Sanjay Dwivedi, Advocate

C. EXCISE EXEMPTION TO POWER PROJECTS

(as on 01/04/2013)

Consider two aspects:

a. Whether the exemption is available? Determine the serial number of the notification. Check whether all conditions are fulfilled.

b. If yes, whether Cenvat Credit also remains intact (i.e. how to comply with rule 6 of CCR)? Can we get benefit of rule 6 (6)?

SRD LEGAL, Advocates & Consultants Page 2 of 7

Power Projects

New Project

Expansion of existing project

ICB Sr. 336

a. ICB Proof b. Cert. Jt. Sec. Power

Ministry c. PO by CMD/ CEO

d. FD (if Provisional)

TCB

Sr. 339 a. Cert. Jt. Sec. Power

Ministry b. PO by CMD/CEO

c. Undertaking

Ultra Mega Super-critical Coal-thermal

Technology Sr. 337

a. Proof of Technology b. TCB Proof c. Cert. Jt. Sec. Power Min d. FD (if Provisional) e. Cert. C. Electricity Authority

f. Undertaking

Mega Sr. 338

Same as that for Ultra Mega Power Project (sr. 337) except that:

- Project could have been awarded to a developer on TCB

- Sup. Critical..tech not required

SRD LEGAL, Advocates & Consultants Page 3 of 7 Mega Power Project means: (Same definition in Customs as well as C. Excise exemption).

J&K, and NE

states Other states

Thermal Power

Capacity 700 MW or more

1000 MW or more

Hydel Power

Capacity 350 MW or more

500 MW or more

Ultra Mega Power Project has not been defined under either of the notifications. Sr. 337 requires it to be of at least 3960 MW Exemption is granted under following serial numbers of notification 12/2012-CE

Serial of the notification

12/2012-CE

Sr. of the old notification 06/2006-CE

Bidding Exemption to

336 91 ICB All goods supplied against ICB

337 91A TCB Items required for setting up of Ultra Mega Power Projects based on super-critical coal-thermal technology (3960 MW or above)

338 91B TCB Items supplied to mega power projects:

339 91C Items required for expansion of an existing mega power project:

PAC means: Project Authority Certificate Caution: In case of Sangam Structurals Ltd. v. CCE, Allahabad, the Hon'ble Tribunal has held that the exemption is available only to the manufacturer who had himself was the successful bidder in ICB. It’s only a stay order (see comments in My Notes)

Plant Location

TYPE

SRD LEGAL, Advocates & Consultants Page 4 of 7 Check List: Common documents Following documents are required in all the cases. Further additional documents have been listed against each serial number. List of other documents is mentioned against each serial number. a. Purchase Order in form of

certificate (mentioning the quantity, total value, description and specifications of the goods)

• In case of Central PSU: by the Chairman and Managing Director

• In case of Private Sector Project - by the Chief

Executive Officer of such project.

b. Proof that specified person has been appointed as the main contractor

Copy of award of contract to the main contractor

c. Proof that we have been appointed as a sub-contractor

Usually this is incorporated as an Annexure or Amendment to the PAC

Check List for Sr. 336: Supply against ICB Excise exemption under Sr. 336 of 12/2012-CE (old 91 of 06/2006): Any goods supplied against ICB. Condition 41 – if there is customs exemption when imported Customs exemption: Sr. 507 of notification 12/2012-Customs (old sr. 400 of 12/2012-Cus) Sr Check Item Item Details Necessity 1. Proof that supply is

against ICB a. Copy of Bid/ Advertisement b. PAC mentioning that supply is against

ICB

3rd condition of rule 6; and Condition of 12/2012-CE

2. Certificate from Jt. Secretary, GOI, Min of Power

a. that the project is a Mega Power Project (specify location & capacity);

b. the power purchasing State – (i) has constituted the Regulatory

Commission with full powers to fix tariffs;

(ii) shall undertake to carry out distribution reforms as laid down by Ministry of Power;

12/2012- Cus (1 of 2 conditions)

3. Is the certificate (from Ministry of Power) provisional or definite

If it is provisional, we are required to submit to AC/ DC, C. Excise, an FD Receipt for 36 months (in favour of President of India)

12/2012-Cus

SRD LEGAL, Advocates & Consultants Page 5 of 7 Check List for Sr. 337: TCB - Ultra Mega Power Proj ect based on super critical coal thermal technology Sr. 337 (old 91A): Items required for setting up of Ultra Mega Power Projects based on super-critical coal-thermal technology (3960 MW or above) Sr Check Item Item Details Necessity 1. TCB - Proof that a. It is based on super-critical coal-

thermal technology b. Its capacity is 3960 MW or above c. power supply has been tied up

through tariff based competitive bidding;

Condition (c) is also essential for the benefit of rule 6 (6).

2. Certificate from Jt. Secretary, GOI, Min of Power

a. that the project is a Ultra Mega Power Project (specify location & capacity);

b. the power purchasing State – (iii) has constituted the Regulatory

Commission with full powers to fix tariffs;

(iv) shall undertake to carry out distribution reforms as laid down by Ministry of Power;

(a) is condition 26 (1 of 4), 12/2012-CE (b) is essential for benefit of rule 6(6) [12/2012-Cus (1 of 2 conditions)]

3. Is the certificate (from Ministry of Power) provisional or definite

If it is provisional, we are required to submit to AC/ DC, C. Excise, an FD Receipt for 36 months (in favour of President of India)

Condition 42 (2 of 4), 12/2012-CE

4. Certificate from Chief Engineer, C. Electricity Authority

a. That the goods are required for the setting up of the said Ultra Mega Power Project under the Government of India initiative,

b. Should indicate the quantity, description and specification of the goods;

Condition 42 (3 of 4), 12/2012-CE

5. Undertaking (to C. Excise) from CEO of the project that

(i) the said goods will be used only in the said project and not for any other use; and

(ii) in the event of non- compliance of sub-

clause (i) above, the project developer will pay the duty which would have been leviable at the time of clearance of goods, but for the exemption under notification 012/2012-CE(sr. 91A).

Remarks: The undertaking should be addressed to the Dy. Commissioner of the manufacturer

Condition 42 (4 of 4), 12/2012-CE

SRD LEGAL, Advocates & Consultants Page 6 of 7 Check List: Sr. 338: TCB - Mega Power Project Sr. 338 (old 91B): Items supplied to mega power projects: Sr Check Item Item Details Necessity 1. TCB - Proof that a. power supply has been tied up through

tariff based competitive bidding; OR b. the project has been awarded to a

developer on the basis of tariff based competitive bidding.

Condition (c) is also essential for the benefit of rule 6 (6).

2. Certificate from Jt. Secretary, GOI, Min of Power

c. that the project is a Mega Power Project (specify location & capacity);

d. the power purchasing State – (v) has constituted the Regulatory

Commission with full powers to fix tariffs;

(vi) shall undertake to carry out distribution reforms as laid down by Ministry of Power;

(a) is condition 43 (1 of 4), 12/2012-CE (b) is essential for benefit of rule 6(6) [12/2012-Cus (1 of 2 conditions)]

3. Is the certificate (from Ministry of Power) provisional or definite

If it is provisional, we are required to submit to AC/ DC, C. Excise, an FD Receipt for 36 months (in favour of President of India)

Condition 43 (2 of 4), 6/2006-CE

4. Certificate from Chief Engineer, C. Electricity Authority

a. That the goods are required for the setting up of the said Mega Power Project under the Government of India initiative,

b. Should indicate the quantity, description and specification of the goods;

Condition 43 (3 of 4), 6/2006-CE

5. Undertaking (to C. Excise) from CEO of the project that

a. the said goods will be used only in the said project and not for any other use; and

b. in the event of non- compliance of sub-

clause (i) above, the project developer will pay the duty which would have been leviable at the time of clearance of goods, but for the exemption under notification 12/2012-CE (sr. 338).

Remarks: The undertaking should be addressed to the Dy. Commissioner of the manufacturer

Condition 43 (4 of 4), 6/2006-CE

SRD LEGAL, Advocates & Consultants Page 7 of 7 Check List: Sr. 339 – Expansion of existing Mega Po wer Project Sr. 339 (old 91C): Items required for expansion of an existing mega power project: Sr Check Item Item Details Necessity 1. Certificate from Joint

Secretary, GOI, Min of Power

a. that the project is a Mega Power Project (specify location & capacity);

b. the power purchasing State – (i) has constituted the Regulatory

Commission with full powers to fix tariffs;

(ii) shall undertake to carry out distribution reforms as laid down by Ministry of Power;

Condition 44 (1 of 3)

2. Undertaking (to C. Excise) from CMD of PSU or CEO of the private sector project that

c. the said goods will be used only in the said project and not for any other use; and

d. in the event of non- compliance of sub-

clause (i) above, the project developer will pay the duty which would have been leviable at the time of clearance of goods, but for the exemption under notification 012/2012-CE(sr. 91C).

Remarks: The undertaking should be addressed to the Dy. Commissioner of the manufacturer

Condition 44 (3 of 3)

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