2015 (6) TMI 43 - AT - Central Excise

Exemption under Notification No.108/95-CE - projects financed by the said United Nations or an International Organisation and approved by the Government of India - Actual user condition - Held that - 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. - Following the decision of Hon ble Madras High Court (2013 (7) TMI 244 - MADRAS HIGH COURT), the impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Denial of benefit under Notification No.108/95-CE for removal of Diesel Engine without payment of Central Excise duty.
2. Appeal by Revenue against the order allowing benefit to the appellants.
3. Requirement to produce proof of certificate from the Project Implementing Authority.
4. Submission of certificate by Rail Vikas Nigam Ltd. and reliance on a judgment of Hon'ble High Court, Madras.
5. Discrepancy between the adjudicating authority's order and the Commissioner (Appeals) decision.
6. Consideration of Tribunal's order and Hon'ble High Court's decision in similar cases.
7. Interpretation and application of Notification No.108/95-C.E. dated 28-8-1995.
8. Dismissal of Revenue's appeal based on factual findings and compliance with conditions of the Notification.

Analysis:
The appeal involved the denial of benefit under Notification No.108/95-CE to the appellants for removing Diesel Engine without paying Central Excise duty. The adjudicating authority initially allowed the benefit, but the Commissioner (Appeals) overturned this decision, prompting the appeal by the Revenue. During the proceedings, the appellant submitted a certificate from Rail Vikas Nigam Ltd., certifying the installation of DG sets as per the project certificate. Additionally, the appellant relied on a judgment from the Hon'ble High Court, Madras, where a similar issue was decided in favor of the assessee.

The Tribunal noted a discrepancy between the adjudicating authority's reliance on a previous order and the Commissioner (Appeals) considering the pending appeal before the Hon'ble High Court. The Tribunal referenced the Hon'ble High Court's decision, which highlighted that the goods were used in the project financed by an International Organization, meeting the conditions specified in Notification No.108/95-C.E. The Tribunal emphasized that the exemption should not be denied based on the goods being supplied to sub-contractors, as long as the project's requirements were fulfilled.

The Tribunal dismissed the Revenue's appeal, citing the factual findings and lack of evidence supporting the alleged misuse of goods by sub-contractors. The Tribunal reiterated that the Notification's conditions were satisfied in the present case, and there was no justification for imposing additional restrictions. Ultimately, the Tribunal upheld the appeal, following the decision of the Hon'ble Madras High Court and setting aside the impugned order. The stay application was also disposed of accordingly.