FDRs to be submitted by Provisional Mega Power Projects - Practical Problems
WE received this mail from a Netizen:
As per Notification No 12/2012 CE dated 17.3.2012, Entry No 338 read with condition No 43, goods supplied to MPPs ( Mega Power Projects) in respect of which certificate of project status is issued provisionally, the CEO of the project is required to furnish a FDR equal to the duty of excise payable but for the exemption to the Deputy/Assistnat Commissioner of Central Excise, having jurisdiction and if the project developer fails to furnish the final mega power status certificate within a period of thirty six months from the date of clearance of excisable goods, the said security shall be appropriated towards duty of excise payable on such clearances but for this exemption; ( the earlier Notification No 6/2006 CE dated 1.3.2006 also had an identical condition)
After the word jurisdiction, it should have been mentioned in whose jurisdiction the FDR is required to be furnished. Should it be at the suppliers' jurisdiction or should it be at jurisdiction of the MPP.
Board, vide Circular No dated 29.3.2012 has clarified that it is the suppliers' jurisdiction only.
Here, it would be relevant to discuss the history of the aforesaid notification. Initially when the excise exemption to MPP was introduced vide Notification No. dated 27-02-2010, the manufacturer was made liable to pay excise duty in the event the goods were not used for the mega power project. Accordingly, as the undertaking was required to be submitted by the manufacturer, to his jurisdictional ACCE/DCCE since he had the jurisdiction over the manufacturer's factory for issuance of Show Cause Notice in the event of non-fulfilment of the aforesaid condition.
However, the said condition was subsequently amended and the onus to ensure the end-use was shifted to the Project Developer. Accordingly, with the aforesaid amendment, in my view, the undertaking is now required to be submitted by the Project Developer to the jurisdictional ACCE/DCCE of the project (though in whose jurisdiction the undertaking is to be submitted is not very clearly mentioned in the condition of the Notification) so that in the event, the goods are not used for intended purposes, the jurisdictional ACCE/DCCE of the Project Developer can issue Show Cause Notice on the Project Developer for recovery of excise duty.
The above interpretation is also supported by the fact that the in the event of non-compliance, the excise authorities of the supplier cannot raise any show cause notice on the project authority (who has been made liable to pay excise duty) since the project authority does not fall under the jurisdiction of the supplier's excise authorities and accordingly, the very purpose of the said undertaking would be defeated.
It appears to be absurd that the undertaking has to be furnished at the project end and FDRs have to be furnished at the supplier's end when the usage of the material has to be ensured at the Project Developer end and further when the Project Developer is made liable to pay excise duty in case of failure to use the goods for the intended purposes.
Additionally, for administrative reasons also, the undertaking or the FDR should be submitted at the Project Developer's jurisdictional excise authorities end since otherwise, the same will lead to multiple recoveries by multiple jurisdictional authorities in addition to the difficulty and extra effort of the supplier's excise authorities in keeping a proper track of the Project Developer.
It is suggested that Board should re-examine the Circular No dated 29.3.2012