Retrospective cancellation of exemption certificates cannot defeat bona fide reliance or sustain duty demand and penalty.

A later cancellation or clarification regarding the certifying authority could not operate retrospectively to deny exemption under Notification No. 108/95-C.E. where the assessee had relied on certificates then issued by the competent authority and acted in bona fide belief that the project was eligible. The retrospective use of the later clarification could not unsettle completed transactions or fasten duty liability for the earlier period, and the demand and penalty were therefore not sustainable. Relief was granted on the same principle applied in an earlier Tribunal decision on identical facts.

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Issues: Whether the cancellation/clarification regarding the certifying authority could operate retrospectively so as to deny the exemption under Notification No. 108/95-C.E. and sustain the demand and penalty.

Analysis: The exemption had been availed on the basis of certificates issued by the competent authority and the assessee had acted under a bona fide belief that the project was eligible. The later cancellation/clarification could not unsettle transactions completed earlier or be used retrospectively to fasten duty liability. The reasoning applied the same principle followed in the earlier Tribunal decision on identical facts, where the demand for the larger period and penalty had been set aside because the assessee had relied on the certificate then in force.

Conclusion: The demand and penalty could not be sustained on a retrospective basis, and the assessee was entitled to relief.

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