Custom, Excise & Service Tax Tribunal
Chennai-Iii vs India Bulls Power Ltd on 11 July, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. III
Excise Appeal No. 41412 of 2015
(Arising out of Order-in-Appeal No. 67/2015 (CXA-I) dated 23.03.2015 passed by Commissioner of
Central Excise (Appeals), No. 26/1, Mahatma Gandhi Marg, Nungambakkam, Chennai - 600 034)
Commissioner of GST and Central Excise ...Appellant
Chennai III Commissionerate,
No. 26/1, Mahatma Gandhi Road,
Nungambakkam,
Chennai - 600 034.
Versus
M/s. India Bulls Power Limited ...Respondent
"India Bulls House", 448-451,
Udyog Vihar, Phase-V,
Gurgoan - 122 001.
APPEARANCE:
For the Appellant : Ms. O.M. Reena, Authorised Representative
For the Respondent : Mr. Deepak Suneja, Consultant
CORAM:
HON'BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
FINAL ORDER No. 40845 / 2024
DATE OF HEARING : 05.07.2024
DATE OF DECISION: 11.07.2024
Order :- Per Ms. SULEKHA BEEVI C.S.
This is an appeal filed by the Department against the order
passed by Commissioner (Appeals), who upheld the order of the
Adjudicating Authority.
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2.1 Brief facts are that M/s. India Bulls Power Limited (IBPL) the
respondent herein was setting up a Thermal Power Plant viz., Amaravathi
Thermal Power Project. The Respondent invited bids by international
competitive bidding and granted the contract for designing, engineering,
procurement, testing, erectioning and commissioning of the project to M/s.
Elena Power and Infrastructure Ltd., (EPIL). Under the contract with EPIL,
the payment for goods was to be made directly by the respondent to the
vendors of EPIL. Consequently, EPIL procured goods from M/s. Bharat
Heavy Electricals Ltd. (BHEL) who raised invoices on EPIL and the said
company in turn raised invoices on the respondent. The payments were
made by respondent to BHEL.
2.2 The goods supplied by BHEL to the respondent were exempted
from excise duty vide Sl.No. 91B of Notification No. 06/2006-CE dated
01.03.2006. However, due to the non-availability of Certificate as
prescribed under the exemption Notification, at the time of supply of goods,
BHEL cleared the goods on payment of excise duty under protest.
2.3 On 11.04.2011, the respondent filed a refund application for
refund of excise duty which was charged by BHEL on invoices issued from
03.07.2010 to 08.10.2010 as the supplies for the Mega Power Project are
exempted as per Notification No. 06/2006 as above.
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2.4 The Show Case Notice was issued to the Respondent proposing
to reject the refund claim alleging that Amaravati Thermal Project is 5x270
MW only which does not satisfy the status of definition of Mega Power Plant
as it is not a single unit of 1000 MWs and above, but its constituted by
multiple units each of which are individually less than 1000 MWs.
2.5 Afte due process of law, the refund sanction authority sanctioned
refund after taking note of the fact that the project constituted 5 units each
of the capacity of 270 MWs being totally more than 1000 MWs and also
certificate issued by the Joint Secretary to the Government of India, Ministry
of Power had been furnished.
2.6 Aggrieved by such order, the Department filed an appeal before
the Commissioner (Appeals) on the following grounds:-
i. that the Adjudicating Authority erred in granting the refund since
sanctioned refund of excise duty is contingent on the non-availment of
CENVAT credit of duty paid on the inputs.
ii. that availment of CENVAT credit on imported goods used in the
manufacture of goods cleared under international competitive bidding
to Mega Power Project has not been considered by the Adjudicating
Authority.
iii. that M/s. BHEL had paid duty on importation of inputs and availed
CENVAT credit, and also paid excise duty on their supplies to the
power plant. Consequently, the claim of refund by the respondent
cannot sustain.
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iv. the benefit of credit and exemption is not envisaged in Rule 6 of
CENVAT Credit Rules, 2004.
v. that exemption from the applicability of sub rules 1, 2, 3, 4 of Rule 6
of CCR, 2004 is available only if the goods are exempted from
payment of customs duties and additional duty when imported into
India.
vi. since BHEL had paid customs duties and other duties and also availed
CENVAT credit, the exemption under Rule 6(6) CCR, 2004 is not
available.
2.7 The Commissioner (Appeals) vide order impugned herein upheld
the view taken by the Adjudicating Authority sanctioning the refund. Against
such order of dismissing the appeal, the Department has now approached
the Tribunal.
3.1 The Ld. Authorised Representative Ms. O.M. Reena appeared and
argued for the Department. It is submitted that the Thermal Plant capacity
of 1350 MW is arrived at by respondent by erecting 5 units each of which is
only of 270 MW. Hence each unit of the project is not within the threshold
limit of 1000 MW. The project does not satisfy the condition of the
Notification and consequently, the exemption Notification No. 06/2006-CE is
not available to the project.
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3.2 M/s. BHEL had manufactured and supplied the contract materials
to Respondent on the invoices raised in the name of M/s. Elena Power and
Infrastructure Limited who in turn raised invoices on the respondent. The
Respondent had made payments directly to M/s. BHEL. Further, M/s. BHEL
and M/s. EPIL had furnished disclaimer Certificates stating that they do not
intend to file for refund of the duty. The Adjudicating Authority has wrongly
held that respondent is eligible for the exemption of the Notification
observing that the total capacity of all the units put together will be
1000MW.
3.3 On the issue of availment of CENVAT credit by M/s. BHEL on
inputs used in the manufacture of finished goods supplied to the power
project, the Original Authority has erroneously held that the said issue of
CENVAT credit has to be dealt separately with M/s. BHEL who is the
manufacturer.
3.4 Rule 6(6) of CCR, 2004 was referred to by the Ld. Authorised
Representative which reads as under:-
"(6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in
case the excisable goods removed without payment of duty are either -
.
.
(vii) all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under sub-section (1) of Section 3 of the said Customs Tariff Act when imported into India and are supplied, --
(a) against International Competitive Bidding; or 6 E/41412/2015
(b) to a power project from which power supply has been tied up through tariff based competitive bidding; or
(c) to a power project awarded to a developer through tariff based competitive bidding, in terms of Notification No. [12/2012-Central Excise, dated the 1st March 2006];"
3.5 Sl.No. 91B of Notification No. 06/2006-CE dated 01.03.2006 exempts excise duties for goods supplied to projects from which supply of power has been tied up through tariff based competitive bidding for a mega power awarded to a developer on the basis of such bidding with condition No. 28 that:
"(j) if such goods are exempted from the duties of customs leviable under the First Schedule of the Customs Tariff Act, 1975(51 of 1975) and the additional duty leviable under Section 3 of the said Customs Tariff Act, when imported into India
(k) An officer not below the rank of Joint Secretary to the Government of India, in the Ministry of Power certifies that the goods are required for a project of the nature specified in column (3) against S.No. 91B of the table
(i) The Chief Executive Officer of the project furnishes an undertaking to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise as the case may be, having jurisdiction, to the effect that -
vii. The said goods will be used only in the said project and not for any other use, and viii. In the event of failure to observe sub-clause (1) above, the manufacturer will pay the duty which would have been leviable at the time of clearance of goods, but for the exemption 3.6 S.No. 400 of Notification No. 21/2002 Cus dated 01.03.2002 as amended provides that goods required for setting up of any Mega Power Project so certified by an officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Power, that is to say "(e) An inter-state Thermal Power Plant of a capacity of 700 MW or more, located in the States of Jammu and Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura or 7 E/41412/2015
(f) An inter-state Thermal Power Plant of a capacity of 1000 MW or more, located in states other than those specified in clause (a) above; or
(g) An inter-state Hydel power plant of a capacity of 350 MW or more, located in the states of Jammu and Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura or
(h) An inter-state Hydel Power plant of a capacity of 500 MW or more, located in States other than those specified in clause (c) above shall be exempted from payment of customs duty and additional duty of customs subject to the condition
(j) If an officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Power certifies that-
i) The power purchasing State has constituted the Regulatory Commission with full powers to fix tariff;
ii) 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;
iii) The power purchasing state has agreed to provide resource to that State's share of Central Plan allocations and other devolutions towards discharge of any outstanding payment in respect of purchase of power;
k) In the case of imports by a Central Public Sector Undertaking, the quantity, total value, description and specifications of the imported goods are certified by the Chairman and Managing Director of the said Central Public Sector Undertaking; and
i) In the case of imports 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.
3.7 It is argued by the Ld. Authorised Representative that the excise duty exemption is available only in cases where the goods are exempted from the duties of customs leviable and the additional duty leviable under Section 3 of the Customs Tariff Act when imported into India. In other words, the exemption is not available, if duty is paid on the goods imported. In the present case, M/s. BHEL had paid the duty on the imported goods as the required certificate was not available at that time. The condition as per 8 E/41412/2015 Sl. No. 91B was not satisfied at the time of import of goods and therefore the benefit of Notification No. 06/2006-CE dated 01.03.2006 cannot be extended to M/s. BHEL. The respondent would be eligible exemption of excise duty only if M/s. BHEL has availed exemption while importing the goods. However, after the production of Cetificates, the application for refund is filed. The duty having been paid by M/s. BHEL, they would have availed the credit on such duty. The refund of duty by respondent is wrong since M/s. BHEL would have availed the credit of such duty which they have paid duty under protest. It is prayed that the appeal may be allowed. 4.1 The Ld. Consultant Shri Deepak Suneja appeared and argued for the respondent. It is asserted by the Ld. Consultant that in the Show Cause Notice, the only allegation raised by the Department is that the benefit of exemption Notification is not eligible as the Mega Power Project does not have capacity of 1000MW. The said aspect has been considered by the Adjudicating Authority as well as the Commissioner (Appeals) and held that being a project with 5 units which had totally more than 1000 MWs, the exemption as per the Notification would be eligible. Further, the respondent had later produced the necessary certificate as required under Sl. No. 91B of the Notification.
4.2 The main ground raised in the appeal is that M/s. BHEL would have availed credit of the duty paid by them and therefore the appellant is not eligible for refund of duty. The said ground has not been raised in the Show Cause Notice at all. Another ground raised is that Rule 6(6) of the 9 E/41412/2015 CENVAT Credit Rules, 2004 would not be eligible as BHEL has paid the duty at the time of import of the goods. It is pointed out by the Ld. Consultant that on production of certificate as required under the Notification, the duties are exempt on the supplies made to the Mega Power Project. Though BHEL had collected the duty from the appellant, since the supplies made to Mega Power Project are exempted as per the above Notifications, the respondent is eligible for refund of duty. All these aspects have been correctly considered by the Adjudicating Authority as well as the Commissioner (Appeals) who have held that the respondent is eligible for refund. The Department has wrongly assumed that Rule 6(6)(vii) of CEVAT Credit Rules, 2004 would not be applicable.
4.3 The decision in the case of Commissioner of Customs, Mumbai Vs. Toyo Engineering India Limited [2006 (201) ELT 513 (SC)] was relied by the Ld. Consultant to argue that the ground which is not raised in the Show Cause Notice cannot be subsequently raised before the appellate forum. The decision of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Nagpur Vs. Ballarpur Industries Ltd. [2007 (215) ELT 489 (SC)] was also relied. The decision in the cases of Thermo Cables Ltd. Vs. Commissioner of Customs and Central Excise, Hyderabad [2013 (292) ELT 412 (Tri.-Bang.)] and Bharat Aluminium Co. Ltd. Vs. Commissioner of Central Excise, Raipur [2017 (345) ELT 685 (Tri.-Del.)] and also in the case of Areva T&D India Ltd. Vs. Commissioner of Central Excise (LTU), Chennai [2013 (296) ELT 106 (Tri.-Chennai)] were relied. It is prayed that the appeal may be dismissed.
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5. Heard both sides.
6. The foremost issue that arises for consideration is whether the ground raised in the appeal that since M/s. BHEL had imported the goods by paying the duty under protest and so would have availed credit of the said duty and therefore the respondent is not eligible for refund is sustainable or not. Rule 6(6)(vii) of CENVAT Credit Rules, 2004 provides as under:-
"(6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either --
(i) ... ... ...
(ii) ... ... ...
(iii) ... ... ...
(iv) ... ... ...
(v) ... ... ...
(vi) ... ... ...
(vii) all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under Section 3 of the said Customs Tariff Act when imported into India and supplied against International Competitive Bidding in terms of Notification No. 6/2002-Central Excise, dated the 1st March, 2002 or Notification No. 6/2006-Central Excise, dated the 1st March, 2006, as the case may be."
7. It is clear from the above CENVAT Credit Rules that the bar under sub-rule (1) of Rule 6 not to avail credit of goods which are exempted from payment of duty is not applicable to inputs meant for use in the manufacture of finished products cleared to Mega Power Projects in terms of Notification No. 6/2006-CE. Further, in the present case, the respondent has filed the refund claim as an ultimate consumer and therefore whether 11 E/41412/2015 the supplier M/s. BHEL has availed credit or not is of no relevance. The Department if aggrieved of wrongful availment of credit has to initiate proceedings against M/s. BHEL. The refund of the duty paid by the ultimate consumer cannot be denied alleging that the supplier has availed credit. When the duties are exempted for supplies made to Mega Power Project, the same cannot be frustrated by imposing conditions which are beyond the control of the respondent.
8. Moreover, in the present case, the only ground which has been raised in the Show Cause Notice is that the Mega Power Project is having 5 units which when put together only will be above 1000MW and therefore would not come within the condition of Notificaiton required for Mega Power Project. M/s. BHEL has furnished the required certificate issued by the Joint Secretary. Therefore, the Adjudicating Authority has correctly dealt with the issue which reads as under:-
i. the term Mega Power Project is not defined in the subject Notification but is defined under the Customs Notification No. 21.2002-Cus dated 01.03.2003 with which the Excise Notification is linked.
ii. the term Mega Power Project is defined vide Sl. No. 400 in the said Customs Notification.
iii. In the case of goods supplied to Thermal Power Plants located in states other than those specified in clause A of the said Sl.No. 400, the term Mega Power Project shall be of a capacity 1000 MG or more. iv. In the instant case, it is seen that the plant capacity of 1350 MW is arrived by erecting 5 units each of which is of the capacity of 270 MW. 12
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9. In the present case, the power project has been constituted by 5 units each of the capacity of 270MW. There is no ground to differ with the view taken by Adjudicating Authority and the Commissioner (Appeals)
10. It is seen that both M/s. BHEL as well as EPIL have filed disclaimer certificates before the Department that the incidence of duty has been borne by respondent. Therefore there is no issue of unjust enrichment also. We find that the Adjudicating Authority as well as the Commissioner (Appeals) have correctly analysed the refund claim and sanctioned the same. The appeal filed by the Department seems to be of misconception of facts and law.
11. In the result, the appeal filed by the Department is dismissed.
(Order pronounced in open court on 11.07.2024)
Sd/- Sd/-
(VASA SESHAGIRI RAO) (SULEKHA BEEVI C.S.)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
MK