Customs, Excise and Gold Tribunal - Bangalore
Venkataraya Power Ltd. vs Cc (Appeals) on 23 February, 2005
Equivalent citations: 2005(191)ELT785(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. This is an appeal filed against the OIA No. 410/2002-MCH dated 1.8.2002 passed by the Commissioner of Customs, New Customs House, Mumbai. The brief facts of the case are as follows:
2. The appellant filed an application for Registration of Contract under heading 98.01 of the Customs Tariff Act, 1965 in respect of one number of 'Waukeshah Enginator, Model VHP 5904 GSI, Gas Enginator Generating System with accessories and spares for initial setting up of a IMW Power Generation Plant using natural gas. The adjudicating authority denied the request for registration of the contract. The Commissioner (Appeals) also held that the appellants are not entitled for the project import benefit. He also held that they are not entitled for the benefit of Exemption Notification 21/2002-Cus. dated 1.3.2002 as against Sl. No. 399 Sub-clause (iv) in view on the fact that as per the Certificate issued by the sponsoring authority, the power plant established by the appellant is meant for captive consumption. The relevant portion of the Notification reads as under:
Power generation projects including gas turbine power projects (excluding captive power plants set up by the projects engaged in activities other than in power generation)
3. S/s. T. Ramesh, the learned Advocate and Laxminarayana Goyal, the learned Consultant appeared for the appellants and Smt. Shobha L. Chary, the learned JCDR appeared for the Revenue.
4. The learned Advocate stated that the appellants are going to install the Power Plant for the supply of the generated electricity to their sister concern. Therefore, the appellant's Power Plant is not a captive Power Plant. Hence, they are entitled for exemption under Sl. No. 399 Sub-clause (iv). It was further urged that the Power Generated is not consumed by the appellants within the premises where the power is generated. The appellants do not carry out any activity other than generation of Power. In other words, the appellants do not have any other manufacturing activity. The power generated is supplied to sister unit situated away from the place where the power is generated. Hence, the appellants' Power Project cannot be considered as captive Power Plant and hence covered by Sl. No. 399 (iv) of the Notification. He relied on Tribunal's decision in the case of Andhra Pradesh Gas Corporation Ltd. v. CCE 2001 (136) ELT 860 (Tri) : 2000 (93) ECR 488 (T), wherein it has been held that who could be the beneficiary of the particular Power Generation Project, is not relevant for the purpose of the Notification clause. Moreover, the Adjudicating Authority has erroneously observed that the Power Generation Plant in the present case is a single composite machine and as per Project Import Regulation under 3(a)(ii), a single composite machine is not covered under the Project Import benefits. He submitted that the plant imported actually involves various equipments and machineries. He pleaded that the appellants are rightly eligible for the benefit of the Notification under Sl. No. 399(iv).
5. Smt. Shobha L. Chary, the learned JCDR took us through the document permitting the appellant by the State Government for establishing one MW Power Plant using natural gas which can go up to 4.5 MF in a phased manner for their captive consumption. The permission order is subject to the condition that the utilization of the power is for captive use in HT Services either for themselves or of their sister concerns any where in the state. Further it is stated that no third party sale is allowed.
6. In view of these conditions, the learned JCDR maintained that the Power Plant is only a captive plant and is not entitled for a concession under Sl. No. 399(iv). She brought to our notice a decision of the Hon'ble Apex Court in UOI v. Indian Charge Chrome wherein while interpreting similar notifications, the distinction between Power Plant and Power Project has been brought out. A Power Plant is not the same thing as a Power Project. The distinction between the two terms is determinable by reference to mass, magnitude or extent of the two. 'Project' suggests something very much more extensive than a plant. The capacity of the Power Plant of the appellant is only one MW. Therefore, it will not be covered under Sl. No. 399 (iii) as that entry covers only captive power plants of 5 MW or more. In view of the Supreme Court's interpretation, of the terms Power Plant and Power Project, the Plant of the appellant can, by no stretch of imagination, be called as a Power Project. Hence, it would not be covered under the entry 399(iv). Therefore, the appellants are not entitled for the benefit.
7. We have gone through the rival submissions. The relevant portion of Sl. No. 399 is reproduced below:
399. 98.01 Goods required for
(i) Fertiliser projects; 5% 16%
(ii) coal mining projects; 5% 16%
(i) captive power plants of 25% 16% 5 MW or more
(ii) power generation projects 5% 16% including gas turbine power projects (excluding captive power plants set up by projects engaged in activities other than in power generation)
(iii) barge mounted power plants 5% Nil
(iv) power transmission projects of 66 KV and above 25% 16%
(v) other industrial plants or projects 25% 16%
8. The capacity of the appellant's Power Plant is only one MW. According to the Government's (Andhra Pradesh) letter of permission, its maximum capacity can go upto 4.5 MW. Under these circumstances, Sl. No. 399(iii) is ruled out. While going through the entries in Sl. No. 399, it is very clear that Sl. No. (iv) is for Power Projects which are much more extensive and more grand than a Power Plant. In view of the Supreme Court's interpretation of Customs Notification No. 71/85 dated 17.3.1985, wherein the entries are similar, it is very clear that the Power Plant of the appellant cannot be considered as a Power Project. It is also very clear that the power is supplied to its sister unit and the same cannot be sold at all. So, even if this tiny Plant can be considered as Project, the concession cannot be given in view of the captive consumption. Under these circumstances, the appellants don to have a strong case and we dismiss the appeal.
(Pronounced in open Court on 23.2.2005).