Rejection of Interest Waiver for Power Project Found Unreasoned: CESTAT Remits Matter for Fresh Consideration [Read Order]

The Customs,Excise and Service Tax Appellate Tribunal(CESTAT) Ahmedabad  Bench  found the rejection of interest waiver for a power project unreasoned and arbitrary due to the Chief Commissioner's failure to provide any explanation or hearing, and remitted the matter back for fresh consideration.

Essar Power Gujarat Ltd ,appellant-assessee,had requested waiver of interest on goods imported for a power project. The goods were kept in a warehouse and cleared later. The request was based on the Central Board of Indirect Taxes and Customs(CBIC) Circular No. 10/2006 dated 14.02.2006, which allowed interest waiver in such cases to avoid cost escalation in projects of national importance.

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The circular clearly covered power projects under clause (ix). When the assessee first approached the Chief Commissioner, they were told to apply after the project was completed. However, when they applied later, the request was rejected without any reason through letters dated 22nd August 2017 and 6th November 2017. The assessee was also directed to pay interest of ₹24,23,880.

Aggrieved by the rejection, the assessee approached the tribunal.

A single member bench of Somesh Arora (Judicial Member) found that the Chief Commissioner’s rejection of interest waiver was unreasoned and passed without giving the assessee a hearing. It noted that the decision was taken in an arbitrary manner, with no explanation provided.

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The appellate tribunal observed that the CBIC Circular clearly supported interest waiver for power projects and explained why such cases deserved sympathetic consideration. However, the Chief Commissioner failed to apply the circular or provide any reasoning.

As a result, the bench set aside all related orders, including the one dated 16th November 2017 issued by the Commissionerate of Central GST and Central Excise, Rajkot. The matter was remitted back to the Chief Commissioner with instructions to pass a reasoned order after hearing the assessee.

To Read the full text of the Order CLICK HERE

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