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The CERC has omitted to examine the nature of capital expenditure, and summarily allowed the same by observing that such expenditure mainly pertains to deferred liabilities against EPC contracts and non- EPC contracts.

16.3 That the Impugned Order contains no justification for including, after the cut -off date, "other assets" (such as office furniture, computers, air-conditioners etc.) of the value of about Rs. 1 crore in additional capitalisation for FY 2006-07.

17. Per contra, the Counsel for the Respondent No.2 strongly refuted the submissions of the Appellant and submits as follows:

17.1 That the Central Commission has correctly considered the capital cost of Mejia Unit Nos. I to IV including additional capitalisation in respect of the period from 1.4.2006 to 31.3.2009, 17.2 That the Additional capitalisation mainly involves deferred liabilities of balance payment against EPC contracts awarded after the commercial operation but within the scope of the original works, including procurement of initial spares. The capitalisation of such expenditure is covered under Clause 1 (1) and (2) of the Regulation 18 of Tariff Regulations 2004.

19.1 The following contentions have been made on behalf of the Appellants on Issue No.4:

19.2 The Central Commission has failed to provide any justification for non-recovery of liquidated damages by DVC in terms of the EPC contract signed with BHEL for setting up of Mejia TPS Unit-4. It is an admitted position that the EPC contract provided that in the event of delay in completion of the project beyond 33 months from the date of LOA/LOI, DVC was entitled to claim liquidated damages @ 0.25% of the contract cost per week. Since there was, admittedly, a delay of six to seven weeks in completing the project, DVC became entitled to recover damages to the tune of Rs. 12.25 crore from BHEL.

recovery of liquidated damages with the amount of revenue derived from the sale of infirm power.

20.2 That the Allegations of the Appellant that the liquidated damages payable by BHEL to Damodar Valley Corporation for delay on the part of BHEL in execution of the EPC contract should be deducted from the capital cost of the project. It is stated that the delay was on account of the 'Non-supply of some balance, Non-completion of some balance Erection & Commissioning and Delay in completion of Non- EPC works'. This clearly indicates that the delay has nothing to do with BHEL. The various miscellaneous works get delayed on account of varied reasons and, therefore, there was a delay of one month and 18 days. Accordingly, Damoder Valley Corporation has not claimed any remedy for delay for such various works. Further there is no cost over-run due to the delay as the EPC contract with BHEL, was a turnkey contract. Therefore the allegation of the Appellant regarding financial load on the consumers due to financial overrun is wrong and denied.