Adjudicating Authority's Error Corrected: Tribunal Grants Exemption for Goods Used in International Projects

M/s JCB India Ltd. Versus CCE, Delhi-IV

M/s JCB India Ltd. Versus CCE, Delhi-IV - TMI Issues Involved:
1. Whether the Adjudicating Authority has gone beyond the scope of the show cause notice.
2. Whether the appellant is entitled to avail the benefit of Exemption Notification No. 108/95 dated 28.08.95.

Detailed Analysis:

Issue No. I: Scope of the Show Cause Notice

The appellant contended that the impugned order is beyond the allegations in the show cause notice. The show cause notice alleged that the goods, after being used for the projects, were retained by the contractors, which should have been communicated to the excise authority. The adjudicating authority, however, held that the goods were not supplied to the project and were paid for by the contractors, not the Project Authority. This was seen as going beyond the scope of the show cause notice.

The adjudicating authority's reliance on the explanation to Notification No. 108/95-CE introduced in 2008 was also contested. The explanation clarified that the benefit is available when goods are not withdrawn from the project. The adjudicating authority interpreted this to mean that the exemption is not available if the goods are withdrawn at any stage by the contractor. However, the appellant argued that this explanation does not have retrospective effect and only clarifies the existing position.

The Tribunal found that the adjudicating authority had indeed gone beyond the show cause notice, as the original issue was the retention of goods by contractors post-project completion, not the initial supply to contractors. Citing the Supreme Court's decision in Caprihans India Ltd., the Tribunal held that the adjudicating authority's findings were unsustainable as they went beyond the show cause notice.

Issue No. II: Entitlement to Exemption Notification No. 108/95

The appellant argued that they met all conditions of the Exemption Notification No. 108/95, which exempts goods supplied to projects financed by international organizations and approved by the Government of India. The appellant provided necessary certificates from the Project Implementing Authority. The Tribunal noted that the projects were financed by the Asian Development Bank and approved by the Government of India, thus fulfilling the notification's conditions.

The Tribunal referenced the case of Caterpillar India Pvt. Ltd., where it was held that goods supplied to sub-contractors for a project financed by an international organization and used in the project are eligible for exemption. The Tribunal emphasized that the notification does not stipulate that goods must be directly paid for by the financing organization. The fact that goods remained with contractors post-project did not negate the exemption, as long as they were used for the project.

The Tribunal also noted that the explanation introduced in 2008 to Notification No. 108/95-CE was not applicable to clearances made before its introduction. The decision in DEE Development Engineers Ltd. was distinguished as the appellant in that case failed to produce the necessary certificate, which was not the issue here.

In conclusion, the Tribunal set aside the impugned order, holding that the appellant was entitled to the benefit of Exemption Notification No. 108/95, as all conditions were satisfied. The appeal was allowed with consequential relief.