Excise Duty & Customs Duty Exemptions for Supplies made to Mega Power Project.

All the equipment supplied for the setting up the mega power projects enjoys both customs and excise duty exemptions.

As per the Notification No 6/2006-Central Excise Dated 01-March-2006 of CBEC on Central Excise:

All the goods supplied against ICB under the First Schedule of the The Central Excise Tariff Act-1985 will be excise duty exempted as in the Sl. No. 91 with Condition no. 19.

(As per the Policy Circular No. 29 (RE-08)/2004-2009 Dated: 20^th August, 2008 by DGFT

Deemed export benefits to Mega Power Projects are available if

(i) If power procurement from such projects has been tied up though ICB procedure;

OR

(ii) If ICB procedure has been followed by such projects at Engineering and procurement contract (EPC) stage.)

Condition No-19:

If the goods are exempted from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under Section 3 of the said Customs Tariff Act when imported into India.

As per the Notification No 21 / 2002-Customs Dated 01-March-2002 by CBEC for Customs Duty:

The equipment for the setting up any mega power project will be customs duty exempted as the details in the following.

Sl No	Chapter or Heading or sub - heading	Description of Goods	Standard Rate	Additional Duty Rate	Condition No
400	98.01	Goods required for setting up of any Mega Power Project , if such Mega Power Project is- (a) an inter-State thermal power plant of a capacity of 1000 MW or more; or (b) an inter-State hydel power plant of a capacity of 500 MW or more, as certified by an officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Power	Nil	Nil	86

Condition-86

(a) If an officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Power certifies that-

(i) the power purchasing State has constituted the Regulatory Commission with full powers to fix tariffs;

(ii) the power purchasing State undertakes, in principle, to privatize distribution in all cities, in that State, each of which has a population of more than one million, within a period to be fixed by the Ministry of Power; and

(iii) the power purchasing State has agreed to provide recourse to that State’s share of Central Plan allocations and other devaluations towards discharge of any outstanding payment in respect of purchase of power;

(b) In the case of imports by a Central Public Sector Undertaking, the quantity, total value, description and specifications of the imported goods are certified by the Chairman and Managing Director of the said Central Public Sector Undertaking; and

(c) In the case of imports by a Private Sector Project, the quantity, total value, description and specifications of the imported goods are certified by the Chief Executive Officer of such project.

Modem Programming

Customs Clearance Procedure for Exported Items

Cusoms Clearance Procedure for Imported Items

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Inter State Sales

Sales are broadly classified into 3 categories.

a) Inter state Sales
b) Sales in Transit
c) Intra state sales

In case of Inter state sales, the sales tax is collected by the Union Govt. The Central Sales Tax is applicable as per the CST rate applicable for sale within the state or it is 2% upon production of Concessional form (C-Form) by the Purchaser.

As per the senction 6(2) of the Central Sales Tax Act 1956, where a sale of goods in the course of inter state trades or commerce has either occasioned the movement of such goods from one state to another or has affected the transfer of document titles of the goods during their movement to one state to another; Any subsequent sales during such movement effected by document transfers of titles of the goods to any authorised dealer or to the Government shall exempt from Tax. This mechanism is known as Sale In Transit.

The Sale In Transit can be broadly divided in two types.

1) E1-Transaction
2) E2-Transaction

High Sea Sales

The High Sea Sales is an international trade practices more often used to get the benefits of Customs duties and ownership transfer on the High Sea.

As per the Section 5(2) of The central sales Tax Act 1956, A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India.

The High Sea Sales can be done as a bilateral agreement between two registered company in India with subsequent Sale invoice to the buyer and endorsement of the bill of lading in the name of the buyer.

The Date of High sea sales agreement should be always before the vessels or air vessel enters into the customs frontier.

The Bill of Entry gets generated in three copies in the name of the importer (Buyer of the HSS).
The Original is kept with the Customs Dept. The Duplicate copy is for the Importer which may required for customs reconcilliation. The Triplicate copy is sent to Exchange Control Board, RBI through the designated foreign remmitance bank of the Importer.