Indian Navy warship construction qualifies for duty exemption under Notification No.64/95

The Tribunal overturned the Order denying duty exemption under Notification No.64/95 for goods supplied to the Indian Navy through a dockyard. It held that supplies made for the construction of Indian Navy warships qualified for the exemption, even if not directly supplied to the Navy. Relying on precedents and circulars, the Tribunal ruled in favor of the appellant, setting aside the denial of exemption and dismissing the Revenue's appeal.

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Issues:
Appeal against Order in Appeal denying duty exemption under Notification No.64/95 for goods supplied to Indian Navy through M/s Mazagaon Dock Ltd.

Detailed Analysis:

1. Competent Authority Certificate Issue:
The Department objected to the certificate issued by an officer in the Rank of the Captain of the Indian Navy instead of a higher authority. The Tribunal overruled this objection, considering it a procedural error due to the undisputed supply of goods to the Indian Navy through M/s Mazagaon Dock Ltd.

2. Exemption Benefit Denial:
The main contention was the denial of exemption under Notification 65/95 C.E. The Tribunal referred to a similar case where exemption was allowed for supplies made to the Indian Navy. However, in this case, supplies were made to M/s Mazgaon Dock and not directly to the Indian Navy, leading to the denial of exemption. The Department relied on a Supreme Court judgment regarding Cenvat credit rules, arguing for the demand to be upheld.

3. Interpretation of Notification No.64/95-C.E.:
The Tribunal analyzed the relevant exemption entry from Notification No.25/2002-C.E. and distinguished it from a Supreme Court judgment regarding goods supplied for consumption on board a vessel of the Indian Navy. The Tribunal emphasized that the goods supplied to Mazgaon Dock for the construction of Indian Navy warships qualified for the exemption, even if not directly supplied to the Indian Navy.

4. Precedent and Circular Analysis:
The Tribunal referenced precedents and circulars to support the appellant's eligibility for the notification's benefit. It highlighted a Mumbai Bench case where goods supplied to the Indian Navy through subcontractors were approved for exemption under similar circumstances. The Tribunal upheld the appellant's eligibility based on these precedents and circulars.

5. Decision and Conclusion:
Based on the above analysis and following the precedent set by the Tribunal and supported by the Supreme Court, the impugned order denying the exemption was set aside. The Tribunal ruled in favor of the appellant, allowing the benefit of exemption under Notification No.64/95 for the goods supplied for the construction of Indian Navy warships. Additionally, the demand under Rule 6(3)(b) of Cenvat Credit Rules was deemed incorrect, and the Tribunal upheld the impugned order, dismissing the appeal filed by the Revenue.

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