HON’BLE MR. JUSTICE ANUROOP SINGHI
Order
REPORTABLE : 08/08/2025
1. The delay in filing the appeals is condoned. Accordingly, the
applications for condonation of delay are allowed.
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2. With the consent of learned counsel for the parties, the
matter is taken up today itself and heard finally at this stage.
3. The present batch of special appeals arise out of common
judgment dated 14.09.2018 passed by learned Single Judge in
batch of writ petitions, therefore, they are being decided by this
common judgment.
4. Briefly noted the facts in the present appeals are that the
respondents herein are registered firms/companies enlisted as
contractors with the Irrigation Department, Government of
Rajasthan. They were awarded various contracts under the
Rajasthan Water Sector Restructuring Project (RWSRP), which
were sponsored by the International Development Association and
funded by the International Bank for Reconstruction and
Development–collectively referred to as “The World Bank”. The
Central Government had issued two notifications–Customs
Notification No. 108/1995 dated 28.08.1995 and Excise
Notification No. 85/1999 dated 06.07.1999–granting exemption
from excise duty for goods falling under the Schedule to the
Central Excise Tariff Act, 1985, when imported into India for
execution of projects financed by the United Nations or any other
international organization. As per the conditions contained in the
bid documents, to avail such exemption, contractors were required
to obtain an excise exemption certificate from the Executive Head
of the Project Implementing Authority, countersigned by the
Principal Secretary or Secretary of the Finance Department of the
concerned State Government, verifying that the goods were
required for execution of the approved project. The respondent
firms submitted declarations and supporting documents in the
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prescribed format, indicating the list of goods such as cement,
diesel, mechanical compactors, trucks, etc., for which the
exemption was sought. Upon due verification, exemption
certificates were issued by the competent authority and duly
countersigned by the Finance Secretary. The respondents availed
excise duty exemption on the basis of these certificates, including
in particular for cement. After the completion of the work by the
respondents, they received letters dated 05.03.2013 and other
similar communications from the concerned Executive Engineer,
informing that the exemption availed on cement was irregular and
proposing recovery of the excise amount. The ground for such
recovery was that cement, being an indigenous good
manufactured by an Indian company, did not qualify as an
“imported” good as contemplated under the relevant notifications.
It was also alleged that the exemption certificate had been
obtained belatedly, contrary to Clause 13.3 of the Instructions to
Bidders (ITB), which required submission of the certificate at the
bid stage. Subsequently, audit objections were raised by the
Comptroller and Auditor General of India (CAG), pointing out
irregularities in the issuance of such exemption certificates to the
respondents. Acting on these objections, the department initiated
recovery proceedings against the respondents for the excise duty
benefit allegedly availed irregularly. The respondents challenged
the said recovery proceedings as well as the audit objections by
filing writ petitions before the learned Single Judge of the High
Court. It is pertinent to note that the CAG, despite being a
necessary party, neither appeared before the Writ Court nor filed
any reply. The learned Single Judge, vide judgment dated
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14.09.2018, allowed the writ petitions and quashed the recovery
orders primarily on the ground that no opportunity of hearing had
been afforded to the respondents before initiating recovery, and
further, that no action had been taken against the government
officials who had issued and countersigned the exemption
certificates. Hence, the present appeals have been filed.