By TIOL News Service

CHENNAI, JULY 18, 2013: THIS is an appeal filed by revenue against the order of CESTAT allowing the benefit of Notification No 108/95 CE reported vide 2005-TIOL-423-CESTAT-DEL

The respondents were engaged in the manufacture of Loaders falling under Chapter Heading 84.29 of the 1st Schedule to the CETA 1985. They cleared these goods by availing exemption in terms of Notification No.108/95-CE dated 28.8.95 which inter alia exempts excisable goods supplied to projects financed by UN and International Organizations approved by the Government of India, subject to certain conditions relating to production of certificate from specified authorities.

The benefit of the Notification was denied to the respondents by holding that it only exempted goods supplied to Projects financed by United Nations or International Organizations approved by the Government of India while the appellants had cleared the loaders to contractors of the respective Projects and not to the Project Implementing Authorities and on the ground that the contractors continue to be the owners of the goods and continue to possess them even after the completion of the Project.

However, the Tribunal held that the respondents were entitled for the exemption.

Against the above order, revenue filed an appeal before the High Court.

After hearing both sides, the High Court dismissed the revenue appeal by holding that:

There is no justifiable ground to interfere with the order of the CESTAT based on a factual finding and there was no material placed by the Revenue on the allegations of the possible misuse of the goods for unintended purposes by the Sub-Contractors. Secondly, being the beneficial Notification issued in public interest and the project itself being executed fully by the Contractors as per the directions of the Project Implementing Authority, the fact that the machineries were not given directly to the project implementing authority but given to the agency executing the work in fact cannot go against the assessee's claim. Thus ultimately, as the machineries had been put in use by the sub-contractors, who were given the job of execution the claim for exemption cannot be denied. The use of the phrase 'supplied to the projects financed by the said United Nations or an International Organisation and approved by the Government of India' clearly shows that the condition for grant of exemption is supply of the goods towards the project and nothing beyond.

Thus with all the conditions satisfied, the beneficial Notification applies to the case on hand.

(See 2013-TIOL-562-HC-MAD-CX)