The Kolkata Bench of CESTAT, Customs Excise and Service Tax Appellate Tribunal confirmed the clean chit granted by Directorate of Revenue Intelligence (DRI) to M/s. Maharashtra Eastern Grid Power Transmission Company Limited (MEGPTCL) in an order quashing over-invoicing allegations against firms.
The main issue in this appeal relates to the allegation of overvaluation of the goods that were imported for the purpose of setting up Transmission Lines and Substations in the State of Maharashtra. The two main respondents in this appeal are Maharashtra Eastern Grid Power Transmission Company Ltd and M/s. PMC Projects (India) Pvt Ltd.
The State of Maharashtra was facing acute power shortage with a deficit of approximately 17.5% and a peak deficit of 4700 MW. After a detailed study, a new company called MEGPTCL was formed, which is a Special Purpose Vehicle, for the development of 765 KV intra-state transmission system.
A DRI show-cause notice in 2014 alleged that the MEGPTCL through PMC Projects made “extra remittances” of Rs 1493.84 crore which “have been siphoned off abroad to and for the benefit of their related party Electrogen Infra FZE, UAE, in the guise of import remittances by resorting to gross over-valuation of the imported goods”.
The DRI notice alleged that while the goods (power generation and transmission equipment) were being shipped directly to India by the original equipment manufacturers (based in China and South Korea), “the documents are routed through an intermediary entity (Electrogen Infra FZE, UAE) created in UAE” which “raised inflated invoices (inflating the values in original invoices of OEM several times) on the Indian company, against which money is remitted to UAE.”
In an October 18, 2017 order, the adjudicating authority dropped all proceedings against MEGPTCL, Electrogen Infra, PMC Projects and Vinod Adani. Singh had said that although MEGPTCL and EIF were related entities, the transaction between them was carried out at arm’s length. Hence the Revenue has filed an appeal before the Tribunal challenging DRI’s decision.
Justice Dilip Gupta, President and P Anjani Kumar, Technical Member held that “The allegation of over-valuation has not been established, it is not necessary to examine this aspect.”
“Thus, as the contentions advanced by the learned special counsel for the appellant do not have force, the order dated 17.10.2017 passed by the adjudicating authority dropping the proceedings that were initiated by issuance of a show cause notice dated 15.05.2014 does not call for any interference in this appeal” The Court said.
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