Project exemption for bus chassis was upheld where the certificate covered chassis manufacture and body building for the approved project.

Notification No. 108/95-C.E. was interpreted to extend exemption to chassis cleared for an approved internationally financed bus project where the project certificate expressly stated that the assessee would manufacture the chassis and specified body builders would build the bus bodies on its behalf. The exemption could not be denied merely because the clearances were described as chassis rather than finished buses, and prior undisputed clearances of similar chassis supported that reading. Correlation between the chassis and the buses supplied, and the question of unjust enrichment, had not been examined by the lower authorities and were remanded for fresh adjudication.

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Issues: Whether the chassis cleared by the assessee for buses supplied to a project approved and financed under Notification No. 108/95-C.E. were eligible for exemption under the certificate issued for the project.

Analysis: Notification No. 108/95-C.E. grants exemption to goods supplied for specified internationally financed projects, subject to production of the prescribed certificate before clearance. The certificate in question described the requirement as passenger buses, but it also expressly stated that the chassis would be manufactured by the assessee and the body building would be carried out by specified body builders on behalf of the assessee. On that basis, the certificate was not confined only to finished buses; it covered the chassis as part of the approved procurement. The fact that similar chassis were subsequently cleared under the exemption without dispute also supported this reading. The issues of correlation between the cleared chassis and the buses supplied, and of unjust enrichment, had not been examined by the lower authorities.

Conclusion: The assessee was held eligible for exemption in respect of the 179 chassis, but the questions of correlation and unjust enrichment were remanded for fresh adjudication.

Final Conclusion: The exemption claim succeeded on merits as to eligibility for the chassis, while the refund aspect remained open for reconsideration by the original adjudicating authority.

Ratio Decidendi: Where the project certificate expressly covers manufacture of chassis and their conversion into buses for an approved project, the exemption cannot be denied merely because the clearance description refers to chassis rather than the finished buses.

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