Strict compliance with exemption conditions required; certificate issued to another entity was insufficient, while penalty was not sustained.

Conditional exemption under Notification No. 108/95-C.E. was denied because the manufacturer did not produce the required pre-clearance certificate in its own favour; a certificate issued to a different entity could not satisfy the notification's strict condition. The duty demand on cover paper supplied for a UNICEF project was therefore sustained. On penalty, no separate factual basis was found to justify penal action, so penalty was set aside.

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Issues: (i) Whether the assessee was entitled to exemption from duty under Notification No. 108/95-C.E. for cover paper cleared for supply to a UNICEF project despite the certificate being issued in favour of a third party; (ii) Whether penalty was warranted.

Issue (i): Whether the assessee was entitled to exemption from duty under Notification No. 108/95-C.E. for cover paper cleared for supply to a UNICEF project despite the certificate being issued in favour of a third party.

Analysis: The notification required production of a certificate from the United Nations or an international organisation before clearance, and the benefit was available only when the manufacturer claiming the exemption satisfied the prescribed condition. The certificate in favour of a different entity did not meet the notification requirement for the assessee.

Conclusion: The exemption was not available to the assessee, and duty was payable.

Issue (ii): Whether penalty was warranted.

Analysis: Although the duty demand was upheld, no separate basis for penalty was found on the facts.

Conclusion: Penalty was not imposable.

Final Conclusion: The exemption claim failed, the duty demand was sustained, and the penalty was set aside, resulting in a partial allowance of the appeal.

Ratio Decidendi: A person claiming exemption under a conditional notification must strictly satisfy the prescribed pre-clearance certificate requirement in its own favour, and a certificate issued to a different entity is insufficient.

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