Exemption for defence research supplies upheld where specialised air-conditioning systems met notification conditions and were used for research.

Air-conditioning systems supplied to defence research establishments qualified for exemption under Notification No. 10/97 dated 01.03.1997 because the goods were specially redesigned and modified to meet technical requirements and military standards, the recipient was a public funded research organisation under the Ministry of Defence, and the exemption certificate with supporting records was produced. As the supplies were required for research purposes and the statutory conditions were met, denial of the exemption was unsustainable.

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Issues: Whether the appellant was entitled to exemption under Notification No. 10/97 dated 01.03.1997 in respect of air-conditioning systems supplied to defence research establishments and whether the conditions for availing the exemption were complied with.

Analysis: The supplies were made to establishments under the Ministry of Defence engaged in research and development for specialised field operation theatres. The record showed that the equipment was specially redesigned and modified to meet unique technical requirements and military standards. The institution receiving the goods was a public funded research organisation, the exemption certificate and supporting records were produced, and the goods were required for research purposes. On these facts, the statutory conditions for the exemption stood satisfied.

Conclusion: The appellant was entitled to the benefit of Notification No. 10/97 dated 01.03.1997 and the denial of exemption was unsustainable.

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