Exemption for pipes used in drinking water supply upheld, and refund allowed since duty incidence was not passed on.

PVC pipes cleared for use in a purified drinking water supply project qualified for exemption because the certificate and related documents showed the goods were actually used for delivery of water from the source to the plant and storage facility, satisfying the notification condition. Refund was also not barred by unjust enrichment because the record, including the buyer's communication, showed that the duty incidence had not been recovered from the buyer. The appellate order denying refund was therefore unsustainable, and consequential refund relief followed in accordance with law.

---

---

Issues: (i) Whether PVC pipes cleared for supply of purified drinking water qualified for exemption under the relevant notification on the basis of the certificate produced. (ii) Whether refund was barred on the ground that the duty burden had been passed on to the buyer.

Issue (i): Whether PVC pipes cleared for supply of purified drinking water qualified for exemption under the relevant notification on the basis of the certificate produced.

Analysis: The certificate on record stated that the pipes were supplied for water supply to the specified villages and that they were actually used for delivery of water from the source to the plant and storage facility. The objection that the certificate did not establish the end use was found to be incorrect. The goods therefore satisfied the stated condition of the exemption notification.

Conclusion: The issue is decided in favour of the assessee and the exemption was available.

Issue (ii): Whether refund was barred on the ground that the duty burden had been passed on to the buyer.

Analysis: The documents placed on record, including the buyer's communication, showed that the duty amount had not been recovered by the appellant from the buyer and would not be paid in future. On that material, the duty burden was not shown to have been passed on.

Conclusion: The issue is decided in favour of the assessee and the refund was not hit by unjust enrichment.

Final Conclusion: The appellate order setting aside the refund was not sustainable, and the appellant was held entitled to the refund with consequential relief in accordance with law.

Ratio Decidendi: When the documentary evidence establishes that exempted goods were cleared for the intended use specified in the notification and the duty incidence was not passed on, exemption and refund cannot be denied.

---