2013 (11) TMI 488 - AT - Central Excise

Benefit of Notification No.108/95 - Project funded by the World Bank and Asian Development Bank Steel bars Cleared were consumed in the Earthquake affected area of kuchh - Whether the appellant is eligible for the benefit of Notification No.108/95-CE on a certificate which has been issued in the name of the contractor who was executing the project 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 - 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. 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 With all the conditions satisfied, the beneficial Notification applies there is no justification to introduce any condition or read in a restrictive manner Relying upon DEE DEVELOPMENT ENGINEERS LTD. Versus UNION OF INDIA 2010 (2) TMI 535 - PUNJAB & HARYANA HIGH COURT and CCE, Pondichery Vs. Caterpillar India Pvt. Ltd. 2013 (7) TMI 244 - MADRAS HIGH COURT - the appellant is eligible for availing the benefit of Notification No.108/95-CE in respect of goods cleared by them for use in earthquake affected area Decided in favour of assessee.

Issues Involved:
1. Eligibility for the benefit of Notification No. 108/95-CE.
2. Validity of certificates not issued in the name of the manufacturer.
3. Interpretation of the phrase "intended to be supplied to" within the notification.
4. Compliance with conditions stipulated in the exemption notification.
5. Contradictory judgments from different High Courts.
6. Application of the principle of substantial compliance.

Issue-wise Detailed Analysis:

1. Eligibility for the benefit of Notification No. 108/95-CE:
The crux of the case was whether the appellant was eligible for the benefit of Notification No. 108/95-CE, which exempts excisable goods supplied to projects financed by international organizations and approved by the Government of India. The appellant had cleared TMT bars for projects funded by the Asian Development Bank and the World Bank, but the certificates were issued in the name of the contractors, not the manufacturer.

2. Validity of certificates not issued in the name of the manufacturer:
The adjudicating authority and the first appellate authority rejected the appellant's claim on the grounds that the certificates were not issued in the appellant's name. The authorities emphasized that the exemption under the notification is not available unless the certificate from the appropriate authority is issued in the name of the manufacturer and produced before the clearance of goods.

3. Interpretation of the phrase "intended to be supplied to" within the notification:
The appellant argued that the phrase "intended to be supplied to" should be interpreted broadly to include goods supplied to contractors executing the project. They cited the Madras High Court's decision in CCE, Pondichery Vs. Caterpillar India Pvt. Ltd., which supported a broader interpretation, emphasizing that the exemption should not be denied if the goods were ultimately used for the intended project.

4. Compliance with conditions stipulated in the exemption notification:
The Departmental Representative argued that strict compliance with the conditions of the exemption notification was essential, citing the Punjab & Haryana High Court's decision in Dee Development Engineers Ltd., which denied the exemption when certificates were not in the name of the manufacturer. The Tribunal had to consider whether substantial compliance was sufficient or strict adherence to the notification's conditions was necessary.

5. Contradictory judgments from different High Courts:
The Tribunal noted the conflicting judgments from the Madras High Court and the Punjab & Haryana High Court. The Madras High Court's decision favored a broader interpretation and substantial compliance, while the Punjab & Haryana High Court emphasized strict compliance. The Tribunal decided to follow the later judgment of the Madras High Court, as there was no contrary judgment from the jurisdictional High Court of Gujarat.

6. Application of the principle of substantial compliance:
The Tribunal concluded that the appellant should not be denied the benefit of the notification, as it was undisputed that the goods were used in the intended projects financed by international organizations. The Tribunal emphasized that the object of the notification was met, and substantial compliance should be considered sufficient.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, granting the appellant the benefit of Notification No. 108/95-CE. The decision was based on the factual background that the goods were used in the intended projects and the principle of substantial compliance, as supported by the Madras High Court's judgment.

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