Duty exemption under certified research supply was sustained; demand and penalty failed when the clearance certificate was valid.

Duty exemption was available where goods were cleared on the strength of a valid certificate issued by the competent authority certifying the manufacturer-supplier arrangement and the research use of the goods. The notification's requirement to produce the certificate at the time of clearance was satisfied, and the certificate's authenticity was not challenged. Relying on earlier decisions, CESTAT held that the Department was bound by the certificate, so the demand and consequential penalty were unsustainable.

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Issues: Whether the appellant was entitled to exemption from duty under the notification on the strength of the certificate issued by ISRO, and whether the demand and penalty could be sustained.

Analysis: The goods were cleared under a certificate issued by the competent authority, which certified the manufacturer and supplier arrangement and the requirement of the goods for research purposes. The notification required production of such a certificate at the time of clearance, and that condition was found to have been satisfied. The authenticity of the certificate was not challenged. The Tribunal treated the matter as covered by earlier decisions holding that goods supplied under such a certificate were entitled to exemption, and held that the Department was bound by the certificate. In these circumstances, the demand and the consequential penalty were unsustainable.

Conclusion: The issue was decided in favour of the assessee, and the exemption benefit was held to be available.

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