Custom, Excise & Service Tax Tribunal
H.D. Fire Protect Pvt. Ltd vs Mumbai Iii on 20 June, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NOS: E/1885/2012 & E/89421/2013
[Arising out of Orders-in-Appeal Nos: BC/317/M-III/2012-13 dated 28/09/2012 and SDK/179/M-III/2013-14 dated 26/09/2013 passed by the Commissioner of Central Excise (Appeals), Mumbai III.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri Anil Choudhary, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
H.D. Fire Protect Pvt. Ltd.
Appellant
Vs
Commissioner of Central Excise
Mumbai III
Respondent
Appearance:
Shri Prakash Shah, Advocate for the appellant Shri Rakesh Goyal, Addl. Commissioner (AR) for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of hearing: 20/06/2014 Date of decision: 20/06/2014 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
The appeals are directed against Orders-in-Appeal Nos: BC/317/M-III/2012-13 dated 28/09/2012 and SDK/179/M-III/2013-14 dated 26/09/2013 passed by the Commissioner of Central Excise (Appeals), Mumbai III.
2. Vide the impugned orders the learned lower appellate authority has upheld the confirmation of duty demands amounting to ` 45,28,873/- along with interest thereon and also imposing equivalent amount of penalty. Aggrieved of the same, the appellant is before us. Since the issues involved in both the appeals are the same, they are taken up together for consideration and disposal.
2.1. The appellant M/s. H.D. Fire Protect Pvt. Ltd. are manufacturers of nozzles and fire fighting equipments falling under Chapter 83 and 84 of the Central Excise Tariff. They undertook supply of these goods to various contractors who were awarded contracts for setting up of Ultra Mega Power Projects. The appellant also claimed the benefit of duty exemption under Notification 6/2006-CE dated 01/03/2006 in respect of the goods supplied. The department sought to deny the exemption on the ground that the appellant, as a sub-contractor, had not been awarded the contract under ICB process and the goods which the appellant supplied did not qualify for Customs duty exemption under Notification 21/2002-Cus dated 01/03/2002. Inasmuch as the appellant did not satisfy the above conditions, the benefit of Notification 6/2006 cannot be extended. Accordingly, notices were adjudicated and the duty demands confirmed against the appellant. Aggrieved of the same the appellant is before us.
3. The learned counsel for the appellant submits that as per Notification No. 6/2006-CE exemption is available to goods required for setting up of a Ultra Mega Power Projects with installed capacity of 3960 MW and above, if contracts for such projects has been tied up through tariff based competitive bidding subject to conditions, namely, such goods are exempt from Customs duty when imported into India; an officer not below the rank of a Chief Engineer in the Central Electricity Authority certifies that the said goods are required for setting up of the said ultra mega power project indicating the quantity, description and specifications there of; and the Chief Executive Officer of the project furnishes an undertaking to the jurisdictional Dy. Commissioner or the Assistant Commissioner having jurisdiction over the supplier unit to the effect that the said goods will be used in the said project and in the event of non-compliance, the project developer will pay the differential duty. Notification 21/2002-Cus dated 01/03/2002 also grants exemption to goods required for setting up of a mega power project vide serial No. 400 of the table annexed to the said Notification subject to condition No. 86 and the said condition stipulates that, an officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Power certifies that the power purchasing State has constituted a Regulatory Commission with full powers to fix tariffs and the power purchasing State undertakes, in principle, to privatise distribution in all cities, in that State, each of which has a population of more than one million, within a period to be fixed by the Ministry of Power and the power purchasing State has agreed to provide recourse to that States share of Central Plan allocations and other devolutions towards discharge of any outstanding payment in respect of purchase of power, and in the case of imports made by a private sector project, the quantity, total value, description and specifications of the imported goods are certified by the Chief Executive Officer of such project.
3.1. In the appellants case, they have supplied the goods as sub-contractor to the power projects undertaken by NTPC Ltd., Jindal Power Ltd., Haryana Power Generation Ltd., etc. They have also produced the certificates from the Chief Engineer concerned that the goods supplied are required for the setting up of the power projects and the quantity description and specifications thereof. They have also provided an undertaking from the Chief Executive Officer of the project undertaking to use the goods for the power project and to pay the differential duty, if any, in case the goods are not so used. The only reason for denying the benefit of exemption is that the appellant is only a sub-contractor and has not participated in the International Competitive Bidding or the Tariff Based Competitive Bidding and the goods are not entitled to exemption under Customs Notification 21/2002. It is the contention of the appellant that in an international competitive bidding, the contracts were awarded to the main contractor who participates in the bidding process. However, in the contract awarded, the appellants name figures as a sub-contractor. The Notification does not stipulate that the supplier of the goods should participate in the international competitive bidding procedure. The Notification merely says that the contracts are awarded under international competitive bidding process which has been done in the instant case.
3.2. As regards the contention that similar goods, when imported, are not eligible for customs duty exemption, the learned counsel submits that this contention of the Revenue is incorrect inasmuch as vide serial No. 400 of the table annexed to the Notification 21/2002, the goods supplied for mega power projects are exempt from duty subject to the condition prescribed therein. In the present case, as far as the appellant is concerned the various power projects to which they have supplied the goods have been duly certified by the Joint Secretary in the Ministry of Power as satisfying the conditions stipulated therein and, therefore, the impugned order is not sustainable in law.
3.3. Reliance is also placed on the decision of this Tribunal in the case of Unique Industrial Handlers Pvt. Ltd. vs. Commissioner of Central Excise, Nashik 2014-TIOL-408-CESTAT-MUM; Kent Introl Pvt. Ltd. vs. Commissioner of Central Excise, Nashik 2014-TIOL-211-CESTAT-MUM; Crompton Greaves Ltd. & Others vs. Commissioner of Central Excise 2013-TIOL-1595-CESTAT-MUM; Sarita Steels & Industries Ltd. vs. Commissioner of Central Excise 2011 (264) ELT 313 and Om Metals SPML JV Unit 2 vs. Commissioner of Central Excise 2013 (298) ELT 79. In these decisions, it has been held that, if the contracts are awarded under international competitive bidding procedure and an assessee supplies goods as a sub-contractor and if his name figures in the contract awarded, then the condition that the goods should be supplied against international competitive bidding procedure would be clearly satisfied, even if the sub-contractor has not been a party to the international competitive bidding process. Similarly, if the Joint Secretary in the Ministry of Power certifies that the goods imported for supply of mega projects is eligible for the benefit of exemption, that would suffice for the purpose of availing exemption under Notification 21/2002. In such circumstances, the benefit of Notification 6/2006 cannot be denied to the appellant. Accordingly, he pleads that the impugned order be set aside.
4. The learned Additional Commissioner (AR) appearing for the Revenue, reiterates the findings of the adjudicating authority and appellate authority.
5. We have carefully considered the submissions made by both the sides. Notification 6/2006 nowhere stipulates that the supplier of the goods should participate in the tariff bases competitive bidding. The only condition stipulated is that the ultra mega power projects for which the goods are supplied and from which the power procurement had been tied up should be through tariff based competitive bidding and an officer not below the rank of Chief Engineer in Central Electricity Authority certifies that the goods are required for the ultra mega power project and the Chief Executive Officer in the Project given an undertaking. In the present case, there is no dispute that the Chief Engineer in the Central Electricity Authority has given the required certification and the Chief Executive Officer has given the requisite undertaking.
5.1. The learned counsel for the appellant also showed us the certificates issued by the Joint Secretary in the Ministry of Power wherein it has been certified that the projects to which the goods have been supplied are inter-State thermal power projects and the power purchasing States have constituted regulatory commission with power to fix tariff and these States and Union Territories have undertaken, in principle to privatise the distribution in all the cities in those States. Therefore, the appellant has satisfied the requirement of Notification 6/2006.
5.2. However, we notice that all these certificates against which the supplies made, have not been produced before the adjudicating and appellate authorities for their consideration. In the case law cited supra, this Tribunal has clearly held that benefit of Notification 6/2006 would be available even for a sub-contractor whose name figures in the contract, in respect of the goods to be supplied giving the details of the quantity, description, etc. so long as the contract is awarded under international competitive bidding process and there is no requirement of the sub-contractor participating in the international competitive bidding. Therefore, the benefit of exemption cannot be denied to the appellant in the present case so long as they fulfill the terms and conditions of the exemption Notification.
5.3. Since the certificates specified in the Central Excise Notification and the Customs Notification were not before the authorities, the matter has to go back to the adjudicating authority for fresh consideration. Accordingly, we direct the appellant to furnish all these certificates to the jurisdictional adjudicating authority, who shall cause verification of the certificates furnished by the appellant and thereafter pass an order as to the entitlement to exemption Notification 6/2006. Needless to say, the appellant should be given a fair opportunity of hearing before the denovo order is passed.
6. Thus, the appeal is allowed by way of remand.
(Operative Part Pronounced in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 2