Exemption for project supplies upheld where International Development Association financing brought tractors within Notification 108/95-CE coverage.

Tractors supplied for a Government of Rajasthan project financed by the International Development Association were treated as eligible for exemption under Notification No. 108/95-CE because the project certificate established Government of India approval and the financing body was regarded as part of the World Bank, which enjoys statutory privileges under the United Nations (Privileges and Immunities) Act, 1947. The exemption was therefore not denied merely because the financing agency formed part of the World Bank framework, and the departmental appeal failed.

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Issues: Whether tractors cleared for a project financed by the International Development Association were eligible for exemption under Notification No. 108/95-CE dated 28.08.1995.

Analysis: The project certificate showed that the supplies were for a Government of Rajasthan project funded by the International Development Association and approved by the Government of India. The International Development Association was treated as part of the World Bank, and the World Bank had been granted privileges under Section 3 of the United Nations (Privileges and Immunities) Act, 1947. On that basis, the organisation was considered covered for the concession under the notification.

Conclusion: The exemption was held admissible and the departmental appeal failed.

Final Conclusion: The order allowing exemption was sustained and the appeal was dismissed.

Ratio Decidendi: Where a project is financed through the International Development Association, the benefit of the exemption notification cannot be denied merely because the financing body forms part of the World Bank, which enjoys statutory privileges under the United Nations (Privileges and Immunities) Act, 1947.

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