2006 (3) TMI 581 - AT - Central Excise

Summary

Issues: Duty demand on items supplied to "Simhadri Vizag Transmission Systems" project based on exemption notification and clarification from Central Board of Excise & Customs.

In this case, the Appellate Tribunal CESTAT, New Delhi, heard the matter regarding duty demand on items supplied to the "Simhadri Vizag Transmission Systems" project. The project was financed by the Japanese Bank of International Cooperation, and initially, the goods were cleared without payment of duty based on a certificate issued under exemption notification No. 108/95. However, a clarification from the Central Board of Excise & Customs stated that the Japanese Bank for International Cooperation was not recognized as an international organization under the United Nations (Privileges and Immunities) Act, 1947.

The appellant argued that the duty demand was unjustified, highlighting that the original clearance was based on a certificate from the Competent State Government authority. They claimed eligibility for duty-free clearance or reimbursement as the supplies were treated as deemed exports. The appellant emphasized that exemption provisions should be interpreted in line with the intended purpose.

The Tribunal found merit in the appellant's submission. The supplies were made duty-free based on a letter from the State Government administering the project, and they had the status of deemed exports. It was undisputed that the project was funded by a Foreign Development Bank. Consequently, the Tribunal waived the requirement for pre-deposit and stayed the recovery until the appeal's disposal. The judgment was dictated and pronounced in open court by Member (T) C.N.B. Nair.