Custom, Excise & Service Tax Tribunal
Apar Industries Ltd vs Cgst & Central Excise Surat on 28 March, 2025
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
EXCISE Appeal No. 10928 of 2019- DB
(Arising out of OIA-CCESA-SRT-APPEAL-PS-844-845-2018-19 dated 28/02/2019 passed by
the Commissioner (Appeals), CGST and Central Excise & Service Tax-SURAT-I)
Apar Industries Ltd ........Appellant
A-201/202 Bezzola Complex Sinon Trombay Road Chembur
Mumbai, Maharashtra
VERSUS
COMMISSIONER OF CGST & CENTRAL EXCISE -
CGST & Central Excise Surat ......Respondent
New Central Excise Building, Opp. Gandhi Baug, Chowk Bazar, Surat, Gujarat- 395001 With EXCISE Appeal No. 10930 of 2019- DB (Arising out of OIA-CCESA-SRT-APPEAL-PS-844-845-2018-19 dated 28/02/2019 passed by the Commissioner (Appeals), Central Excise, Customs and Service Tax-SURAT-I) Apar Industries Ltd ........Appellant A-201/202 Bezzola Complex Sinon Trombay Road Chembur Mumbai, Maharashtra VERSUS COMMISSIONER OF CGST & CENTRAL EXCISE -
CGST & Central Excise Surat ......Respondent New Central Excise Building, Opp. Gandhi Baug, Chowk Bazar, Surat, Gujarat- 395001 APPEARANCE:
Shri Amal Dave & Shri Parth Rachchh, Advocate for the Appellant Shri Anand Kumar, Superintendent (AR) for the Respondent CORAM:
HON'BLE MR. SOMESH ARORA, MEMBER (JUDICIAL) HON'BLE MR. SATENDRA VIKRAM SINGH, MEMBER (TECHNICAL) Final Order No. 10210-10211/2025 DATE OF HEARING: 18.02.2025 DATE OF DECISION: 28.03.2025 SATENDRA VIKRAM SINGH The present appeals have been filed by the appellant M/s. Apar Industries Ltd, Mumbai against the Order-In-Appeals bearing No. CCESA-SRT (Appeals) PS-844-845/2018-2019 dated 28.02.2019, passed by the Commissioner (Appeals), CGST and Central Excise & Service Tax, Surat. Vide this OIA, the Commissioner (Appeals) has decided appeals bearing No. 296/2017-18 & 33/18-19 filed by the Appellant M/s. Apar Industries Ltd..
2|Page E/10928&10930/2019 -DB
2. The facts of the case are that the appellants are manufacturing electrical Cable and Conductor, etc. falling under CTH 8544 1990 of the Central Excise Tariff Act, 1985 which they are clearing to approved projects by availing the benefit of the Notification No. 12/2012-CE dated 17.03.2012 at nil rate of duty.
The department has alleged that during the period from June- 2012 to June- 2017, the Appellant have removed finished goods from their factory without payment of duty on which they were liable to reverse an amount @ 6% of the value of exempted goods in terms of Rule 6 of the Cenvat Credit Rules, 2004 as they did not fulfil the conditions of the said Notification. The department has issued SCN dated 22.01.2016 covering the period from January-2012 to March-2015 demanding an amount of Rs. 37,57,424/- alongwith interest and penalty. Subsequently, they issued statement of computation dated 11.04.2016 for the period from April-2015 to January-2016 demanding an amount of Rs. 45,33,440/- and another statement of computation dated 08.09.2017 for the period from February-2016 to June-2017 demanding an amount of Rs. 34,95,660/-. The Learned adjudicating authority confirmed the demand of Rs. 1,17,86,524/- against the Appellant along with interest and penalty. The appellant also did not succeed before the Commissioner (Appeals) where their appeals were rejected. Hence, this appeal.
3. The Learned Advocate on behalf of the Appellant contended that they have supplied Electrical Power Cables to Mega Power Projects against International Competitive Bidding (ICB) without payment of Central Excise duty. These power projects are (1) M/s. Rajpura Thermal Power Plant Punjab (2x700 MW); (2) Tuticorin Thermal Power Project (2x500MW) of Neyveli New Thermal Power Project; (3) Thermal Power Project of M/s. GMR. Chhattisgarh Energy Ltd. (2x685 MW) & (4) Supercritical Thermal Power Project, Suratgarh of Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (2x660W). The supplies were made against International Competitive Bidding. They supplied goods directly for use in the projects against project Authority Certificate(s) where name and the address of the appellant and description of the products to be supplied were already endorsed as a sub-contractor. The department has illegally confirmed demand against them by wrongly interpreting the condition of the Notification No. 12/2012-CE that benefit of Rule 6(6) (vii) of CCR, 2004 is applicable only to the imported goods and not to the domestically manufactured goods. Their another argument is that the demand is time barred as the issue does not involve suppression of facts. He assailed levy of penalty and interest on them under
3|Page E/10928&10930/2019 -DB Section 11AC and Section 11AA respectively of the Central Excise Act, 1944 by saying that the demand itself is not tenable so the interest and penalty.
3.1 Learned Advocate pointed out that for claiming exemption under Sr. No. 336 of the Notification No. 12/2012-CE for supply made against ICB, the condition No. 41 is to be complied with which mentions that "All goods which are exempted from both the duties of customs leviable under First Schedule to CTA. 1975 and Additional Duty leviable under Section 3(1) of the CTA. 1975, when imported into India". The officers below have wrongly interpreted this condition that the exemption is available only to the imported goods and not to the domestically manufactured goods. The condition is that the said goods if imported into India, are exempted from both the duties of customs. If this condition is satisfied, supplier is not required to reverse any amount in terms of Rule 6 of the CCR, 2004. For claiming exemption under Sr. No. 338 of the above Notification, condition No. 43 is to be satisfied which says that the project should be certified as Mega Power Project by an officer not below the rank of Joint Secretary to the Government of India in Ministry of Power. The projects to whom they have supplied electrical power cables, are Mega Power Project. He referred to the decision in the case of M/s Kent Introl Pvt. Ltd Vs. CCE Nasik- 2014 (301) ELT 84 (Tri.-Mumbai) which was confirmed by Hon'ble Mumbai High Court vide 2016 (331) ELT 77 (Bombay). Additionally, he referred to the following Judgments: -
• CCE, Meerut- I V/s. Bharat Heavy Electricals Ltd.- 2015(329) ELT 893 (Tri.-Del.) • Unique Industrial Handlers Pvt. Ltd. Vs. CCE, Nasik, reported in 2016 (333) E.L.T. 311 (Tri. Mumbai) • Ramsarup Utpadak, Unit-II Vs. CCE, Kolkata-III reported in 2012 (283) E.L.T. 425 (Tri. Kolkata), • Sangam Structurals Ltd. V/s. CCE, Allahabad- 2018(9) TMI 1425-
CESTAT Allahabad • Andhra Cements Ltd. V/s. CCE, Guntur- 2016(7) TMI 650-CESTAT Hyderabad • Rallison Electricals Pvt.Ltd. V/s. CCE, Jaipur-1- 2016(342) ELT 292(Tri.- Del.) • CCE & ST, Alwar V/s. Rallison Electricals Pvt.Ltd.- 2018(359) ELT 139 (Raj.)
4|Page E/10928&10930/2019 -DB 3.2 The Learned Advocate also referred to CBEC Circular No. 334/8/2016- TRU dated 29.02.2016 which clarifies that when supply is made to any power projects listed at list 32A of Sr. No. 507 of Notification No. 12/2012-Customs and also awarded under International Competitive Bidding, such supply will be eligible for exemption under Sr. No. 336, 337 (list 10) and Sr. No. 338 (list
11) of the Notification No. 12/2012-CE. The appellant contended that demand against them does not survive and prayed for setting aside the demand, interest and the penalty imposed on them.
4. On the other hand, Learned AR reiterated the findings of the lower authorities and emphasised that the appellants are not entitled to the benefit of Rule 6(6)(vii) of the Cenvat Credit Rules, 2004, as the supplied goods have been manufactured in India and not the imported goods. These provisions are not applicable to the goods manufactured in India and supplied at nil rate of duty. The appellant availed Cenvat credit on common inputs, used them in manufacture of dutiable as well as exempt final goods but did not maintain separate account of inventory so Rule 6(3)(i) is attracted which obligates appellant to pay an amount equal to 6% of the value of the goods cleared at nil rate of duty. On issue of limitation, he emphasised that the letters given by the appellant to the department nowhere mention the relevant entry of the Notification to be availed by them. The Appellant have simply informed about clearing their goods to various projects at nil rate of duty and did not disclose specific entry of the Notification in their ER-1 returns. Citing self-removal procedure, he tried to justify invocation of extended period and the related consequences on the ground that the appellant has intentionally not disclosed the facts before the department.
5. We have heard the rival submissions. The relevant provisions of Notification No. 12/2012-CE dated 17.03.2012 are reproduced as under:-
"The Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in column (3) of the Table below read with relevant List appended hereto and falling within the Chapter, ................................................................... from so much of the duty of excise specified thereon under the First Schedule to the Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions annexed to this notification, if any, specified in the corresponding entry in column (5) of the Table aforesaid
5|Page E/10928&10930/2019 -DB Table S. Chapter or Description of goods Rate Condition No. heading or No. sub-
heading or tariff item (1) (2) (3) (4) (5) 336 Any Chapter All goods supplied against International Nil 41 Competitive Bidding.
338 Any Chapter All items of machinery, including prime Nil 43 movers, instruments, apparatus and appliances, control gear and transmission equipments, power cables used within the power generation plant, auxiliary equipment (including those required for research and development purposes, testing and quality control), as well as all components (whether finished or not) or raw materials for the manufacture of aforesaid items and their components, supplied to mega power projects from which the supply of power has been tied up through tariff based competitive bidding or a mega power project awarded to a developer on the basis of such bidding.
Explanation.- For the removal of doubts, it is clarified that goods required for setting up of "mega power project"
include the goods required for development of facilities such as ash disposal system including ash dyke, water intake including treatment and storage facilities and coal transportation facilities for such a project, notwithstanding the fact that such facilities are set up inside or outside the power plant's designated boundary.
5.1 The entry at Sr. No. 336 grants exemption to all goods supplied against International Competitive bidding subject to fulfilment of condition No. 41 which states that ...............
"41. If the goods are exempted 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 Custom Tariff Act when imported into India."
5.2 Likewise, entry at Sr. No. 338 grants exemption to goods specified in column 3 of the above table subject to fulfilment of condition No. 43 which state that.........
"43. if, -
(a) an officer not below the rank of Joint Secretary to the Government of India in the Ministry of Power certifies the project as Mega Power Project;
6|Page E/10928&10930/2019 -DB
(b) in case the certificate regarding mega power project status issued as above is provisional, the chief executive officer of the project furnishes a security in the form of a fixed deposit receipt from any scheduled bank for a term of thirty six months or more, in the name of the President of India for an amount equal to the duty of excise payable but for this exemption, to the Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, having jurisdiction and if the project developer fails to furnish the final mega power status certificate within a period of thirty six months from the date of clearance of excisable goods, the said security shall be appropriated towards duty of excise payable on such clearances but for this exemption:
(c) an officer not below the rank of Chief Engineer in the Central Electricity Authority certifies that the said goods are required for the setting up of the said mega power project under the Government of India initiative, indicating the quantity, description and specification thereof;
(d) the Chief Executive Officer of the project furnishes an undertaking to the Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, having jurisdiction, to the effect that-
(i) the said goods will be used only in the said project and not for any other use; and
(ii) in the event viable compliance of sub-clause (i), the project developer will pay the duty which would have been leviable at the time of clearance of goods, but for this exemption."
5.3 As neither the Show Cause Notices nor the orders of the lower authorities dispute clearance of electrical power cables by the Appellant at Nil rate of duty, hence these conditions do not require further elaboration.
5.4 As regards reversal of an amount equal to 6% of the value of exempt goods on account of use of common inputs Rule 6(6) (vii) of the CCR, 2004 provides that Sub-Rule (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
(b) to a power project from which power supply has been tied up through tariff based competitive bidding; or
7|Page E/10928&10930/2019 -DB
(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 17th March, 2012];"
As (a), (b) & (c) are separated by the word "or", hence, any one of the condition need to be satisfied. In the instant case, there is no dispute that the goods have been supplied against International Competitive Bidding. Therefore, it is prudent to examine if these goods, when imported in India, are exempt from duties of customs and the additional duty leviable under sub- Section 1 of Section 3 of the Custom Tariff Act, 1975. The appellant has referred entry at Sr. No. 507 of Notification No. 12/2012-CUS dated 17.03.2012, which is reproduced as under: -
Table S. Chapter or Description of goods Stan Additi Condition No. No. heading or dard onal sub- rate duty heading or rate tariff item (1) (2) (3) (4) (5) (6) 507 9801 Goods required for setting up of any Nill Nill 93 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 ,
(a) a thermal power plant of a capacity of 700MW or more, located in the States of Jammu and Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; or
(b) a thermal power plant of a capacity of 1000MW or more, located in States other than those specified in (a) ; or
(c) a hydel power plant of a capacity of 350MW or more, located in the States of Jammu and Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; or
(d) a hydel power plant of a capacity of 500MW or more, located in States other than those specified in clause (c) 5.5 As all these thermal power plants are Mega Power Projects, hence satisfaction of Condition No. 93 is to be seen which states that.....................
8|Page E/10928&10930/2019 -DB
"93 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 tariffs;
(ii) the power purchasing states shall undertake to carry out distribution reforms as laid down by Ministry of Power.
(a) in case of imports for a project for which certificate regarding Mega Power Project status issued by an officer not below the rank of Joint Secretary to the Government of India in the Ministry of Power is provisional, the importer furnishes a security in the form of a Fixed deposit Receipt from any Scheduled Bank for a term of thirty six months or more in the name of the President of India for an amount equal to the duty of customs payable on such imports but for this exemption, to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, at the time of importation and if the importer fails to furnish the final mega power status certificate within a period of thirty six months from the date of importation, the said security shall be appropriated towards duty of customs payable on such imports but for this exemption.
(b) 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
(c) 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."
5.6 It is not in dispute that the goods have been supplied by the appellant to Mega Power Project(s) as certified by the Joint Sectary to the Government of India in the Ministry of Power. We find that the lower authority have ruled that the Electrical Power Cables are not covered under Chapter Heading 98.01 of the Customs Tariff Act, hence, these are not exempt from basic Customs Duty as well as Additional Customs Duty. This reasoning seems incorrect as the Central Excise Tariff Act does not have any corresponding Tariff entry as it exists in Customs Tariff Act, 1985. This issue has already been decided by the Tribunal in the case of Cords Cable Industries Pvt. Ltd. Vs. Commissioner of C. Ex., Jaipur-I - 2016 (342) ELT 264 (Tri.-Del.), wherein it was held that electrical wires, cables supplied to Mega Power Projects are fully exempt under
9|Page E/10928&10930/2019 -DB the corresponding Central Excise Notification read with Customs Notification. Para 5 & 6 of the said order are reproduced as under:-
"5. We find that the same set of facts came up for decision before this Tribunal in earlier cases. In Sarita Steels and Industries Ltd. v. CCE vide Final Orders Nos. 1076-1081/2010, dated 15-7-2010 [2011 (264) E.L.T. 313 (Tribunal)], the Tribunal held that when the fact that supplies are made to mega power projects and all the conditions have been fulfilled the goods which are required for execution of mega power project are categorically exempted by the said customs notification. So in Om Metals SPML JV Unit 2 Vs. CCE & ST, Jaipur - 2013 (298) E.L.T. 79 (Tri.-Del.), the Tribunal held that there is no Heading 9801 in Central Excise Tariff which is only in Customs Tariff. The goods manufactured in India cannot be classified under 9801. Accordingly, denial of exemption on that ground is not tenable. Further, the Tribunal in Paramount Communications Limited vide Final Order dated 23-6-2016 examined the very same issue and held that denial of exemption on the ground of classification shown under Customs Notification is 9801, is not sustainable. The same ratio has been followed by the Tribunal in KEI Industries Limited vide Final Order No. 52371/2016, dated 1-7-2016.
6. In view of the above decided cases, it is clear that denial of exemption to the appellant is not legally sustainable. Admittedly, the condition stipulated for exemption under Notification No. 6/2006-C.E. has been fulfilled by the appellant except for the classification in column 2 of Entry No. 400 in Customs Notification No. 21/2002-Cus. As clearly noted, the classification [Heading] 9801 is not available in Central Excise Tariff and the same relates to project import, as such the denial of exemption on this grounds is legally not sustainable. Accordingly, we set aside the impugned order and allow the appeal."
5.7 The same issue was again considered by the Tribunal in the case of Rallison Electricals Pvt. Ltd. V/s. CCE, Jaipur-I - 2016 (342) ELT 292 (Tri.-Del.) which was also upheld by Hon'ble Rajasthan High Court vide 2018 (359) ELT 139 (Raj.) dated 27.07.2017. Para 7 of the said order is reproduced below:-
"7. The impugned order confirms the denial of exemption of duty of Central Excise saying that conditions of Notification No. 6/2006-C.E. (supra) have not been fulfilled. Commissioner, Central Excise in the impugned order inter alia says that subject goods are not classifiable under Chapter Heading 9801 of Customs Tariff and required certificate has not been issued by CMD of NTPC. 10 | P a g e E/10928&10930/2019-DB 7.1 The facts are that the appellant have supplied the goods against International Competitive Bidding [reference to Sr. No. 91 of Notification No. 6/2006-C.E. (supra)] for setting up a Mega Power project of a capacity of 1000 MW or more (refer Sr. No. 400 of Notification No. 21/2002-Cus., dated 1-3- 2002) and certified so through a Project Authority Certificate (PAC) dated 9-9-
2005 by the Additional General Manager of NTPC, Ms. Reeta Bandopadhyay, who is duly authorised to issue such a certificate.
7.2 Further, the Commissioner in the impugned order says that the subject goods are not classifiable in Chapter Heading 9801 of Customs Tariff. But from the wordings of Chapter 9801, we find that all the items of machinery as well as all components or raw materials for manufacture of the machinery and their components, required for initial setting up of a unit, etc., of specified Power Project (along with other plants/projects) are classified in Chapter Heading 98.01 of Customs Tariff. Therefore, there cannot be any dispute on subject items, 'Electric Wires & Cables' as the facts stand are classifiable under Chapter Heading 98.01 of Customs Tariff and as per the discussion made above would be entitled to the benefit of exemption Notification No. 6/2006-C.E., dated 1- 3-2006."
6. However, Condition No. 93 to the Notification No. 12/2012-CUS dated 17.03.2012, also prescribes certain requirements to be fulfilled, for availment of the exemption from Customs Duty as well as Additional Customs Duty. These conditions are factual in nature as to whether Power Purchasing State has constituted the Regulatory Commission with full powers to fix Tariffs and whether the Power Purchasing States have undertaken to carry out distribution reforms as laid down by the Ministry of Power. It also needs to be seen whether procurement Certificates have been issued by the designated Authorities as per Sr. No. (b) and (c) of the Condition No. 93. The documents submitted along with appeal, do not contain all the relevant details which are to be seen in the matter. We therefore deem it fit to remand the matter to the adjudicating authority to see fulfilment of Condition No. 93 of Notification No. 12/2012-CUS dated 17.03.2012. If these Conditions are satisfied, then the appellant will not be required to reverse an amount as demanded by the department. The Bench directs the Appellant to produce relevant documents/Certificates in respect of supplies involved in the case before the adjudicating authority within one month for determining whether the Condition No. 93 of the said Customs Notification is satisfied in the case. We also direct the adjudicating authority to decide the issue within 3 months from the date of production of above documents, as the matter is quite old. 11 | P a g e E/10928&10930/2019-DB Accordingly, appeals are disposed off by way of remand to the adjudicating authority.
7. The appeals are disposed of in the above terms.
(Pronounced in the open court on 28.03.2025) (SOMESH ARORA) MEMBER ( JUDICIAL ) (SATENDRA VIKRAM SINGH) MEMBER ( TECHNICAL ) Raksha