Duty-free import exemption confirmed where bilateral agreement certificate showed machinery supplied free of cost for the project.

Imported plant and machinery were treated as eligible for duty-free clearance under Notification No. 148/1994 because the notification required the goods to be gifted free of cost under a bilateral agreement. The documentary certificate issued under the agreement stated that the machinery was meant for the appellant's project and was supplied free of cost in terms of that agreement. On that basis, the exemption condition was regarded as satisfied, and the benefit of the notification could not be denied on a contrary reading of the agreement.

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Issues: Whether the imported machinery was entitled to duty free clearance under Notification No. 148/1994 on the basis that it was supplied free of cost under a bilateral agreement between the Government of India and the foreign Government.

Analysis: The condition in the notification required the goods to be gifted free of cost under a bilateral agreement. The certificate issued by the European Union stated that the plant and machinery were meant for the appellant's project and were supplied free of cost in terms of the bilateral agreement. On that basis, the requirement of the notification stood satisfied.

Conclusion: The imported goods were held eligible for duty free clearance under Notification No. 148/1994.

Ratio Decidendi: Where the documentary certificate issued under a bilateral agreement clearly establishes that the imported goods were supplied free of cost, the condition of the exemption notification is satisfied and the benefit cannot be denied on a contrary interpretation of the agreement.

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