Exemption for World Bank-assisted projects upheld where financing included loan support and no prescribed certificate form was required.

Goods supplied for a World Bank-assisted project satisfied the exemption conditions under Notification No. 108/95-C.E. because the expression "financed by" was read to include projects supported by an international organisation through loan or credit, not only those wholly paid for by it. The record also showed World Bank letters confirming the contracts and eligibility of the ex-factory cost for disbursement, and the notification did not prescribe any specific certificate form. Denial of the benefit on grounds not raised in the show cause notice was impermissible. The exemption was therefore admissible, and the demand and penalty could not stand.

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Issues: Whether the goods were eligible for exemption under Notification No. 108/95-C.E. when supplied for a World Bank-assisted project, and whether denial of the benefit could rest on alleged non-production of a prescribed certificate or on grounds not raised in the show cause notice.

Analysis: The notification exempted specified goods supplied to projects financed by the United Nations or an international organisation and approved by the Government of India, subject to production before clearance of a certificate from such organisation. The record showed that the goods were supplied for a World Bank-financed project, that the World Bank had issued letters confirming the award of contracts and eligibility of the ex-factory cost for disbursement, and that no prescribed form of certificate was laid down in the notification. The denial of exemption on a basis beyond the show cause notice was not permissible. The expression "financed by" was held to cover a project supported by loan or credit from the international organisation, not only one where the entire cost was directly borne by it.

Conclusion: The goods satisfied the notification conditions and the exemption was admissible; the demand and penalty could not stand.

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