Tribunal affirms Appellant's eligibility for Exemption Notification 108/95

The Tribunal ruled in favor of the Appellant, affirming their eligibility for the benefit of Exemption Notification 108/95 for supplying goods to World Bank-funded projects. The Tribunal clarified that goods need not be consumed during the project but should not be withdrawn by the supplier or contractor during project execution to qualify for the exemption. The Tribunal also invalidated a Circular that imposed additional conditions beyond the Notification's scope. Citing a relevant precedent, the Tribunal allowed the appeal, setting aside the previous order and granting consequential relief to the Appellant.

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Issues Involved:

1. Eligibility for the benefit of Exemption Notification 108/95.
2. Interpretation of Explanation 2 to the Exemption Notification.
3. Validity of CBEC Circular dated 12.06.2008.
4. Applicability of previous Tribunal decisions.

Summary:

1. Eligibility for the benefit of Exemption Notification 108/95:
The Appellant, engaged in manufacturing commercial motor vehicles/chassis, claimed the benefit of Exemption Notification 108/95 for goods supplied to World Bank-funded projects. The Notification grants exemption to all goods required for the execution of such projects, provided a certificate from the Project Implementing Authority, countersigned by a government officer, is obtained. The Appellant had produced the necessary certificates, fulfilling the stipulated conditions.

2. Interpretation of Explanation 2 to the Exemption Notification:
Explanation 2, inserted effective 01.03.2008, clarifies that the exemption is available when goods are not withdrawn by the supplier or contractor during the project execution. The department interpreted this to mean that only goods consumed in the project are eligible for the exemption. The Tribunal observed that this interpretation is incorrect. The correct interpretation is that goods should not be withdrawn during the project execution, but can be withdrawn after project completion without losing the exemption.

3. Validity of CBEC Circular dated 12.06.2008:
The Circular clarified that the exemption applies only to goods forming a permanent part of the project. The Appellant argued that this interpretation added words to the Notification not originally present. The Tribunal agreed, stating the Circular's interpretation went beyond the Notification's mandate.

4. Applicability of previous Tribunal decisions:
The Appellant cited the case of *Schwing Stetter (I) Pvt. Ltd Vs CCE&ST.LTU, Chennai-2018 (364) ELT 653 (Tri.-Chennai)*, where it was held that goods withdrawn after project completion still qualify for the exemption. The Tribunal found this decision applicable and supportive of the Appellant's case.

Conclusion:
The Tribunal held that the Appellant is eligible for the benefit of Exemption Notification 108/95 for the chassis cleared to World Bank-funded projects, having fulfilled the Notification's conditions. The impugned order was set aside, and the appeal was allowed with consequential relief.

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