Liberal construction-site exemption and bona fide belief on duty demand keep the contractor's claim protected.

An exemption for goods manufactured at a contractor's Railway-allotted site was applied liberally, as manufacture at the "site of construction" was treated broadly enough to cover a site made available for the contract work; the mere distance from the exact construction point did not defeat the exemption. The demand was also held time-barred because there was no material showing suppression of facts or intent to evade duty, and the contractor's bona fide belief was supported by the contractual exemption stipulation. On both grounds, the exemption claim and the limitation defence succeeded, and the demand was set aside with consequential relief.

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Issues: (i) Whether goods manufactured at a Railway-allotted site near the place of construction were eligible for exemption under Notification No. 62/95-C.E. as goods manufactured at the site of construction for use at such site; (ii) Whether the demand was barred by time in the absence of intent to evade duty.

Issue (i): Whether goods manufactured at a Railway-allotted site near the place of construction were eligible for exemption under Notification No. 62/95-C.E. as goods manufactured at the site of construction for use at such site.

Analysis: The exemption notification was held to require a liberal construction. The expression relating to manufacture at the site of construction was treated as wide enough to include a site allotted to the contractor for manufacture of goods to be used in the construction work under the contract. Since the goods were manufactured at a site made available by the Railways and were used for the Railway construction work, a mere physical distance from the exact place of construction did not justify denial of the exemption.

Conclusion: The exemption was held applicable, in favour of the assessee.

Issue (ii): Whether the demand was barred by time in the absence of intent to evade duty.

Analysis: The demand was found to be time-barred because there was no material showing suppression of facts or intention to evade duty. The appellant acted under a bona fide belief supported by the contractual stipulation indicating exemption from duty.

Conclusion: The demand was held to be barred by limitation, in favour of the assessee.

Final Conclusion: The exemption claim and the limitation defence both succeeded, and the demand was set aside with consequential relief.

Ratio Decidendi: An exemption for goods manufactured at the site of construction is to be construed liberally so as to cover a contractor's allotted manufacturing site used for the construction work, and where duty is disputed under a bona fide belief without suppression or intent to evade, the demand cannot be sustained as time-barred.

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