Notification 108/95-CE exemption upheld for project supplies despite delayed World Bank financing and penalties struck down.

Goods supplied to a transmission project qualified for exemption under Notification No. 108/95-CE because the project was supported by the required certificate from the implementing authority and countersignature of the competent Government officer, and World Bank financing was in the pipeline even though disbursement was later sanctioned. The Tribunal followed its earlier ruling on the same project and held that subsequent delay in financing did not defeat the exemption. It also accepted that the clearances were made under a bona fide belief, so the duty demand and consequential penalties could not be sustained.

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Issues: Whether the supplier was entitled to exemption under Notification No. 108/95-CE for goods supplied to a transmission project where World Bank financing was initially pending but later sanctioned, and whether duty and penalties could be sustained.

Analysis: The exemption was claimed on the basis that the goods were supplied for an approved project intended to be financed by the World Bank, supported by the required certificate from the project implementing authority and countersignature of the competent Government officer. The earlier Tribunal decision on the same project had held that the notification condition was satisfied when the certificate was issued and the project financing was in the pipeline, and that subsequent delay in disbursement did not defeat the exemption. Since the same factual and legal issue arose here, the earlier reasoning was followed. The Tribunal also treated the clearance as made under a bona fide belief and found no justification for invoking the duty demand and consequential penalties.

Conclusion: The assessee was entitled to the benefit of Notification No. 108/95-CE, and the confirmation of duty and penalties was unsustainable.

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