2011 (8) TMI 929 - AT - Central Excise

Notification No. 108/95-C.E., dated 28-8-95 - As the certificate was not issued in the name of the assessees, the department was of the view that the conditions of the notification were not fulfilled and accordingly, issued two show cause notices both dated 19-11-2003 proposing recovery of duty of Rs. 53,03,047/- as result of denial of benefit of the notification was issued - The agreement clearly brings out that M/s. MFIL, to whom a contract had been awarded by the United Nations World Food Programme for supply of fortified biscuits to Afghanistan, had engaged the respondents to manufacture such biscuits and supplied them to the United Nations World Food Programme - the certificate issued by the project implementing authority under Notification No. 108/95 is not necessarily required to be in the name of supplier of the products used in the project, are directly applicable to the facts of the present case - Decided in favor of the assessee

Summary

Issues:
Interpretation of Notification No. 108/95-C.E. regarding exemption from excise duty for goods supplied to international organizations.

Detailed Analysis:

Issue 1: Interpretation of Notification No. 108/95-C.E.
The case involved the interpretation of Notification No. 108/95-C.E., which provides exemption from excise duty for goods supplied to international organizations approved by the Government of India. The assessees manufactured fortified biscuits at nil rate of duty under this notification based on a certificate issued in the name of another entity, M/s. Modern Food Industries (I) Ltd. The department contended that since the certificate was not in the name of the assessees, they were not eligible for the exemption, leading to the issuance of show cause notices for recovery of duty. The lower appellate authority, however, set aside the demand and penalty, ruling in favor of the assessees.

Issue 2: Link between Manufacturer and Certificate Holder
The Tribunal analyzed the agreement between M/s. Modern Food Industries (I) Ltd. and the assessees, establishing that M/s. MFIL had engaged the assessees to manufacture fortified biscuits supplied to the United Nations World Food Programme. This agreement demonstrated a clear link between M/s. MFIL, the certificate holder, and the assessees. The Tribunal referenced previous decisions to support its ruling, emphasizing that the certificate under Notification No. 108/95 does not necessarily need to be in the name of the supplier of the products used in the project. Citing relevant precedents, the Tribunal upheld the lower appellate authority's decision, extending the benefit of the notification to the assessees and rejecting the appeal by the revenue department.

In conclusion, the judgment by the Appellate Tribunal CESTAT, New Delhi, in this case clarified the interpretation of Notification No. 108/95-C.E. regarding exemption from excise duty for goods supplied to international organizations. By establishing a direct link between the manufacturer and the certificate holder, the Tribunal upheld the lower appellate authority's decision, ruling in favor of the assessees and rejecting the revenue department's appeal. The case highlights the importance of analyzing agreements and previous decisions to determine eligibility for exemptions under relevant notifications.