Circular No. 33/2013-Customs

Circular No. 33/2013-Customs

F.No.354/94/2011 -TRU

Government of India

Ministry of Finance

(Department of Revenue)

Tax Research Unit

*****

New Delhi, dated the 23^th August, 2013

To,

All Chief Commissioners of Customs.

All Chief Commissioners of Customs & Central Excise.

All Chief Commissioners of Central Excise.

All Directors General of CBEC.

Sub: - Customs Duty Exemption for Import of Ash Handling Systems, Water Treatment Plant and Coal Transportation Facilities etc. Required for Ultra-Mega/ Mega Power Projects under Heading 9801(Project Imports)-Clarification -Reg.

Sir / Madam,

I am directed to invite your attention to notification No. 12/2012-Central Excise (S. Nos. 337&338), dated 17-03-2012, which provides exemption to machinery, instruments, apparatus and appliances etc. required for setting up of ultra-mega/ mega power projects. Particular attention is invited to the Explanation, which clarifies that the goods required for setting up of these projects include the goods required for development of facilities such as ash disposal system including ash @#!*% , water intake including treatment and storage facilities and coal transportation facilities for such a project, notwithstanding the fact that such facilities are set up inside or outside the power plant’s designated boundary.

2. In this connection, representations have been received from the trade and industry that the benefit of exemption is being denied to the afore-cited goods when they are imported for setting up of ultra-mega/ mega power projects. It has been requested that, for removal of doubts, a clarification,on the lines of excise exemption, should be issued by the Ministry that the said goods required for ultra-mega/ mega power projects are eligible for customs duty exemption.

3. The matter has been examined by the Ministry. In Pre Budget 2011-12, representations were received from power producers that limited interpretation of the term power project as facilities inside the plant boundary only, was restrictive in nature and was limiting the scope of exemption of customs and excise duty on goods required for these facilities. It was requested that the benefit of exemption for ultra mega power projects should be extended to the development of facilities both inside and outside the power plant’s designated boundary such as ash pond, water intake, coaltransportation within the scope of the term ‘project’. The matter was examined and it was decided to clarify that the benefit of exemption, available for ultra mega power projects, would be available for development of facilities such as ash disposal system including ash @#!*% , water intake including treatment and storage facilities and coal transportation, both inside and outside the power plant’s designated boundary. Accordingly, an Explanation was inserted at S. Nos. 91A & 91B of notification No 6/2006-CE, dated 1.3.2006 [now S. Nos. 337 and 338 of notification No. 12/2012-CE dated 17-03-2012].

4 The explanation clarified, without any ambiguity whatsoever, that the goods specified in paragraph 1 above and required for setting up of ultra-mega/ mega power projects would be eligible for the benefit of excise duty exemption even if the facilities are set up outside the power plant’s designated boundary. No such clarification was issued for the purpose of availing of the customs duty exemption, as it was felt that this exemption would be available to the said goods under project imports.

5. Subsequently, representations were received, seeking clarification in respect of customs duty exemption on the said goods required for setting up of ultra-mega/ mega power projects. The issue was examined in consultation with Ministry of Power (MoP). MoP vide letter dated 13^th October, 2011 clarified that facilities such as ash disposal system including ash @#!*% , water intake including treatment and storage facilities and coal transport facilities are an integral part of mega power projects and therefore, customs duty should be exempted for import of these goods under the Mega Power Policy. On the basis of this, a clarification dated 29-12-2011 was issued to the Commissioner of Customs, Nhava Sheva, stating that these goods are eligible for customs duty exemption.

6. Now, it has been brought to the notice of the Ministry that in the absence of a general clarification, the Customs authorities at certain places are demanding duty on these goods on the ground that the goods are used outside the power plant’s designated boundary. However, the foregoing would make it clear that the intention all along was to grant exemption from Customs duty on these goods.

6.1 For removal of doubts, it is clarified that the goods required for development of facilities such as ash disposal system including ash @#!*% , water intake including treatment and storage facilities and coal transport facilities required for ultra-mega/ mega power projects are eligible for customs duty exemption, notwithstanding the fact that such facilities are set up inside or outside the power plant’s designated boundary.

7. Difficulties, if any, faced in the implementation of the instructions may be brought to the notice of the Ministry at an early date.

Encl : clarification dated 29-12-2011 (see below)

Yours faithfully,

(P.K.Mohanty)

Joint Secretary (TRU)

F.No.354/94/2011 -TRU

Government of India

Ministry of Finance

(Department of Revenue)

Tax Research Unit

*****

New Delhi, dated the 29^th December, 2011

To,

The Commissioner of Customs (Imports), JNCH- Nhava Sheva, Mumbai.

Sir,

Sub: Clarification on eligibility of Ash Handling Systems and Seamless Pipes as parts/ components of Ash Handling System under Project Import (CTH 9801)- reg.

The undersigned is directed to refer to the letter dated 26.07.2011 on the above mentioned subject. The issue has been examined in consultation with the Ministry of Power- the administrative Ministry for all Power Projects.

2. The exemptions to Mega/ Ultra-Mega Power Projects were extended to augment the power generation capacities in the country considering the acute shortages and requirements. The facilities such as Ash Disposal System including ash @#!*% , water intake including treatment and storage facilities and coal transportation facilities are essential for viability and sustenance of Mega/ Ultra-Mega power Projects and hence are considered vital and inalienable part of such projects. Moreover, facilities like Ash Disposal System are considered essential to mitigate environmental concerns and therefore, rank high in the priority list for such exemptions. Since a Heading corresponding to Project imports (98.01) does not exist in the First Schedule to the Central Excise Tariff Act and there were likely to be divergence in interpretation between Customs and Central excise as also between basic Customs & additional duties, the description of heading 98.01 has been borrowed for the purpose of S.No. 91A of notification no.6/2006-CE. The explanation in the latter in respect of Ash disposal system has been inserted “for the removal of doubt” which implies that it was always meant to be included. The description of Heading 98.01 is pari passu with entry at S. No. 91A, the explanation would also be valid for determining the scope of “Mega Power projects” under heading 98.01 for the purpose of Basic Customs Duty.

3. The eligibility of seamless pipes as parts/ components of Ash handling system under ‘Project imports’ is to be decided on the basis whether the subject goods are parts/ components of the Ash handling systems or not. Such issues are governed by the General Rules for Interpretation and lie in the domain of the Assessing Officer.

4. In view of the above it is stated that facilities such as Ash Disposal System including ash @#!*% , water intake including treatment and storage facilities and coal transportation facilities are an integral part of Mega Power project and therefore customs duty exemption for import of these goods under Mega power policy is available.

(Yogendra Garg)

Director