2010 (10) TMI 149 - AT - Customs

Construction of roads Exemption to goods required for construction of roads notification grants exemption to goods required for construction of roads - appellants contractor in the contract between the Govt., of Tamilnadu and the Tamil Nadu Road Development Corporation (TNRDC) and hence they are satisfying clause (a)(iii) of Condition No. 40 of notification no. 21/2002 - benefit of exemption under the impugned notification cannot be denied to the appellants

Summary

Issues:
- Exemption under Notification No. 21/2002, Sl. No. 230
- Fulfillment of Condition No. 40
- Sub-contractor status in a contract
- Interpretation of Clause (a)(ii) of Condition 40
- Bona fides of the appellants

Exemption under Notification No. 21/2002, Sl. No. 230:
The appellants were denied exemption under Notification No. 21/2002, Sl. No. 230 as they were deemed not to have fulfilled Condition No. 40 specified against the said serial number. The exemption was related to goods required for the construction of roads. The authorities held that the appellants were not mentioned as a sub-contractor in the contract between the Govt. of Tamil Nadu and the Tamil Nadu Road Development Corporation (TNRDC), thus not satisfying clause (a)(iii) of Condition No. 40.

Fulfillment of Condition No. 40:
The appellants presented a purchase order issued by the TNRDC for high-speed barriers for ECR toll plazas and a letter from the Govt. of Tamil Nadu clarifying the appellants' status as a sub-contractor of the TNRDC. The Tribunal found that the purchase order constituted a contract between the appellants and the TNRDC, making the appellants the contractors. This fulfillment of the contract satisfied clause (a)(ii) of Condition 40, which allows duty exemption for goods imported by a person awarded a contract by a road construction corporation under the control of a State government.

Sub-contractor status in a contract:
The letter from the Govt. of Tamil Nadu confirmed the appellants' role as a sub-contractor for the TNRDC, establishing their bona fides in undertaking road construction work on behalf of the TNRDC. This clarification was crucial in determining the appellants' eligibility for the exemption under the impugned notification.

Interpretation of Clause (a)(ii) of Condition 40:
The Tribunal interpreted Clause (a)(ii) of Condition 40 to include the appellants, who had been given a contract for road construction under the purchase order issued by the TNRDC. This interpretation, coupled with the confirmation of sub-contractor status, led to the Tribunal's decision to grant the benefit of exemption to the appellants.

Bona fides of the appellants:
The Tribunal, after considering the evidence presented, including the purchase order, the letter from the Govt. of Tamil Nadu, and the nature of the work undertaken by the appellants, concluded that the appellants had acted in good faith and were rightfully entitled to the exemption under the impugned notification. Consequently, the impugned order was set aside, and the appeal was allowed with consequential benefits to the appellants.