Exemption for indigenous capital goods upheld where later recommendation requirement could not be applied retrospectively.

Exemption under Notification No. 1/95-C.E. for indigenous procurement of capital goods could not be denied on the basis of a recommendation requirement that was inserted only later by Notification No. 31/98-C.E. and applied from 15-9-1998, after the goods had been procured. The record also showed a clarification from the Development Commissioner that no such recommendation was needed, along with a CT3 certificate, Ministry permission for duty-free procurement, and use of the goods for the intended purpose. Since the remaining exemption conditions were satisfied, the appellants were entitled to the benefit and the demand was unsustainable.

---

---

Issues: Whether the appellants were entitled to exemption under Notification No. 1/95-C.E. for indigenous procurement of capital goods when the requirement of recommendation by the Development Commissioner was introduced only by a later amending notification.

Analysis: The condition requiring a recommendation from the Development Commissioner was inserted only by Notification No. 31/98-C.E. with effect from 15-9-1998, whereas the goods were procured in June, 1998. A condition brought into force subsequently could not be applied to an earlier procurement. The record also showed clarification from the Development Commissioner that no such recommendation was needed for indigenous procurement, issuance of a CT3 certificate by the jurisdictional Superintendent, and permission from the Ministry for duty-free procurement. The remaining requirements of the exemption notification were found to have been satisfied and the goods were used for the intended purpose.

Conclusion: The appellants were entitled to the exemption under Notification No. 1/95-C.E., and the demand was unsustainable.

---