Goods for mega power projects can be imported duty-free

The conditions for grant of excise duty exemption for goods supplied to mega power projects have been amended. Now, the project developers, instead of the manufacturers, have been made liable to pay the duty in case they do not ensure that exempted goods are used only in their projects. Besides, the power to attest the list of goods required for setting up the projects has been given to the chief engineer of the Central Electricity Authority.

Thermal power projects that can generate 1,000 Mw power and hydel power projects that can generate 500 Mw power are referred to as mega power projects. The threshold limits are 700 Mw and 350 Mw for projects located in Jammu and Kashmir and states in the North-East. Goods required for such mega power projects can be imported duty free. Locally produced goods, which are supplied to such projects, can be cleared without excise duty payment.

Excise exemption notification number 6/2006-CE dated March 1, 2006 has three different dispensations for power projects. S.No. 91 exempts all goods supplied against International Competitive Bidding, if such goods can be imported at zero duty. This entry covers a wide range, including supplies, to mega power projects. This entry in the notification does not prescribe any documentation but the trade proceeds on the basis that documents to show eligibility for duty-free imports for the project should be adequate.

S.No. 91A of the notification exempts goods required for setting up ultra mega power projects based on the super-critical coal-thermal technology, with installed capacity of 3,960 Mw or above, from which power procurement has been tied up through tariff-based competitive bidding. The prescribed documentation includes a an undertaking from the chief executive officer of the project that the exempted goods will be used only in the said project and not for any other use and that in the event of failure to do so, the project developer will pay the duty which would have been leviable at the time of the clearance of goods, but for this exemption.

S.No. 91 B of the notification exempts goods supplied to mega power projects from which supply of power has been tied up through tariff-based competitive bidding or a mega power project awarded to a developer on the basis of such bidding. The documentation is similar to that under S. No. 91A but the manufacture was required to pay duty in case the goods were not used only in the project. As manufacturers could not ensure such end use, that condition has now been amended making the project developer responsible for duty payment in case of such violation.

The said S. No. 91 B, prescribed documentation that called for a certificate from Joint Secretary in the Union Ministry of Power that the goods are required for a mega power project from which the supply of power has been tied up through tariff-based competitive bidding or a mega power project awarded to a developer on the basis of such bidding. As the trade expressed practical difficulties in obtaining the certificate from the power ministry, the amendment now prescribes a certificate from the chief engineer in the Central Electricity Authority that the goods are required for setting up the said mega power project under the central government initiative, indicating the quantity, description, and specification thereof.