Excise Duty & Customs Duty Exemptions for Supplies made to Mega Power Project.
That all the equipment supplied for the setting up the mega power projects enjoys both customs and excise duty exemptions.
1. As per Central Excise Notification No 6/2006-CE dated 1.3.2006:
All the goods supplied against ICB will be excise duty exempted as in the Sl. No. 91 (read along with Condition no. 19)
Condition no.19 à 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 Customs Tariff Act when imported into India
2. As per Customs Notification No. 21/2002-Cus dated 1.3.2002, as amended:
Supply of goods required for setting up of any mega power projects as specified in Sl. No. 400 (read along with Condition no. 86) of Notification No. 21/2002- Customs dated 1.3.2002, as amended, shall be eligible for deemed exports benefits as mentioned in paragraph 8.3(a), (b) and (c) of FTP, whichever is applicable, if such mega power project is:
- an inter state Thermal Power Plant of capacity of 1000MW or more; or
- an inter state Hydel Power Plant of capacity of 500 MW or more
Condition no. 86 à that 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 State undertakes, in principle, to privatize 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; and
(iii) the power purchasing State has agreed to provide recourse to that State’s share of Central Plan allocations and other devaluations towards discharge of any outstanding payment in respect of purchase of power;
3. As per Foreign Trade Policy 2009 to 2014: That supply of goods under the contract made to Mega Power Project in India is under the procedure of ICB (International Competitive Bidding) and in accordance with the provisions of paragraph 8.2 and 8.4.4(iv) of FTP (Foreign Trade Policy). And as per Para 8.3 of the FTP, deemed exports will be eligible for exemption from TED where supplies are made against ICB.
This apart, reference may also be made to Rule 6 of the CCR … which deals with Exempted goods & the related input CENVAT credit à In this very regards, we would like to refer to clause (a) of sub-rule 6 (vii) [as substituted by Notification No. 6/2010-C.E. (N.T.), dated 27-2-2010] in Rule 6 of the CCR, 2004, which states that in respect of those inputs used in the manufacture of excisable goods and that are supplied against International Competitive Bidding with exemption of excise duty, the CENVAT Credit can be availed of and also there is no need to debit an amount equal to 6% of the value of the goods
CONCLUSION: having regards to
a) Central Excise Notification No 6/2006-CE dated 1.3.2006 (Sl. No. 91 read along with Condition no. 19),
b) Customs Notification No. 21/2002-Cus dated 1.3.2002, as amended Sl. No. 400 (read along with Condition no. 86),
c) Foreign Trade Policy 2009 to 2014 paragraph 8.2 and 8.4.4(iv) and Para 8.3 of the (FTP),
d) And so also in terms of Rule 6 of the CCR, for availing INPUT CENVAT Credit for supply of exempted goods to MPP under the ICB procedure
All the goods supplied against ICB under the First Schedule of the CETA 1985, will be excise duty exempted as in the Sl No. 91 (read along with Condition No. 19).