Project finance exemption extends to subcontracted supplies when statutory conditions are met and goods reach the implementing authority.

Exemption under Notification No. 108/95-CE was available to goods supplied for a project financed by the United Nations or another international organisation when the statutory conditions were satisfied and the goods were received by the project implementing authority. The benefit was not confined to direct supplies by the main contractor; supplies made through contractors or sub-contractors in the execution chain remained eligible. Applying the settled position affirmed by the Supreme Court, the Tribunal held the exemption admissible, so the demand and penalty were unsustainable and the Revenue appeal failed.

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Issues: Whether exemption under Notification No. 108/95-CE dated 28.05.1995 was available to goods supplied to contractors executing a project financed by the United Nations or an international organisation, including supplies made through sub-contracts.

Analysis: The exemption was held to apply where the goods were supplied for a project financed by the United Nations or an international organisation and were received by the project implementing authority. The Tribunal relied on the settled legal position that the benefit of the notification is not confined only to direct supplies by the main contractor, and that supplies made in the chain of execution for such a project remain eligible when the statutory conditions are satisfied. The earlier view of the Madras High Court, as affirmed by the Supreme Court, was treated as squarely governing the controversy.

Conclusion: The exemption was admissible to the respondent-assessee, and the Revenue's challenge failed.

Final Conclusion: The demand and penalty were not sustainable, and the Revenue appeal was rejected.

Ratio Decidendi: Where goods are supplied for a project financed by the United Nations or an international organisation and the conditions of the exemption notification are otherwise met, the benefit cannot be denied merely because the supplier acted through a contractor or sub-contractor.

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