Exemption for World Bank project supplies allowed despite certificate lapse, as procedural non-compliance did not defeat substantive benefit.

Exemption under Notification No. 108/95 was available for sutures supplied to a World Bank-funded project where the project was duly approved and the goods were not shown to have been diverted or misused. The absence of a countersignature by an officer not below Joint Secretary, and non-production of the certificate before clearance, were treated as procedural defects that did not defeat the substantive exemption claim. The notification was applied in a welfare-oriented context, and the lapse was regarded as curable rather than a breach of a foundational condition. Exemption was therefore allowed and denial of benefit was set aside.

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Issues: Whether exemption under Notification No. 108/95 dated 28.08.1995 was available to clearances of sutures supplied for a World Bank funded project despite the certificate not being countersigned by an officer not below the rank of Joint Secretary and despite its non-production before clearance.

Analysis: The clearance was for a duly approved project financed by the World Bank and the goods were not shown to have been diverted or misused. The dispute turned on a procedural lapse relating to the form and timing of the certificate. The benefit of the notification was treated as intended for a welfare-oriented project, and the absence of countersignature was viewed as a curable procedural infirmity rather than a failure going to the substance of the exemption claim. The matter was distinguished from cases involving non-compliance with basic or foundational conditions.

Conclusion: Exemption under Notification No. 108/95 dated 28.08.1995 was held admissible, and the denial of benefit was set aside in favour of the assessee.

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