, apparatus, appliances, control gear, transmission equipment, power cables etc. supplied to a mega power projects from which the supply of power has been tied up through tariff based competitive biding or a mega power project awarded to a developer on the basis of such biding, the appellants claim for exemption in terms of Sl. No. 91 cannot be denied, that the successor Notification No. 12/2012-CE also provides full duty exemption to the goods supplied against international competitive biding on the same conditions, that Sl. No. 91B is applicable to any goods supplied against international competitive biding without any restriction regarding the description of the goods or Chapter under which they fall, that in view of this, the impugned order denying the duty exemption under Notification No. 6/2006-CE in respect of the goods supplied by the appellant to Kawai Thermal Power Project, Sagardighi Thermal Power Project and Shree Singaji Thermal Power Project, is not correct, that as regards supply of General Fabrication Structures, Auto welded Beams and Boxes to Prayagraj Super Thermal Mega Power Project, since this is a mega power project awarded to a developer through tariff based competitive biding, the exemption had been claimed in terms of Sl. No. 91B of the table to Notification No. 6/2006-CE readwith condition No. 28 and subsequently under Sl. No. 338 of the table to the Notification No. 12/2012-CE readwith condition No. 43, that in respect of these goods, the Commissioner has denied the exemption on the ground that the goods are not covered by the description of the goods, as mentioned against Sl. No. 91B, as the same are not machinery, instrument, appliances, apparatus, control gear, transmission equipment power cable, R&D equipment or the component of the above items, that this finding of the Commissioner is totally incorrect as the goods supplied Auto welded Beams and Boxes and General Fabrication Structures, are meant to be used with boilers and the Commissioners presumption that these items are ordinarily used for shades and supporting structures for capital goods is totally incorrect and that in view of the above, the impugned order is not correct.
4. Shri Jayant Sahai, the learned DR, defended the impugned order by reiterating the findings of the Commissioner. He emphasized that all the goods supplied are the structural items and the same cannot be said to be the components of the machinery and, hence, the same would not be covered by the exemption.
5. We have considered the submissions from both the sides and perused the records.
6. The goods supplied to Kawai Thermal Power Project, Sagardighi Thermal Power Project and Shree Singaji Thermal Power Project are against international competitive biding even though in respect of these projects, the contracts were awarded through tariff based competitive biding. During the period of dispute, Sl. No. 91 of the table to the exemption Notification No. 6/2006-CE readwith condition No. 19 and Sl. No. 336 of the table to the Notification No. 12/2012-CE dated 17/03/12 readwith condition No. 41 of this notification, exempted all the goods supplied against international competition bidding from whole of the duty excise leviable thereon and the condition to which this exemption was available was that the goods if imported into India are fully exempt from Customs duty. There is no dispute that the goods, if imported into India, would be exempt from Customs duty in terms of Sl. No. 400 of the Notification No. 21/2002-CUS readwith condition No. 86, as in terms of this condition, the appellant have produced the required certificates from Joint Secretary to the Government of India. The department, however, is of the view that since in respect of these power projects, the supply of power had been tied up through tariff rate competitive biding or the project has been awarded to a developer on the basis of such biding, it is Sl. No. 91B of the Notification No. 6/2006-CE and Sl. No. 338 of the Notification No. 12/2012-CE dated 17/03/12 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-CE and 336 as well as 338 of the table to Notification No. 12/2012-CE and since the appellant satisfy the conditions of the Notification No. 6/2006-CE/(Sl. No. 91) and Notification No. 12/2012-CE (Sl. No. 336), the exemption in terms of this Sl. No. cannot be denied, as exemption under this Sl. No. is available to any good supplied by a manufacturer in India against international competitive biding. 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-CE and Sl. No. 338 of Notification No. 12/2012-CE. The Commissioner has given finding that the requisite conditions for this exemption are satisfied in as much 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 the project developer have been produced. However, here the objection of the Commissioner is that the goods supplied General Fabrication Structures and Auto welded Beams and Boxes, are not covered by the description of the goods mentioned against Sl. No. 91B of the Notification No. 6/2006-CE and Sl. No. 338 of the Notification No. 12/2012-CE, as the Commissioner is of the view that these goods are generally used for making shades and supporting structures for capital goods. In our view, even if the General Fabrication Structures, Auto welded Beams and Boxes cleared by the appellant are meant to be used as Supporting Structure for some machinery, the same would have to be treated as component parts of that machinery as the description of goods against Sl. No. 91B of Notification No. 6/2006-CE, Sl. No. 338 of Notification No. 12/2012-CE covers all components whether finished or not and raw materials for the manufacture of the items of machinery, prime movers, instruments, apparatus, appliances, control gear, transmission equipments etc. In view of this, the impugned order denying exemption to the goods supplied to Prayagraj Super Thermal Mega Power Project is also not sustainable.
8. In view of the above discussion, the impugned order is not sustainable. The same is set aside. The appeal as well as stay application are allowed. The miscellaneous application also stands disposed of.
(Operative part of the order pronounced in the open court.) (Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) PK ??
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