Exemption for water supply plant equipment sustained where electric cables for a river pump house met the notification conditions

Electric cables cleared for a river water pump house used in a power project were held eligible for exemption under Notification No. 3/2004-CE because the notification covered machinery, components and auxiliary equipment required for setting up water supply plants. The prescribed certificate from the Collector was produced, and the explanatory portion of the notification was read as expanding, not restricting, the scope of a water supply plant. On that basis, denial of the exemption was unsustainable.

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Issues: Whether the respondent was entitled to exemption under Notification No. 3/2004-CE dated 08.01.2004 in respect of electric cables cleared for a river water pump house connected with a power project.

Analysis: The exemption covered machinery, instruments, apparatus, appliances, auxiliary equipment and components or parts required for setting up water supply plants, subject to the prescribed certificate. The goods were supplied for a pump house used for drawing water from the river, the water being treated and used for power generation. The required certificate from the Collector was produced. The explanatory portion of the notification was treated as enlarging the scope of the water supply plant rather than restricting it, and the Commissioner (Appeals) had already examined the issue in detail.

Conclusion: The respondent was entitled to the exemption and the denial of benefit was unsustainable.

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