CESTAT Directs Excise Duty Refund to Supplier,  Notes Compliance with Mega Project Exemption Conditions [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) recently directed a refund of excise duty to an engineering company that supplied equipment for a mega power project, noting the supplier’s compliance with exemption requirements under central excise regulations.

The case arose from a refund claim filed by the appellant, Brady and Morries Engineering Co Ltd, an engineering company involved in manufacturing EOT cranes, supplied the said cranes to a major power project undertaken by Larsen and Toubro in Amrawati, Maharashtra. These supplies, the appellant argued, were eligible for duty exemption under Notification No. 6/2006-CE, as amended by Notification No. 31/2010-CE, applicable to goods supplied for mega power projects.

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The appellant-company paid an excise duty amount of Rs. 7,15,026/- on these supplies, later realizing that the goods should have qualified for exemption. In December 2012, they applied for a refund under Section 11B of the Central Excise Act, 1944, contending that the duty was paid in error due to oversight. The Commissioner of Central Excise, however, rejected the claim, asserting that the appellant had not met all conditions required under the exemption notification. The case went through an appeal, with the Commissioner (Appeals) upholding the rejection on similar grounds, stating the appellant was ineligible for the refund.

In its defense, the appellant’s legal representation argued that they had met all necessary conditions under Sr. No. 28 of the amended Notification No. 31/2010-CE. According to these conditions, goods supplied for mega power projects are exempt from excise duty, provided certain documents and assurances are furnished. The appellant presented evidence, including certification from a Chief Engineer-level officer confirming that the goods were essential for setting up the mega power project. Additionally, they submitted an undertaking from the Chief Executive Officer of the project, Indiabulls Power Limited, affirming that the cranes would be used exclusively for the power project, with a commitment to pay duty if this condition was breached.

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In evaluating the case, the bench of C.L. Mahar, Member (Technical), reviewed the relevant documentation and was satisfied that the company had met the exemption conditions.

The tribunal highlighted that the notification stipulates specific criteria for excise duty exemption, including certification of necessity for the mega power project and assurances against the goods' use for other purposes. Upon examining the records, the tribunal concluded that the appellant had provided all required documents, fulfilling Condition No. 28. In support of this decision, CESTAT referenced a prior Supreme Court judgment in the case of Bonanzo Engineering Chemicals Pvt Ltd vs. Commissioner of Central Excise, which established that paying duty on exempt goods by mistake does not negate eligibility for a refund.

After considering the appellant’s compliance and relevant legal precedent, CESTAT set aside the prior decisions, declaring that the appellant was indeed entitled to the refund.

To Read the full text of the Order CLICK HERE

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