2005 (3) TMI 243 - AT - Central Excise

Tribunal Grants Exemption; No Direct Supply Needed for ADB-Financed Project, Overturns Duty and Penalties.

The tribunal ruled in favor of the appellants, determining they were eligible for exemption under Notification No. 108/95-C.E. The tribunal emphasized ... Project import - Demand and penalty - manufacture of Bar Loader, Loader, Backhoe Loader - Exemption in terms of Notification No. 108/95-C.E - goods supplied to UN or an specified International Organisation - HELD THAT:- Since the goods have admittedly been used for the project, the question of misuse of goods for unintended purposes, as noted by the Commissioner, does not arise. The fact that after the projects are implemented, the sub-contractors are entitled to retain the goods supplied to them under the notification cannot result in denial of benefit of exemption under the notification to the appellants. We are supported in our view by the Larger Bench decision of the Tribunal in Toyo Engineering India Ltd. v. CC,[2000 (10) TMI 64 - CEGAT, COURT NO. II, NEW DELHI] in which it has been held that the mere fact that the construction machinery used in the initial setting up of the specified plant could possibly be used subsequently elsewhere in the setting up of another plant will not debar the importer from the facility of project import. There is also no evidence in the present case that the goods in question were used in any other project after the implementation of the Golden Quadrilateral Project. There is also no requirement under the Notification that the entire cost shall be borne by the International Organization, as held by the Tribunal in Nestor Pharmaceuticals Ltd. v. CCE,[2000 (1) TMI 187 - CEGAT, NEW DELHI]. Thus, we hold that the benefit of exemption in Notification No. 8/95-C.E., is admissible to the goods cleared by the appellants herein, set aside the duty demand and penalty and allow the appeal. Issues:1. Interpretation of Notification No. 108/95-C.E. regarding exemption for excisable goods supplied to projects financed by international organizations.2. Whether the appellants qualify for exemption under the notification.3. Validity of duty demand, interest, and penalties imposed by the Commissioner of Central Excise.Analysis:Issue 1: Interpretation of Notification No. 108/95-C.E.The notification exempts excisable goods supplied to projects financed by international organizations approved by the Government of India. The tribunal analyzed the language of the notification, emphasizing that it does not require direct payment by the financing organization. The goods in question were supplied to sub-contractors for a project financed by the Asian Development Bank, and the goods were used for the project, meeting the notification's criteria.Issue 2: Qualification for ExemptionThe department alleged that the appellants did not qualify for the exemption as the goods were not supplied directly to the project implementing authorities. However, the tribunal held that the notification does not mandate direct supply to the organization financing the project. Relying on precedent, the tribunal determined that the appellants were entitled to the exemption since the goods were used for the specified project and there was no evidence of misuse or use in other projects post-implementation.Issue 3: Validity of Duty Demand and PenaltiesThe Commissioner of Central Excise raised duty demands and imposed penalties on the appellants. However, the tribunal found the demands unjustified based on the interpretation of the notification and relevant precedents. As a result, the tribunal set aside the duty demands, interest, and penalties, allowing the appeal in favor of the appellants.In conclusion, the tribunal ruled in favor of the appellants, holding that they were eligible for the exemption under Notification No. 108/95-C.E. The decision was based on a strict interpretation of the notification's requirements and supported by relevant legal precedents, ultimately overturning the duty demands and penalties imposed by the Commissioner of Central Excise.