Exemption for warship-construction supplies upheld where end-use and Navy certification were satisfied despite intermediary supply route

Exemption under Notification No. 64/95-C.E. was available for circuit breakers and other electrical items used exclusively in the construction of Indian Navy warships because the prescribed Navy certificate was produced and the end-use condition was satisfied. The notification did not require direct supply to the Indian Navy, so supply through Mazagon Dock Ltd. did not defeat eligibility. A precedent on supplies to shipbuilders under a different entry and on different facts was held inapplicable. The operative principle is that exemption cannot be denied when the notification's terms, including certification and end-use requirements, are met merely because an intermediary is involved.

---

---

Issues: Whether the appellants were entitled to exemption under Notification No. 64/95-C.E. for goods supplied for use in the construction of warships of the Indian Navy, even though the goods were supplied through Mazagon Dock Ltd. and not directly to the Navy.

Analysis: The goods consisted of circuit breakers and other electrical items supplied exclusively for use in the construction of warships of the Indian Navy. The required certificate from the competent authority of the Indian Navy had also been produced, satisfying the condition attached to Sl. No. 21 of the notification. The notification did not require direct supply to the Indian Navy. The cited precedent concerning stores supplied to ship builders under a different entry and on different facts was held inapplicable.

Conclusion: The appellants satisfied the conditions of the notification and were entitled to the exemption.

Ratio Decidendi: Where an exemption notification is satisfied on its terms, including the prescribed certificate and end-use condition, benefit cannot be denied merely because the goods were supplied through an intermediary rather than directly to the ultimate beneficiary.

---