Tribunal grants waiver of duty & penalty for motor vehicles in UN project.

The Tribunal granted the applicant's request for a waiver of predeposit of duty and penalty under Section 11AC of the Central Excise Act, 1944. It found that the goods supplied, specifically motor vehicles, remained in the project financed by the United Nations, in accordance with the conditions specified in Notification No.108/95-CE and Explanation 2 to Notification 13/2008-CE. As a result, the recovery of duty and penalty was stayed during the appeal process, as the applicant met the criteria for availing the benefit under the notifications.

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Issues:
1. Application for waiver of predeposit of duty and penalty under Section 11AC of the Central Excise Act, 1944 based on Notification No.108/95-CE.
2. Interpretation of Explanation 2 to Notification 13/2008-CE regarding goods supplied to projects financed by the United Nations or an international organization.

Analysis:
1. The applicant sought waiver of predeposit of duty and penalty amounting to Rs.5,49,19,588/- each under Section 11AC of the Central Excise Act, 1944. The dispute arose from the denial of benefit under Notification No.108/95-CE due to the interpretation of the Explanation to the Notification. The contention was that the goods supplied, specifically motor vehicles, should not be withdrawn from the ongoing project financed by the United Nations. The applicant argued that the goods remained in the project and were not withdrawn, meeting the criteria of the Notification.

2. The Explanation 2 inserted by Notification 13/2008-CE clarified that the benefit under the notification for goods supplied to projects financed by the United Nations is available when the goods brought into the project are not withdrawn by the supplier or contractor. The expression "goods are required for the execution of the project" was to be construed accordingly. The Tribunal observed that the term "into" in the Explanation suggested an ongoing or continuous presence of goods in the project, indicating that the goods, in this case, motor vehicles, should not be removed from the ongoing project. It was noted that the project was indeed financed by the United Nations, and the goods had not been withdrawn, remaining within the project as required by the Notification.

3. The Tribunal found that the applicant had made a prima facie case for the total waiver of predeposit of all dues adjudged in the case. Consequently, the recovery of the duty and penalty amount was stayed during the pendency of the appeal. The Tribunal allowed the stay petition, considering that the goods supplied by the applicant were still in the project financed by the United Nations and had not been withdrawn, meeting the conditions specified in the Notification for availing the benefit.

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