Project exemption under Notification No. 108/95-CE extends to contractor and sub-contractor supplies when conditions are met.

Notification No. 108/95-CE is treated as a beneficial exemption for goods supplied to an approved, Government-funded project, and it is not confined to direct delivery to the project implementing authority. Where goods are covered by the required project authority certificate and are used for the intended project, supply to contractors or sub-contractors executing the project satisfies the notification conditions. The earlier view and departmental clarification both support availability of the exemption to such supplies, provided the substantive requirements are otherwise met. On that basis, the exemption cannot be denied merely because the goods moved through contractors, and the demand was unsustainable on the facts discussed.

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Issues: Whether exemption under Notification No. 108/95-CE dated 28.08.1995 is available when goods are dispatched to contractors or sub-contractors engaged in execution of a project approved by the Government of India and funded by an international organization, instead of being supplied directly to the project implementing authority.

Analysis: The exemption notification was held to be a beneficial one meant for goods supplied towards the project, and not confined to a direct delivery to the project implementing authority. The goods were covered by the prescribed project authority certificate and were used for the intended project. The earlier decisions on the same question had already settled that supply to contractors executing the project satisfies the notification conditions, and the departmental clarification also recognized availability of the exemption to sub-contractors supplying goods for or on behalf of the main contractor, subject to other conditions being met.

Conclusion: The exemption could not be denied merely because the goods were supplied to contractors executing the project. The issue was decided in favour of the assessee.

Final Conclusion: The appellate challenge failed, and the order dropping the demand was sustained because the notification benefit remained available on the facts found.

Ratio Decidendi: A beneficial exemption notification for goods supplied to an approved project applies when the goods are supplied to contractors or sub-contractors executing that project, provided the substantive conditions of the notification are satisfied.

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