2017 (1) TMI 1352 - AT - Central Excise

Benefit of Exemption N/N. 108/95-CE dated 28/08/1995 - denial on the ground that the goods were not supplied to the project or Project Implementing Authority but to the contractors who continued to be the owner of the said goods even after the completion of the project - Held that - 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 appellant is entitled for benefit of exemption N/N. 108/95 ibid - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of benefit under Exemption Notification No. 108/95-CE dated 28/08/1995.

Analysis:
The appellant, engaged in manufacturing Excavator Loaders and Earthmoving Machinery, was denied the benefit of Exemption Notification No. 108/95-CE. The goods were cleared for projects to contractors instead of the Project Implementing Authority, leading to a show cause notice and subsequent demand of duty, interest, and penalties. The appellant contended that the projects were financed by an International Organisation approved by the Government of India, satisfying the conditions of the Notification. The Tribunal examined the Notification's requirements and previous cases to determine eligibility. It was established that the goods were used in the projects financed by the International Organisation, fulfilling the Notification's criteria. The Tribunal emphasized that the goods' use in the project was crucial, not the direct payment to the financing organization. Citing precedents, the Tribunal highlighted that retaining the goods by contractors post-project completion did not negate the exemption eligibility. The Tribunal also referenced a Madras High Court decision supporting the view that post-project retention of goods does not affect exemption eligibility.

The Tribunal found no grounds to interfere with the CESTAT's order, emphasizing the beneficial nature of the Notification and the fulfillment of its conditions by the appellant. The Tribunal clarified that supplying goods for the project's use was the key requirement for exemption, dismissing the Revenue's appeal. Given the similarity to a previous case involving M/s JCB India Limited, the Tribunal held that the appellant was entitled to the benefit of the exemption Notification. Consequently, the impugned orders were set aside, and the appeals were allowed with any necessary consequential relief.