Exemption for supplies to a notified project upheld despite contractor route; extended limitation rejected absent suppression of facts.

Exemption under Notification No. 108/95 was held available where goods supplied to an intermediary contractor were ultimately used for a UNICEF project, because direct delivery to the project authority was not treated as essential on the facts. The assessee was therefore entitled to refund. The extended limitation period for duty demand was also rejected because the record did not show suppression of material facts or intent to evade duty; clearance details had been disclosed to the department. The order against the assessee was set aside with consequential relief.

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Issues: (i) Whether exemption under Notification No. 108/95 dated 28-8-95 was available when goods were supplied to a contractor who used them for a UNICEF project and not directly to the project authorities; (ii) Whether the demand of duty could sustain invocation of the longer limitation period in the absence of suppression of facts with intent to evade duty.

Issue (i): Whether exemption under Notification No. 108/95 dated 28-8-95 was available when goods were supplied to a contractor who used them for a UNICEF project and not directly to the project authorities.

Analysis: The goods were supplied to M/s. Inalsa Ltd., which used them to manufacture vaccine carriers for supply to a UNICEF project. The reasoning adopted in the cited precedent was that exemption under the notification cannot be denied merely because the goods were not delivered directly to the project implementing authority, if they were ultimately used for the notified project. On the admitted facts, there was no basis to distinguish the present case from that principle.

Conclusion: The exemption under Notification No. 108/95 was available and the assessee was entitled to refund.

Issue (ii): Whether the demand of duty could sustain invocation of the longer limitation period in the absence of suppression of facts with intent to evade duty.

Analysis: The record did not disclose any suppression of material facts by the assessee. The clearance particulars were placed before the department, and there was no justification for alleging deliberate evasion so as to extend the limitation period.

Conclusion: Invocation of the extended period was not justified.

Final Conclusion: The assessee succeeded on both entitlement to exemption and limitation, and the order against it was set aside with consequential relief.

Ratio Decidendi: An exemption notification intended for supplies to a notified project cannot be denied merely because the goods passed through an intermediary contractor, and the extended period of limitation requires proof of suppression of facts with intent to evade duty.

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