Exemption for diesel generating set supplies to Nepal upheld after certificate confirmed remittances linked to the joint venture.

Exemption under Notification No. 45/2001-C.E. (N.T.) was established for diesel generating sets supplied to a joint venture in Nepal for a hydro-electric project, because a subsequent certificate confirmed that the remittances related to those supplies and were received in US dollars. The earlier denial based on absence of certification from the German company was not sustained once that evidence was produced. As the exemption claim was accepted, the foundation for interest and penalty also fell away, and the denial of exemption, interest, and penalty was set aside.

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Issues: Whether the appellant was entitled to exemption under Notification No. 45/2001-C.E. (N.T.), dated 26-6-2001 for supplies of diesel generating sets to Nepal, and whether the denial of exemption, interest, and penalty could be sustained.

Analysis: The goods were supplied for a joint venture in Nepal in connection with a hydro electric project, and payment was received in US dollars. The authority below had denied exemption for want of a certificate from the German company involved in the venture to show that the remittances related to the impugned supplies. A subsequent certificate was produced confirming that the goods were supplied for the joint venture in Nepal and that the amounts were remitted for those goods. On that basis, the exemption claim stood established, and the basis for confirming interest and penalty also disappeared.

Conclusion: The appellant was held entitled to the exemption, and the denial of exemption, interest, and penalty was set aside in favour of the appellant.

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