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(ii) The power purchasing state undertakes, in principle, to privatise distribution in all cities, in that state, each of which has population of more than one Million, within a period to be fixed by the Ministry of Power; and
(ii) The power purchasing state has agreed to provide recourse to that states share of central plan allocations and other devolutions towards discharge of any outstanding payment in respect of purchase of power.

2. In the present case, there is no dispute that the goods were supplied by the appellant against international competitive bidding to M/s. L & T Ltd. on account of M/s.Jindal Power Ltd. and that the appellant have also produced certificate from Joint Secretary, the Ministry of Power certifying that -

 (a) that Raigar Thermal Power Project being set up by M/s.Jindal Power Ltd. is an interstate Thermal Power Plant of capacity of 1000 Mega Watt capacity and (b) also that - (i) The power purchasing state have constituted the regulatory commission with full powers to tariff and (ii) The power purchasing state undertakes in principle to privatize distribution in all cities each of which has a population of more than one Million. With regard to the third condition to be certified that the power purchasing state has agreed to provide recourse to that states share of central plan allocations and other devolutions towards discharge of any outstanding payment in respect of purchase of power, the Joint Secretary of the Ministry of Power under his letter dated 17.08.2005 clarified that this condition is not applicable in case of independent power projects and the power projects, in question, is an independent power project.

3. The Department was of the view that since the Joint Secretary to the Government of India in Ministry of Power has not certified in respect of the power project in question, that the power purchasing state has agreed to provide recourse to that states share of central plant allocation and other devolution towards discharge of any outstanding payments in respect of purchase of power, the conditions of the Customs Notification No.21/2002-Cus. are not fulfilled and, hence, the goods, if imported into India would not be eligible for customs duty exemption and hence the excise duty exemption would also not be admissible. It is on this basis that the Commissioner by the impugned order in original dated 27.11.2006 confirmed the duty demand of Rs.11,08,21,021/- alongwith interest on it under section 11AB and besides this, has imposed penalty of Rs.1.25 Crores on the appellant under Rule 25 of the Central Excise Rules 2002. Against this order of the Commissioner this appeal has been filed.

7. We have considered the submissions from both the sides and perused the records. The goods supplied by the appellant during the period from July, 2005 to May, 2006  iron and steel items are made for use in Mega Power Project of M/s. Jindal Power Ltd. which is being setup by M/s. Larson & Tubro Ltd. There is no dispute that the power project - Raigar Thermal Power project for which the goods have been supplied is an inter state thermal power project of capacity of 1000 Mega Watt and in this regard the certificate has been given by the Joint Secretary to Govt. of India, Ministry of Power. There is also no dispute that the goods had been supplied against International Competitive Bidding. In terms of sl. No.301 of Notification No. 6/02-CE and 91 of the Notification No.6/2006-CE the goods of any chapter supplied against International Competitive bidding are fully exempt from Central Excise duty subject to condition that the same goods, if imported into India, would be fully exempt from basic Custom duty and additional customs duty. Sl. No.400 of the exemption Notification No. 21/2002-Cus exempts the goods imported which are required for setting-up of any mega power project, that is to say interstate thermal power plant of capacity of 1000 mega power or inter state Hydel Plant of capacity of 500 mega Watt or more, as certified by Joint Secretary in the Ministry of Power the whole of the basic customs duty and additional customs duty. However this exemption notification is subject to condition No.86 of the exemption notification which is that if an officer not below the rank of Joint Secretary to the Govt. of India in the Ministry of Power certifies that - (a) the power purchasing state has constituted the regulatory commission with full Power to fix Tariff (b) the power purchasing state under takes, in principle, to privatize distribution in all cities in that state which have population of more than one Million within a period to be fixed by Ministry of Power, and (c) the power purchasing state has agreed to provide recourse to that states share of Central plant allocation and other devolutions towards discharge of any outstanding payment in respect of purchase of power.