Excise Duty: High Court Dismisses Challenge as Finance Act 2024 Extends Exemption Period for Mega Power Projects
Excise Duty: High Court Dismisses Challenge as Finance Act 2024 Extends Exemption Period for Mega Power Projects
This case is associated with two companies named D.B. Power Limited and M.B. Power (Madhya Pradesh) Limited, which approached the Delhi High Court and filed two petitions. Both of these companies are involved in Mega Power Projects, which are large electricity generation projects.
For these projects, the company was earlier granted a Central Excise Duty exemption from the government, provided they submitted “Mega Power Project Certificates” confirming their eligibility. Originally, this exemption was valid for 120 months. However, numerous companies could not submit all required certificates within this stated time limit.
In conclusion, the Department of Revenue issued an Office Memorandum dated March 10, 2023, to these companies, which stated that if the certificates were not submitted within the specified time period, i.e., 120 months, then the government would start recovering the excise duty that was previously exempted.
This created a problem for both D.B. Power and M.B. Power, because they needed an extended time of 36 months to submit their certificates and continue availing the excise exemption. They wanted the same benefit that had already been granted earlier for Customs Duty via Notification No. 31/2022-Customs dated 07.06.2022 to be applied for Excise Duty also.
The companies request the high court to quash the office memorandum dated 10.03.2023, and direct the government to issue a circular extending the deadline till 156 months for excise duty exemption, similar to what was already done for customs duty. The court was told that the recovery of excise duty was put on hold while the government re-examined the issue. The court then directed that a meeting should be held between the Ministry of Power, Ministry of Finance, and Department of Revenue to make a coordinated decision.
On March 12, 2025, the court asked a senior official from the Ministry of Power to be present at the next hearing if their affidavit was not filed. The Ministry of Power finally submitted an affidavit on April 15, 2025, signed by an officer named Mr. Somraj from the Central Electricity Authority. In this affidavit, the Ministry stated that a meeting was held on March 24, 2025, headed by a Joint Secretary from the Ministry of Power. Officials from the Department of Revenue also participated. During the meeting, it was confirmed by the Department of Revenue that the extension from 120 months to 156 months had already been granted through an amendment in the Finance Act, 2024.
This amendment made it officially legal to extend the time limit for claiming the excise duty exemption. Therefore, the Ministry informed the court that the main concern of the petitioners had already been addressed, and so the petitions no longer needed to continue.
Since the government had already extended the deadline to 156 months, and this change was now part of the law via the Finance Act, 2024, the Court concluded that the relief the petitioners were asking for had already been granted. Therefore, the High Court dismissed the petitions, stating that no further action was needed. Also, the appearance of Mr. Anurag Ojha, a Senior Standing Counsel who represented CBIC (Central Board of Indirect Taxes and Customs), was officially recorded for all the hearings, especially the one on March 12, 2025.