Project exemption under Notification 6/2006-C.E. cannot be denied merely because goods were supplied through a sub-contractor.

Exemption under Notification No. 6/2006-C.E. could not be denied where seamless pipes were supplied for the identified project against a valid project authority certificate and were actually used in the project, even though the manufacturer supplied through a sub-contractor and did not directly supply the main contractor or itself participate in international competitive bidding. The Tribunal held that these facts did not disqualify the claim where the notification's substantive conditions were otherwise satisfied, so the exemption was allowable and the duty demand, interest, and penalty could not survive.

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Issues: Whether the assessee was entitled to exemption under Notification No. 6/2006-C.E. for clearances of seamless pipes supplied through a sub-contractor against a project authority certificate, notwithstanding the absence of direct supply to the main contractor and participation in international competitive bidding.

Analysis: The goods were supplied for the identified project on the strength of a project authority certificate issued in the name of the main contractor, and there was no dispute that the quantity and quality of the pipes covered by the certificate were actually supplied and used in the project. The only ground for denial was that the assessee had not supplied the goods directly to the main contractor and had not itself participated in international competitive bidding. The exemption notification did not make local procurement in such circumstances ineligible merely because the manufacturer was a sub-contractor supplier, and the Tribunal followed its earlier view that the exemption cannot be denied where the goods are shown to have been supplied to and used in the project and the conditions of the notification are otherwise met.

Conclusion: The assessee was eligible for the exemption, and denial of the benefit solely because the supply was made through a sub-contractor was not justified.

Final Conclusion: The impugned order was set aside and the duty demand, interest, and penalty did not survive.

Ratio Decidendi: Where goods are demonstrably supplied to and used in the project against a valid project authority certificate, exemption under the relevant notification cannot be denied merely because the manufacturer supplied through a sub-contractor rather than directly to the main contractor or did not itself participate in international competitive bidding.

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