Project exemption under Notification 108/95-CE applies to supplies made through the contractor; later explanatory amendment cannot act retrospectively.

Supply of goods to a contractor implementing a project can satisfy Notification No. 108/95-CE where the contractor is engaged in execution of the project, so direct supply to the project authority is not mandatory on that view. The earlier interpretation on the same issue had been affirmed in higher appellate review, and Explanation 2 inserted by Notification No. 13/2008 could not be applied to clearances made in March 2006. On that basis, denial of exemption was unsustainable, the benefit of Notification No. 108/95-CE was available, and the impugned order was set aside with consequential relief.

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Issues: Whether goods cleared without payment of duty under Notification No. 108/95-CE could be supplied to the contractor implementing the project, instead of directly to the project implementing authority, and whether the assessee was entitled to the exemption.

Analysis: The exemption claim turned on the scope of Notification No. 108/95-CE. The earlier decision on the same question had held that supply to the contractor, where the contractor was engaged in implementing the project, satisfied the notification. That view had been affirmed in higher appellate review, and the later insertion of Explanation 2 by Notification No. 13/2008 could not govern clearances made in March 2006.

Conclusion: The assessee was entitled to the benefit of Notification No. 108/95-CE, and denial of exemption on the ground that the goods were supplied to the contractor was unsustainable.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief as permissible in law.

Ratio Decidendi: Where a project is being implemented through a contractor, supply of goods to that contractor can satisfy the conditions of the exemption notification, and a later-amended explanation cannot be applied retrospectively to earlier clearances.

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