NESTOR PHARMACEUTICALS LTD Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE issue involved in this appeal filed by M/s. Nestor Pharmaceuticals Ltd. is whether the benefit of Notification No. 108/95 -C.E., dated 28 -8 -1995 was available to the Folic Acid and Ferrous Sulphate cleared by them.

(2.) BRIEFLY stated the facts are that the Appellants cleared the impugned goods claiming exemption from payment of duty under Notification No. 108/95; that a show -cause notice dated 2 -12 -1996 was issued to them for denying the benefit of the said notification and for demanding central excise duty amounting to Rs. 62,25,991/ - and for imposition of penalty, on the ground that they had not submitted a certificate before clearance of the goods to the Assistant Commissioner from the United Nations or an International Organisation that the goods were to be supplied to a project financed by the United Nations or International Organisation and the said project had duly been approved by the Government of India; that the Assistant Commissioner, under Adjudication Order dated 29 -10 -1997 confirmed the demand of duty and imposed a penalty of Rs. 62,25,991/ - holding that the exemption is to be allowed only on production of the requisite certificate; that the certificate issued by Rail India Technical and Economic Services Ltd. (RITES) can not be accepted for the purpose of the notification. On appeal, the Commissioner (Appeals) also rejected the appeal, holding that goods involved is Folic Acid and Ferrous Sulphate Tablets and not Drug kit A to be supplied under the project; and that Notification 108/95 is applicable only when the cost of relevant project is borne by the U.N. or International Organisations and not in those cases where money is borrowed by the Government for implementation of certain projects.

(3.) SHRI Vinay Garg, learned Advocate, submitted that the World Bank, under its various social scheme extends loan/credit facility to various member countries; that under one scheme known as "World Bank Assisted Child Survival and Safe Motherhood Project", the International Development Association of the World Bank under credit No. 2330 IN entered into a loan agreement with the Government of India called as Project Agreement; that the Government, through the Ministry of Health and Family Welfare, hired the services of RITES for procurement of drugs and drug kits; that as per the Joint Procedure, RITES was to call for the tenders; that accordingly tender was invited by the RITES; that it is apparant from the perusal of the bid -documents that the project has been funded by the World Bank under their credit/loan agreement; that tenders were invited for the supply of drug kit A consisting of (i) Oral Rehydration Salt (ORS), (ii) Tablet IFA (large), (iii) Tablet IFA (small), (iv) vitamin A solution and (v) Tablet Cotrimoxazole (Paediatric); that they were awarded two contracts for drug kit A under RITES letter dated 12 -4 -1996.