2011 (1) TMI 414 - AT - Central Excise

Exemption - The Notification No. 108/95-C.E., dated 28-8-95 read with Notification No. 4/99-C.E., dated 11-2-99 clearly provides that the exemption has been sought to be granted thereunder to the goods when supplied to International Organisation for their official use or supply to the project financed by the an International Organisation - Scince, the respondents did not have certificate in their favour as required under the said notification merely because some other person who was authorised to supply the goods had transferred his obligation to the respondents, it is not permissible for the respondents to avail the benefit under the said notification - It is settled law that the conditions of the exemption notification attached to the said notification are to be strictly complied with - Once the basic issue which was discussed in the show cause notice is established against the assessee, the other point discussed by the authorities take the back seat and therefore, merely because on some minor point, the authority had travelled beyond the scope of the show cause notice, that cannot be a justification to quash the order of demand passed in duty confirmation proceedings - The impugned order is hereby set aside and the order of the adjudicating authority is restored with consequential relief.

Issues:
1. Benefit of Notification No. 108/95 dated 28-8-95 read with Notification No. 4/99-C.E., dated 11-2-99.
2. Requirement of certificate in the name of the manufacturer for availing exemption.
3. Dispute over the validity of certificates submitted by the respondents.
4. Interpretation of conditions attached to the exemption notification.
5. Compliance with the mandatory conditions for claiming exemption.
6. Scope of authority to decide beyond the show cause notice.
7. Strict compliance with the conditions of the exemption notification.

Analysis:

1. The case involves the interpretation and application of Notification No. 108/95 dated 28-8-95 read with Notification No. 4/99-C.E., dated 11-2-99, granting exemption to goods supplied to specific projects approved by the Government of India or international organizations.

2. The central issue revolves around the requirement of the certificate being in the name of the manufacturer to claim the benefit of the said notification. The dispute arose as the certificates submitted by the respondents were not in their name but in favor of third parties.

3. The Department issued a show cause notice based on the discrepancy in the certificates submitted by the respondents, leading to a duty demand against them. The respondents contested this by arguing that photocopies of certificates sufficed, and there was no explicit requirement for original certificates in the notification.

4. The Tribunal examined the mandatory conditions specified in the exemption notification, emphasizing that the benefit could only be claimed by the manufacturer of the goods supplied to approved projects. The certificate had to be in favor of the manufacturer, not a third party or dealer, to avail the exemption.

5. It was established that the respondents failed to produce a certificate in their favor as required by the notification. The strict compliance with the conditions of the exemption notification was crucial, and any deviation could render the claim for exemption invalid.

6. The Tribunal addressed the scope of authority to decide beyond the show cause notice issue. While acknowledging that the adjudicating authority had considered additional factors like the nature of certificates, it emphasized that the core issue of lacking a certificate in the manufacturer's name was sufficient to uphold the duty demand.

7. Upholding the principle of strict compliance with exemption conditions, the Tribunal concluded that the respondents could not avail the benefit of the notification due to the absence of a certificate in their favor, despite arguments regarding the sufficiency of photocopies and procedural errors by the authorities.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and restoring the duty demand against the respondents for failing to meet the essential requirement of having a certificate in their name as mandated by the exemption notification.

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