Custom, Excise & Service Tax Tribunal
Visakhapatnam-I vs G M R Kamalanga Energy Limited on 20 June, 2025
(1)
C/30642/2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench - Court No. - I
Customs Appeal No. 30642 of 2017
(Arising out of Order-in-Appeal No. VTZ-CUSTM-000-APP-114-16-17 dt.15.02.2017 passed
by Commissioner of Customs, Central Excise & Service Tax (Appeals), Visakhapatnam)
Commissioner of Central Tax
Visakhapatnam - I ......Appellant
Port Area, Visakhapatnam,
Andhra Pradesh - 530 035
VERSUS
GMR Kamalanga Energy Ltd
PO: Kamalanga, Via: Meramundali,
Dist: Dhenkanal, Orissa - 759 121 ......Respondent
Appearance Shri A. Rangadham, Authorized Representative for the Appellant. Shri A.S. Hasija, Consultant for the Respondent.
Coram: HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) HON'BLE MR. ANGAD PRASAD, MEMBER (JUDICIAL) FINAL ORDER No. A/30209/2025 Date of Hearing: 17.03.2025 Date of Decision: 20.06.2025 [Order per: A.K. JYOTISHI] The Revenue has filed this appeal against the OIA dt.15.02.2017 (impugned order), whereby, the refund sanctioned by the Original Refund Sanctioning Authority amounting to Rs.1,13,47,953/- was upheld. The grounds taken by the Department that the impugned order is not legal and proper are as under:
a) that the Respondent was holding a letter dt.16.03.2009 issued by the Under Secretary to the Government of India in the Ministry of Power which granted 'In-principle Mega Power Project status', whereas, the term 'In-principle' does not find mention in the Customs Notification No. 21/2002-Cus dt.01.03.2002 and that it would not be correct to presume that a Mega Power Project includes one that is so approved 'In-principle'.(2)
C/30642/2017
b) that the learned Commissioner (Appeals) has not appreciated the fact that the Principal Notification No. 21/2002 was amended vide Notification No. 65/2011-Cus dt.21.07.2011 to provide benefit to such Mega Power Projects for which the status is 'provisional', which was not available earlier and since the term 'In-principle' and 'provisional' have specific legal connotation, therefore, Mega Power Projects approved 'In-principle' or 'provisional' cannot be equated with a project that is unconditionally granted the status of Mega Power Project.
c) that the Commissioner (Appeals) has not appreciated the condition of the Notification No. 21/2002 where there is requirement for certification by an Officer not below the rank of a Joint Secretary.
d) that in view of settled law in the case of CC, Bangalore Vs Maestro Motors Ltd [2004 (174) ELT 289 (SC)] and in the case of CCE, New Delhi Vs Hari Chand Shri Gopal [2010 (260) ELT 3 (SC)], a person must comply with all the conditions of the notification and the mandatory requirements of the conditions must be obeyed or fulfilled exactly.
e) that the Provisional Mega Power Project status certification in 2011 was for 3 x 350 MW after de-linking the Power Project of 1 x 350 MW from the original registered project under product import i.e., 4 x 350 MW.
f) that the assessment, though admittedly provisional, was only for the purpose of reconciliation of imports made under Project Import Regulations, 1986.
g) that the Commissioner (Appeals) has not appreciated that 'relevant date' defined in section 28 of the Customs Act, 1962, is for calculation of time limitation for issue of demand of duty after final assessment but not for determination of rate of duty or for determination of eligibility of notification benefits for the imported goods.
2. The issue, in brief, is that M/s GMR Kamalanga Energy Ltd, the respondent, registered their 'purchase contract for import of equipment relating to 4 x 350 MW coal based thermal power project at Angul, Orissa (3) C/30642/2017 with Paradip Custom House under Project Imports Regulations, 1986, and claimed assessment under S.No.399 of Notification No.21/2002-Cus (presently S.No.506 of Notification No.12/2002-Cus). Subsequently, the importers were accorded Provisional Mega Power Project status Certificate for 3 x 350 MW unit on 19.08.2011 and thereafter, the customs house accorded new registration number for imports pertaining to 3 x 350 MW unit of the project and extended benefit of Nil rate of Customs duty for such imports under S.No.400 of Notification No.21/2002, whereas, the imports for 1 x 350 MW unit continued under old registration number. It was noticed that the respondents have cleared certain consignments vide various Bills of Entry (BEs) as per details herein under:-
S.No. BE No./date RA No./date Duty Amount (INR)
1 000681/30.05.2011 61/19.05.2011 9,45,775/-
2 3934498/29.06.2011 09/17.09.2011 18,96,144/-
3 4128856/20.07.2011 80/15.07.2011 9,57,439/-
4 4136834/21.07.2011 79/15.07.2011 56,67,385/-
5 4516630/31.08.2011 87/25.08.2011 18,81,284/-
Total 1,13,47,953/-
3. The respondents filed refund application against these 5 BEs and the same was sanctioned, however, on review, the department preferred appeal against said refund sanctioned before Commissioner (Appeals) primarily on the ground that Mega Power Project status certificate in this case was granted only after clearance of 4 consignments for home consumption though the assessments were provisional and since the respondents had not fulfilled the conditions of notification, therefore, in respect of BEs from S.No.1 to 4 of the above table, which have been filed prior to confirmation of Provisional Mega Power Project status, they are not eligible under S.No.400 of Notification No.21/2002.
4. The Commissioner (Appeals), after hearing the submissions made by the party, inter alia, noted that in this case, the In-principle Mega Power Project status was granted on 16.03.2009, Provisional Mega Power Project status was granted on 19.08.2011 and Final Mega Power Project status was granted on 01.02.2012 and all the BEs were filed provisionally between 30.05.2011 and 31.08.2011 were finalized on 21.01.2014. He also took into account the plant verification report submitted by jurisdictional Central Excise Authority confirming that goods were installed for the said project, (4) C/30642/2017 which fulfilled the requirement of Mega Power Project status certificate as on the date of finalization of the BEs and therefore, at the time of finalization of BEs, which were under provisional assessment, the same is required to be finalized as the project import rate applicable to the goods, which fulfilled the requirement of status of Mega Power Project. He has also relied on the judgment of Hon'ble Supreme Court in the case of CCE Vs MPV Engineering Industries [2003 (153) ELT 485 (SC)], wherein it was opined at Para 11 as under:
"11. ............ No doubt, so far the authorities are concerned they must examine the claim of the respondent to be a small scale industry strictly and in accordance with the rules. However, once it is found that the industry qualifies as a small scale industry, in the matter of grant of exemption a liberal approach is permissible if it does no violence to the language of the notification. In a case of this nature it is only reasonable to take the view that the benefit of exemption will accrue to a unit found to be small scale industrial unit from the date on which the application was made for grant of registration certificate. Such a unit should not be deprived of the benefit to which it is otherwise entitled as a small scale industrial unit merely because the authorities concerned took their own time in disposing of the application. We therefore, agree with the majority view of the Tribunal and hold that the benefit of exemption under the notification in question should be extended to the respondent with effect from the date on which the application for grant of registration was made by it before the competent authority. ........."
5. Similarly in the case of CC Vs Tullow India Operations Ltd [2005 (189) ELT 401 (SC)], wherein it was held as under:
"30.The conditions referred to in Sub-section (1) of Section 25 as regard time when such certificate is to be produced would, thus, mean those which were within the control and power of the importer. If it is not within the power and control of the importer and depends upon the acts of other public functionaries, non-compliance of such condition, subject to just exception cannot be held to be a condition precedent which would disable it from obtaining the benefit therefrom for all times to come.
31.It is no doubt true that the fiscal liability has to be certain. There cannot, however, be any doubt that in a case of this nature ONGC being a government company for all intent and purport was also certain that it would get the requisite exemption, subject of course, to its fulfilling the condition of obtaining such essentiality certificate.
32.There is no universal law, as was suggested by Mr. Ganguly, that fiscal liability cannot be deferred. In a statute where there is a provision for a provisional assessment and/ or provisional clearance, subject to compliance of certain conditions, such conditions may be fulfilled at a later stage, namely, at the stage of final clearance or final assessment."
6. Based on the appreciation of the facts and judgments cited supra, he held that respondents were eligible to get Mega Power Project status and to get eligible for an exemption, procedural requirement of indicating the said (5) C/30642/2017 status/exemption through a document may be dispensed with. Mere procedure of obtaining a certificate cannot vitiate the status of the respondent in any manner and that in this case, it was evident that Ministry of Power had already granted 'In-principle Mega Power Project status' way back in 16.03.2009 to the appellant much before the execution of the impugned imports.
7. Learned AR reiterates the grounds taken by the department in their appeal and further submits that exemption notification must be construed strictly as held in the case of CC (Import), Mumbai Vs Dilip Kumar & Company [2018 (361) ELT 577 (SC)]. He has also relied on the judgment of Coordinate Bench in the case of Airport Authority of India Vs CC, Chennai [2005 (180) ELT 223 (Tri-Del)].
8. On the other hand, by way of rebuttal, learned Counsel for the respondent has submitted that Commissioner (Appeals) has passed a reasonable and legal order and that they were very much entitled for the refund. He also pointed out that while the impugned order has been reviewed by the Chief Commissioner of Customs, who directed the Assistant Commissioner to file this appeal on two grounds indicated in his sanction order at Para 7(i) and (ii), whereas, the Assistant Commissioner has gone beyond the grounds which were sanctioned by the competent authority.
9. Heard both sides and perused the records.
10. The issue which needs to be decided in this case is whether in the facts of the case, the respondents were entitled for the benefit of notification 21/2002-Cus (S.No.400) or otherwise in view of the fact that on the date of clearance of four out of five consignments, they were not in possession of either provisional or final Mega Power Project status. Before we proceed, there are certain admitted facts, which need to be highlighted. There is no dispute as regards classification of the goods under CTH 9801, which covers project imports. In other words, the heading 9801 will cover the goods which are imported, whether in one or more than one consignment, against one or more specific contracts, which have been registered with the appropriate Custom House in the manner specified in regulation 5 of Project Imports Regulations, 1986. The respondents had initially claimed entry at S.No.399 of notification 21/2002. This entry, inter alia, provides for (6) C/30642/2017 concessional rate of duty in respect of power generation projects and there is no condition attached for the same. However, subsequently, while retaining the classification under CTH 9801, the respondents claimed the benefit of S.No.400, which is applicable to goods required for setting up of any Mega Power Project specified in List 42, if such Mega Power Project is an inter-State thermal power plant of a capacity of 1000 MW or more, as certified by an Officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Power and this is also subject to condition that the said officer has to certify, inter alia, that (i) the power purchasing State has constituted the Regulatory Commission with full powers to fix tariffs; (ii) the power purchasing State undertakes, in principle, to privatize 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 (iii) the power purchasing State has agreed to provide recourse to that State's share of Central Plan allocations and other devolutions towards discharge of any outstanding payment in respect of purchase of power. There is no dispute with regard to certificate dt.01.02.2012, whereby, the Joint Secretary to the Government of India in the Ministry of Power has certified that Kamalanga Power Project being set up at Dhenkanal District, Orissa of the respondent is a thermal power plant of capacity of 3 x 350 MW and that the power purchasing States have constituted the Regulatory Commissions with full powers to fix tariff and the power purchasing States shall undertake to carry out distribution reforms as laid down by Ministry of Power.
11. The department is not contesting that post 19.08.2011 or for that matter post 01.02.2012 there is any issue with considering 3 x 350 MW as Mega Power Project. We find that the respondent had received 'In-principle' Mega Power Project status for 1050 MW Power Plant at Dhenkanal District, Orissa on 16.03.2009 itself, wherein, inter alia, it was indicated that the final clearance will be considered subject to fulfillment of all the conditions laid down in the Mega Power Policy and after fulfilling of tariff based bidding Power Purchase Agreements (PPAs) for the entire power before the appropriate Regulatory Commission. Subsequently, a provisional certificate was also issued to the respondents vide certificate dated 19.08.2011. Thereafter, certificate dated 01.02.2012 was also issued by Joint Secretary, Ministry of Power, certifying, inter alia, that respondents are setting up (7) C/30642/2017 Kamalanga Thermal Power Project at Dhenkanal of 3x350 MW capacity and that relevant PPAs have been signed and also U/T have been received from relevant State Governments.
12. We have gone through the certificate dt.01.02.2012 where the basis for granting the said certificate is various PPAs, which the respondents had entered with Grid Corporation of Orissa Ltd, signed on 28.09.2006, with PTC India Ltd, signed on 21.06.2007, with Uttar Haryana Bijli Vitran Nigam Ltd and Dakshin Kamalanga Energy Ltd with Bihar State Electricity Board, signed on 09.11.2011. The said certificate was also based on undertaking from the Government of Orissa vide letter dt.13.04.2010, Government of Haryana vide letter dt.26.04.2010 and Government of Bihar vide letter dt.28.07.2010 that they would carry out the distribution reform measures in accordance with Government of India's letter dt.03.12.2009. Therefore, we find that while the In-principle status and provisional status for the said project as Mega Power Project of 1050 MW Kamalanga Thermal Power Project in Dhenkanal district was already given, subject to certain conditions which were required to be fulfilled in due course and therefore, a certificate dated 01.02.2012 was issued subsequent to various compliance in due course in respect of ongoing project. Therefore, the question is whether this certificate will have prospective effect or it will have retrospective effect especially in the fact that the project remains of the same capacity of 3 x 350 MW and at the same location for which In-principle and provisional status were already accorded by Ministry of Power and subsequently, various procedural requirements were also complied with much before the actual date of import of impugned goods, except for PPA with Bihar State Electricity Board on 09.11.2011. Therefore, despite having these compliances already in place, much before the date of import, if there was delay in issuing the so called 'Final Mega Power Project status certificate' by Joint Secretary, Ministry of Power, it does not take away the fact that this certificate was in continuation of their earlier In-principle status as well as Provisional status granted for setting up power project of 1050 MW (3x350 MW). While the fact remains that in the amendment notification, certain procedural relaxation has been extended even for the provisional status and even when some of the conditions were not fulfilled, the same is being denied for period in which In-principle status was accorded by the Ministry of Power. We find that once all the relevant conditions were satisfied, all (8) C/30642/2017 earlier certification, irrespective of whether given 'In-principle' or 'Provisional' stands subsumed and finalized in the Mega Power Project status certificate issued by Ministry of Power, which incidentally has not been referred as final certificate and the status of project has to be considered as 'Mega Power Project'.
13. Therefore, we find that the certificate dt.01.02.2012 is in substantive compliance with the conditions attached for availing benefit under S.No.400 of Notification 21/2002 and said certification granting the status of Mega Power to the project of 3x350 MW at Dhenkanal is in continuation of 'In- principle' and 'Provisional' grant of Mega Power Project status. The said project was an ongoing project and it is not disputed that it was accorded status of Mega Power as per Mega Power Plant Policy of Ministry of Power. Further, it is not in dispute that the provisional assessment has been not resorted to and even though the department is claiming that it has been resorted to for the purpose of project import and value and not for the rate of duty, there is nothing in the Project Import Regulations, 1986 that the assessment has to be kept provisional only for the purpose of value. The authority to keep an assessment provisional is with the assessing officer in terms of section 18 of the Customs Act for any reason based on which he cannot finalize the assessment. Therefore, once at the time of finalization, if benefit under notification is claimed, which is more apt or suitable to the respondent, even within the overall scope of project import, he is entitled to avail the same and accordingly, once they claimed the benefit of S.No.400, instead of S.No.399 of the Notification 21/2002, which was claimed initially, we find there was no infirmity in the same.
14. The core of department's arguments is that on the date of importation, the so called final status certificate was not there and therefore, even on finalization of such BEs, admittedly, imported as project import, benefit of said notification cannot be extended. We note that the rate of duty is to be determined in terms of section 15 of the Customs Act, which provides, inter alia, for the rate as the one which is in force on the date BEs were filed. However, section 18, which governs provisional assessment, is having overriding provisions over other provisions, except for section 46 of the Customs Act and it provides that assessment of such BEs can be kept provisional and subsequently finalized. It is not in dispute that (9) C/30642/2017 assessment was provisional in terms of section 18 as there is no other provision where assessment can be kept provisional. Thus, on finalization, the earlier assessed duty could be changed, if required, in view of change in classification, availability of conditional/unconditional notification, finalization of contract value, etc. As discussed in foregoing paras, the respondent had registered their project import again on receipt of provisional status and department has no objection to extend the benefit on the strength of some post-amended registration under project import. However, on the date of finalization, while the value is not in dispute in relation to 3x350 MW project, the benefit of notification is being denied as it was not in force on the date of import. We find that the rate of duty has to be read with notification, if any, at the time of finalization of provisional assessment and since there is no change in duty at the time of provisional assessment and only benefit of notification has been extended in the given factual matrix, the provisions of section 15 would not be relevant.
15. Further, we do not find force in the counter by the respondents that the grounds of appeal has gone much beyond the grounds of appeal approved by the competent authority, who has the power to review the order of Commissioner (Appeals) and therefore, we are not taking up some of the grounds, other than what have been specifically permitted by the competent authority for review. It is also not in dispute that one unit of 350 MW capacity was neither claimed nor considered for benefit at S.No.400 or for that matter the goods imported were meant for any other project. Further, entire imports covered under impugned 5 BEs are under project import classifiable under CTH 9801.
16. We also note that the assessing officer has not found any irregularity regarding the total capacity (1050 MW) or location, which was in the In- principle status and subsequent provisional or final status. Thus, he has extended the benefit to the project, which had Mega Power Project status. The Commissioner (Appeals) has also upheld this view after going through the factual matrix, as also certain case laws. Therefore, we do not find any infirmity in this order.
17. As far as reliance placed by the learned AR on the judgment of CC (Import), Mumbai Vs Dilip Kumar & Company (supra), we find that there is (10) C/30642/2017 no grey area in the interpretation of this notification inasmuch as the substantive requirement of having a certificate certifying it as Mega Power Project is already complied with and is not being disputed except for the fact that there was no such status prior to final certificate/provisional certificate. Since we have already discussed this issue that the status given on 01.02.2012 is in continuum of earlier certificates and therefore, that status certificate is applicable to the entire project and therefore, this case law is not relevant in the factual matrix of this appeal. As regards amendment notification giving benefit to projects having provisional status, we find that this merely provides for certain procedural relaxation in terms of bond/ security, etc., for project import for Mega Power Plant and it does not specifically allow benefit of parent notification to units holding provisional status so as to construe that provisional status was specifically brought in for extending notificational benefit.
18. Similarly, reliance placed on the judgment in case of Airport Authority of India Vs CC, Chennai (supra) is also distinguished as in the present case, the status certificate has been produced for the project as a whole by the respondent, whereas, in that case no certificate was produced at all.
19. Therefore, in the fact of the case, we find that the appeal filed by the Revenue is not sustainable and we find that the impugned order is legal and proper and therefore, there is no substantive ground to interfere with the same and accordingly, we uphold the impugned order.
20. Appeal is dismissed.
(Pronounced in the Open Court on 20.06.2025) (A.K. JYOTISHI) MEMBER (TECHNICAL) (ANGAD PRASAD) MEMBER (JUDICIAL) Veda