Exemption under project-linked import notification cannot be denied merely because goods were supplied through a contractor.

Notification No. 108/95-CE grants exemption to goods supplied for projects financed and approved under its terms, subject to production of the prescribed certificate before clearance. Where the competent authority certificate confirms that the project is duly financed and approved and that the goods are required for its execution, the benefit cannot be denied merely because the supply is made through a contractor rather than directly to the project implementing authority. The notification does not impose a direct-supply requirement, so satisfaction of the substantive conditions is sufficient for exemption.

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Issues: Whether exemption under Notification No. 108/95-CE dated 28-8-1995 could be denied merely because the goods were supplied to a contractor and not directly to the project implementing authority, when the project was financed by an international organisation and the other conditions of the notification were satisfied.

Analysis: The notification granted exemption to goods supplied for projects financed by specified international organisations and approved by the Government of India, subject to production of the prescribed certificate before clearance. The certificate in this case was issued by the competent State authority and recorded that the project was duly financed and approved, that the goods were required for execution of the project, and that the contractor intended to procure the goods for implementation of the project. The condition in the notification did not stipulate that the goods must be supplied directly to the project implementing authority. Where the substantive requirements of the exemption were fulfilled, the benefit could not be denied on the narrow ground of indirect supply through a contractor.

Conclusion: The denial of exemption was unsustainable, and the benefit of Notification No. 108/95-CE was available to the assessee.

Ratio Decidendi: An exemption notification cannot be denied merely because the goods are supplied through a contractor or sub-contractor, if the notification does not require direct supply to the project implementing authority and the substantive conditions are otherwise met.

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