Appeal allowed, exemption granted under Notification No. 3/2004. Penalty quashed due to lack of reasoning.

The appeal was allowed, setting aside the Assistant Commissioner's order denying exemption under Notification No. 3/2004. The Tribunal found that the denial was based on technicalities, emphasizing that the goods were used for the intended project. The penalty of Rs. 25,000 imposed under Rule 25 of the Central Excise Rules was also quashed due to the lack of specific reasoning and absence of deliberate contravention by the appellant.

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Issues Involved:
1. Denial of exemption under Notification No. 3/2004.
2. Validity of the certificate issued by the District Collector.
3. Non-production of the certificate before the Assistant Commissioner.
4. Imposition of penalty under Rule 25 of the Central Excise Rules.

Detailed Analysis:

1. Denial of Exemption under Notification No. 3/2004:
The appellant, engaged in manufacturing excisable goods, was denied exemption under Notification No. 3/2004 on the grounds that the goods supplied were for the Godawari Lift Irrigation Scheme, which lacked a water treatment facility. The Assistant Commissioner held that the certificate from the District Collector was in the name of M/s. Kirloskar Brothers Ltd. (KBL) and not the appellant. The appellant argued that since KBL was the main contractor, the certificate was rightly issued in their name and endorsed to the appellant. The appellant cited multiple Tribunal decisions, including Hindustan Colas Ltd. v. CCE and Spic Organics Ltd. v. CCE, which established that exemption should not be denied merely because the certificate was in the contractor's name.

2. Validity of the Certificate Issued by the District Collector:
The Assistant Commissioner rejected the exemption claim because the certificate was not in the appellant's name. The appellant contended that this was a technical violation and cited precedents where certificates in the contractor's name were deemed valid for exemption purposes. The judgment highlighted that Notification No. 3/2004 does not explicitly require the certificate to be in the supplier's name, only that it certifies the goods are for the intended project use. The Tribunal supported this view, emphasizing that the purpose of the certificate is to ensure the goods are used for the specified project.

3. Non-Production of the Certificate Before the Assistant Commissioner:
The Assistant Commissioner also denied the exemption because the certificate was not produced before him. The appellant argued that the certificate was submitted to the Range Officer, who should have forwarded it to the Assistant Commissioner or directed the appellant accordingly. The judgment noted that this was a technical failure and should not result in the denial of substantial benefits. The Tribunal held that the failure to produce the certificate before the Assistant Commissioner was not a significant enough reason to deny the exemption, especially as the goods were used for the intended project.

4. Imposition of Penalty Under Rule 25 of the Central Excise Rules:
The Assistant Commissioner imposed a penalty of Rs. 25,000/- under Rule 25, without specifying the clause under which it was imposed. The appellant argued that penalties are only justified in cases of deliberate contravention with mala fide intent, which was not the case here. The judgment referenced several decisions, including Dugar Tetenal (I) Ltd. v. CCE and Windorz Industries (P) Ltd. v. CCE, which held that penalties without specific reasoning are unsustainable. The Tribunal found that the imposition of the penalty was unjustified as the issue was one of technical non-compliance rather than deliberate violation.

Conclusion:
The appeal was allowed, and the impugned order by the Assistant Commissioner, Central Excise, Satara Division, was set aside. The Tribunal concluded that the denial of exemption was based on technical grounds and not on the substantive use of the goods. The penalty imposed was also quashed due to the lack of specific reasoning and the absence of deliberate contravention by the appellant.

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