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Issues: Whether goods supplied to a shipbuilding yard for construction of naval vessels qualified as exempt "ship stores" under Notification No. 64/95, and whether the condition of consumption "on board" a vessel was satisfied.
Analysis: The exemption was held applicable only to goods that are stores for consumption on board a vessel of the Indian Navy or Coast Guard. Goods supplied for construction of a vessel are components used in the building process, not stores consumed on board. The phrase "ship stores" was understood in its marine parlance meaning, covering items used by the crew for maintenance or running of the ship, not materials used in dockyard construction. The condition of consumption on board could not be extended to supplies made for use while the ship was still under construction. Certificates from naval authorities were held irrelevant where the substantive conditions of the notification were not met.
Conclusion: The goods did not qualify for exemption under Notification No. 64/95, and the assessee was not entitled to the benefit of the notification.
Final Conclusion: The exemption claim failed because the supplies were components for ship construction and not ship stores consumed on board a naval vessel.
Ratio Decidendi: An exemption for "ship stores" consumed "on board" a naval vessel does not extend to goods supplied to a shipyard for construction of the vessel, as the notification must be construed according to its plain terms and commercial parlance.
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