Duty exemption for Navy vessel supplies cannot be denied merely because goods were routed through contractors.

Exemption under Notification No. 64/95-C.E. was available for stores supplied for consumption on board Indian Navy vessels even where the goods were routed through the Navy's contractors, because the notification did not bar indirect supply and the naval end-use certificates established that the goods were actually received for specified naval use. The Tribunal treated the purchase orders and consumption certificates as sufficient correlation of the supplies to Indian Naval vessels and relied on earlier precedent, including approval by the Apex Court, to hold that direct supply to the Navy was not mandatory. Denial of the exemption on that ground was unsustainable.

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Issues: Whether exemption under Notification No. 64/95-C.E. was available when goods supplied for consumption on board Indian Navy vessels were routed through the Navy's contractors rather than supplied directly to the Navy.

Analysis: The notification contained no prohibition against supply to the Indian Navy through sub-contractors. The goods were duly received for naval use, and the end-use/consumption certificates issued by the naval authorities correlated the purchase orders and established that the supplies were meant for Indian Naval vessels. The Tribunal also relied on an earlier decision allowing identical relief in similar factual circumstances and noted that the same view had been approved by the Apex Court.

Conclusion: The exemption was admissible, and the denial of benefit was unsustainable.

Ratio Decidendi: Where a duty exemption for stores supplied for consumption on board Indian Navy vessels does not prohibit routing through contractors, and naval certificates establish actual supply for the specified end use, the exemption cannot be denied merely because the goods were not supplied directly to the Navy.

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