Case Law Details
Inar Profiles Pvt Ltd Vs Commissioner of Central Tax (CESTAT Hyderabad)
CESTAT held that exemption under Notification No.12/2012-CE is available to sub-contractor who supplied the goods to the main contractor who has been awarded contract/ work order under ICB.
Division Bench ruling of this Tribunal-Bangalore in the case of CST Ltd vs CC & CE, Hyderabad, wherein under similar facts and circumstances that the assessee has supplied the goods as a sub-contractor of BHEL for use in mega power project, this Tribunal held that there is absolutely no need that the appellant (sub-contractor) themselves should have been the bidder in ICB. In huge projects, the main contractor does not do everything. There is also a system of sub-contractors inasmuch as the assessee had supplied the goods to BHEL who are the bidders in ICB, the condition of notification is satisfied and there is no justification for denying benefit of exemption notification.
FULL TEXT OF THE CESTAT HYDERABAD ORDER
Appellants are manufacturers of GI cable trays, accessories and their supports falling under Central Excise Tariff sub-heading No. 73089090.
2. During the period January 2009 to February 2013, the appellants cleared excisable goods after obtaining purchase orders from various customers like M/s Siemens Ltd, M/s TRF Ltd. Jamshedpur, M/s Macauber Beekay Pvt Ltd. New Delhi, who were awarded contract for supply of goods to power projects under “International Competitive Bidding” (ICB) having certificates issued by Secretary of Govt. of India, Ministry of Power pertaining to various projects. Appellants name appeared as sub-contractor and certificates were issued by project authority clearly indicated appellants as sub-contractor along with description and quantity to be supplied. Appellants gave clarification to the Supdt. Central Excise, Anakapalle Range that they have supplied galvanized cable trays, etc., under ICB to various power projects through different customer/ contractors, at nil rate of duty as per Notification No.6/2006-CE dt.01.03.2006 vide Sr.No.91 and No.12/2012-CE dt.17.03.2012 vide Sr.No.336 and they have already submitted copy of all invoices, Project Authority certificates and Purchase Order copies in the month of November, 2013.
3. The appellants were regularly filing ER-1 Returns and had disclosed such clearance at nil rate of duty under the Notification No.06/2006-CE dt.01.03.2006 read with Notification No.6/2006-CE dt.01.03.2006
4. Pursuant to enquiry raised by the department on the audit objection, the appellant gave clarification to the Superintendent that they have supplied galvanized cable trays, accessories, etc., under ICB for various eligible power projects through different customers/ contractors under the aforementioned notification and they have already submitted the relevant copy of invoices, project authority certificates and purchase order copies in the month of November, 2013.
5. It appeared to Revenue that the appellant/ assessee has not participated directly in the ICB as claimed in the ER-1 Returns for the period January 2009 to February 2013. It further appeared that the appellant/assessee have neither participated directly in any ICB nor they had procured any order directly from any Eligible Project for which an ICB was called for. It further appeared that the benefit of these aforementioned notifications was available only to those firms/units who cleared goods against ICB after participating in the bidding. Accordingly, a show cause notice dt.28.01.2014 was issued demanding Central Excise duty with interest and further penalty was proposed.
6. The appellant contested the SCN by filing reply to the SCN and also enclosed letters which are placed in the appeal paper book. The appellant relied in the judgment of this Tribunal in the case of Sarita Steel Industries Ltd. vs CCE, Visakhapatnam [2011 (264) ELT 313 (Tri-Bang.)].
7. Learned Counsel for the appellant further submitted a letter to Commissioner enclosing clarification issued by Ministry on 10.07.2014 and the certificates issued by Jt. Secretary, TRU-1. In Para 4 of the clarification, it was clarified that exemption under Notification No.12/2012-CE is available to subcontractor who supplied the goods to the main contractor who has been awarded contract/ work order under ICB.
8. During the adjudication proceedings, learned Commissioner requisitioned the appellant to submit new certificate from the concerned project authority. In response, the appellant by letter dt.27.12.2019 stated that they have already submitted project authority certificates, covering letters from Under Secretary to the Govt. of India, Amendment to PAC, purchase orders, copies of all invoices and also stated that their factory is closed now in view of extraordinary losses suffered, they are not in business from more than 5 years and it will not be possible to obtain any documents like ‘End Use Certificates’ for all years. In the case of Sarita Steel Industries Ltd., this Tribunal have allowed appeal in an identical case. Vide the impugned order, learned Pr. Commissioner while confirming the demand of duty and interest and imposing penalty held that supplies made by sub-contractor are eligible for exemption provided they could substantiate with sufficient documentary evidence that the said goods are duly utilized for the notified purpose, but due to inability of the appellant to provide ‘End Use Certificates’ from the concerned project authority, he has no option, but to deny exemption.
9. Being aggrieved, the appellant is in appeal. Learned counsel urges as follows:
(a) It was submitted that all the necessary documents such as letters from Under Secretary, Govt. of India and the certificate issued by the Jt. Secretary, Ministry of Power to various projects under ICB were provided and the only allegation in the notice was that appellants are subcontractor and have not directly participated in the ICB. This identical objection raised is decided in favour of the assessee by this Tribunal in the case of M/s Sarita Steel Industries Ltd., by following earlier judgment in the case of CST Ltd., vs. Commissioner and therefore the learned Pr. Commissioner having noted the judgments are accepted, ought to have dropped the proceedings initiated in the subject show cause notice. Further, when judgment is accepted, there cannot be any condition imposed.
(b) In both the Notifications, there is no condition of requirement of End Use Certificates. Therefore, the learned Pr. Commissioner could not have confirmed the demand on a ground which is not in the SCN and is beyond the provisions of exemption notification.
(c) Even the Ministry on 10.07.2014, have clarified that such subcontractors are entitled for exemption who supplied the goods to contractors who have undertaken mega power projects under ICB. Therefore, the finding arrived at by the learned Pr. Commissioner in confirming duty demand is not only perverse, but contrary to the Ministry clarification and the ratio laid down under these two judgments of this Tribunal.
10. He also relies on the Division Bench ruling of this Tribunal-Bangalore in the case of CST Ltd vs CC & CE, Hyderabad, wherein under similar facts and circumstances that the assessee has supplied the goods as a sub-contractor of BHEL for use in mega power project, this Tribunal held that there is absolutely no need that the appellant (sub-contractor) themselves should have been the bidder in ICB. In huge projects, the main contractor does not do everything. There is also a system of sub-contractors inasmuch as the assessee had supplied the goods to BHEL who are the bidders in ICB, the condition of notification is satisfied and there is no justification for denying benefit of exemption notification. Accordingly, he prays for allowing the appeal with consequential relief.
11. Learned departmental representative relies on impugned order.
12. Having considered the rival contentions, we find that the issue is no longer res integra and the same is squarely covered in favour of the appellant/ assessee in the precedent order of this Tribunal in the case of Sarita Steel Industries Ltd (supra) and also in the case of CST Ltd (supra). Further the Joint Secretary, TRU-1 have also issued clarification dt.10.07.2014, clarifying that the exemption is available also to sub-contractors who have not directly participated in the ICB.
13. Accordingly, in view of the observations and findings, we set aside the impugned order and allow the appeal. The appellant is entitled to consequential relief in accordance with law.
14. The appeal is allowed.
(Operative part of the order was pronounced in the Open Court)
