The division bench of Madras High Court recently held that goods supplied to the projects financed by the United Nations or the International Organization are exempted from Central excise duty.
The appeal is filed by the Commissioner of Central Excise, under Section 35G of the Central Excise Act, 1944, questioning the correctness of an order passed by the Customs, Excise, and Service Tax Appellate Tribunal, Chennai.
The second respondent M/s. IBM India Limited is the holders of a Central Excise Registration Certificate. They are manufacturing and clearing computers falling under Chapter Sub Heading No.8471.00 of the First Schedule to the Central Excise Tariff Act, 1985. They cleared 1676 personal computers valued at Rs.5,17,46,000/- for a project known as “Second Health Systems Development Project” for implementation by the Government of West Bengal. Goods were cleared without payment of appropriate Central Excise Duty, in view of the exemption contained in Notification No.108/95 CE, dated 28.8.1995.
The bench comprising of Justice V.Ramasubramanian and Justice N.Kirubakaran held that “A careful look at the Notification No.108/95-C.E. dated 28.8.1995 shows that the object of the Notification was to exempt all goods falling under the First Schedule to the Central Excise Tariff Act, 1985, when they are supplied to the United Nations or an International Organization for their official use or supplied to the projects financed by the United Nations or an International Organization and approved by the Government of India. It is sufficient to extract the first portion of the Notification to appreciate this point. The focus of the Notification is actually only on two things namely (a) goods when supplied to the United Nations or an International Organization for their official use or (b) goods supplied to the projects financed by the United Nations or the International Organization and approved by the Government of India”.
“The supply made to the Organization indicated in the Notification for their official use as well as a supply made to the projects financed by them, are both included within the purview of the Notification. It may be open, to the Department to contend, in some cases where the supply is made for the official use of International Organization that such supply should have been made directly”, the Court added.
Read the full text of the judgment here.
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