Custom, Excise & Service Tax Tribunal
Keld Ellentoft India Private Limited vs Cce Chennai-I on 27 November, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III
Excise Appeal No. 41845 of 2016
(Arising out of Order-in-Appeal No.137/2016 (CXA-I) dated 30.06.2016
passed by Commissioner of Central Excise (Appeals-I), 26/1, Mahatma
Gandhi Marg, Nungambakkam, Chennai 600 034.)
M/s.Keld Ellentoft India Private Ltd. .... Appellant
Raheja Complex, 1st Floor,
No.68 (Old No.834) Anna Salai,
Chennai 600 002.
VERSUS
The Commissioner of GST &
Central Excise, ... Respondent
Chennai North Commissionerate,
26/1, Mahatma Gandhi Road,
Nungambakkam,
Chennai 600 034.
APPEARANCE :
Ms. Nikita. A, Advocate for the Appellant
Shri N. Satyanarayana, Authorized Representative
for the Respondent
CORAM :
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
FINAL ORDER No.41395/2025
DATE OF HEARING : 20.08.2025
DATE OF DECISION :27.11.2025
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Per: Shri P. Dinesha
Brief and relevant facts are that Appellant is a
manufacturer of Non-metallic Expansion Joints and Industrial
Dampers falling under Chapter 84 of the Central Excise Act,
1985. Apart from clearing their goods on payment of duty,
they also cleared goods for Mega Power Projects without
payment of duty in terms of Notification No.06/2006-CE
dated 01.03.2006. The Department found that during the
period from March 2010 to September 2011, the Appellant
cleared excisable goods to M/s.Bharat Heavy Electricals Ltd.,
Hyderabad/Ranipet, Main Contractor under International
Competitive Bidding (ICB, for short) for Mega Power Projects
without payment of duty availing exemption under the
aforesaid Notification. As per the ICB, the Appellant is the
sub-contractor for the Project viz. Gas Turbine Generator
Package for PPCL, Bawana (1500 MW) (Consignee:
M/s.Pragati Power Corporation Ltd.) and another project
viz. Combined Cycle Gas Turbine Mega Power Project
(726.26 MW) (Consignee: M/s. ONGC Tripura Power
Company Ltd.). In terms of the Certificate from the Project
Authority, supplies to Mega Power Project are exempted
from duty vide the No.06/2006-CE dated 01.03.2006 read
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with Sl.No.400 of Notification No.21/2002-Cus. dated
01.03.2002.
2. A Show Cause Notice dated 10.07.2013 was issued to
the Appellant on the allegation that both the aforesaid
Projects neither a Thermal Power Plant nor a Hydel Power
Plant so as to qualify for the exemption under the
Notifications (supra) and that in terms of Foreign Trade
Policy 2009-14, the sub-contractor has to supply the goods
only to the main contractor and not directly to the
designated projects / agencies. Hence, denying the benefit
of the Notification No.06/2006-CE dt. 01.03.2006, duty of
Rs.10,29,595/- was proposed to be demanded under proviso
to Section 11A of the Central Excise Act, 1944 along with
appropriate interest. Alleging suppression of facts, penalty
provisions were proposed under Section 11AC ibid. After
due process, the Adjudicating Authority vide Order-in-
Original No.11/2015 dated 30.09.2015 dropped the
proceedings in respect of PPCL Bawana (1500 MW) project
and granted exemption, however denied exemption in
respect of the ONGC Tripura (726.6 MW) project. He ordered
recovery of Rs.96,849/- being the duty due but not paid for
the period September 2011 with interest under extended
provisions of Section 11A ibid and imposed equal penalty
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under Section 11AC ibid. Aggrieved by the order of the
Adjudicating Authority, an Appeal was filed by the Appellant
before the First Appellate Authority who vide impugned
Order-in-Appeal No.137/2016 dated 30.06.2016 upheld the
OIO. Hence this Appeal before this forum.
3. Heard Ms. Nikta, Ld. Advocate for the Appellant and
Shri N. Satyanarayana, Ld. Assistant Commissioner for the
Respondent.
4. The short issue that arises for our consideration in this
Appeal is, "whether the Appellant is eligible to avail
exemption Notification No.06/2006-CE dated 01.03.2006
read with Notification No.21/2002-Cus. dated 01.03.2002 in
respect of 'Combined Cycle Gas Turbine Mega Power Project
for ONGC Tripura Power Company Ltd.' ?"
5. The facts as narrated are not disputed by either of the
parties; the only palpable reason given by the authorities
below is that the Tripura Power Plant could not be
considered as a Mega Thermal Power Plant since the
capacity was only 726.6 MW. In this regard, both the
authorities below have failed in ignoring the spirit of
Notification No. 118/2003-IPC dated 14.12.2009 issued by
the Minister of Power, Govt. of India. We have carefully
considered the above Notification which is termed as
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'Revised Mega Power Project Policy'. It is very much clear
from clause (i) (b) that a Thermal Plant of capacity of
700 Mega Watt or more shall be eligible for the benefit of
Mega Power Policy. The same reads as under:
No.A-118/2003-IPC
Government of India
Ministry of Power
Shram Shaki Bhavan, New Delhi
OFFICE MEMORANDUM
Subject : Revised mega power project policy.
****
Policy guidelines for setting up of mega power projects were last revised and issued vide this Ministry's letter of even number dated 2nd August, 2006. The Government of India has modified the Mega Power Policy to smoothen the procedures further. The modified Mega Power Policy is as follows :
(i) The power projects with the following threshold capacity shall be eligible for the benefit of mega power policy;
(a) A thermal power plant of capacity 1000 MW or more or
(b) A thermal power plant of capacity of 700 MW or more located in the States of J&K, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tirupura or
(c) ... .... ..
(d) .... ... ...
(e) ... ... ...
(ii) Mandatory condition of Inter-State sale of power for setting mega power status has been removed.
(iii) Goods required for setting up a mega power project, would qualify for the fiscal benefits after it is certified by an officer not below the rank of a joint Secretary to the 6 Govt.of India in the Ministry of Power that (i) the power purchasing States have constituted the Regulatory Commissions with full powers to fix tariffs and (ii) power purchasing states shall undertake to carry out distribution reforms as laid down by Ministry of Power.
(iv) Mega Power Projects would be required to tie up power supply to the distribution companies/utilities through long term PPA(s) in accordance with the National Electricity Policy 2005 and Tariff Policy 2006, as amended from time to time, of Government of India.
(v) There shall be no further requirement of ICB for procurement of equipment for mega projects if the requisite quantum of power has been tied up or the project has been awarded through tariff based competitive bidding as the requirements of ICB for the purpose of availing deemed export benefits under chapter 8 of the Foreign Trade Policy would be presumed to have been satisfied. In all other cases, ICB for equipments shall be mandatory.
(vi) The present dispensation of 15% price preference available to the domestic bidders in case of cost plus projects of PSUs would continue. However, the price preference will not apply to tariff based competitively bid project/s of PSUs.
This issues with the approval of Secretary (Power).
SD/-
(Puneet K Goel) Director (IPC)"
6. In fact, the Appellant has also placed on record a certificate issued by the Ministry of Power certifying the capacity of the power project in dispute, which clearly indicates the capacity of the project in question is 726 MW which fact also remains undisputed by the authorities below. 7
7. We have carefully considered findings of the Commissioner (Appeals), whose order is impugned here, in this Appeal and a perusal of the same prima facie indicates that the officer has considered the issue by ignoring the spirit of Notification/circular dated 14.12.2009 supra. It is very unfortunate that without discussing about the circular issued by the Ministry of Power (supra), the First Appellate Authority has only held that 'the benefit of Notfn. No. 21/2002-Cus cannot be extended for the simple reason that the threshold capacity therein for Thermal Power Plant has been mentioned as 1000 MW or more as certified by an officer not below the rank of Joint Secretary to the Government of India, Ministry of Power'. We are afraid this observation of the lower Appellate Authority is contrary to his observation just above these lines in the OIA wherein he himself acknowledges the capacity of Tripura Project. When the capacity is clearly satisfied, we fail to understand the difficulty of the officer in giving proper reasons for not accepting the subsequent Circular, which only drives us to hold that the order has not been passed with an open mind. This is sufficient for us hold that the impugned order suffers from serious legal infirmity and hence, the same is required to be set aside, which we hereby do.8
8. We may add here, that when an Assessee relies on a Circular issued by the Government entitling such an Assessee of certain benefits, the same is to understood in the context of the intention of Government of India to encourage an entrepreneur to participate in Government projects aimed at Public Welfare; when a subsequent Circular has clarified the capacity to be eligible for the benefit, and when there is a certificate issued by a Competent Authority viz., Joint Secretary to Government of India as to the capacity of the Power Project, according to us, nothing else remains and the officer of the rank of Commissioner(Appeals) cannot sit in judgement over the character of such certificate.
9. In the result, we allow the Appeal with consequential benefits, if any, as per law.
(Order pronounced in open court on 27.11.2025) sd/- sd/-
(VASA SESHAGIRI RAO) (P. DINESHA) Member (Technical) Member (Judicial) gs