6) Whether the Tribunal has travelled
beyond the settled position of law and
consistent judicial opinion in the matter
of interpretation of exemption
notifications?"
3. Brief facts relevant for the purposes of deciding the
(ii) Pursuant to the same on a Application to the DGFT for
grant of advance licence for the import of certain components,
a licence was issued with the condition that the technical
specification of the components imported should conform to
those utilized in the manufacture of the resultant product and
should be reflected in the export documents.
(iii) Subsequently, the First consignment was imported and
was exported in December 2000. When the second
consignment of the imports arrived the same were not allowed
by the DRI and were seized to conduct certain enquiries.
4. The 1st respondent herein was a Partnership Firm
engaged in Export of Medicines, Engineering Goods,
Medical Equipments and Agro Products. It was a
government recognized Export House and they used to
execute their export orders mainly to Russia. The Ministry
of Defence of the Government of Russia entered into a
contract with the first respondent for the supply of 255
numbers of Complete Electronic Ventilation System to be
used as life-saving devices in the Hospitals in Russia. To
fulfil this export obligation to Russia, the first respondent
entered into contract with M/s. NOVO LLC USA for supply
of equipment relating to the ventilator and also placed
Purchase Orders with the 5th respondent-Mr. Ashok
Murthy, a Partner of M/s. Erkadi International, Bangalore.
5. Pursuant to the same, an application was made to
the Directorate General of Foreign Trade (for short 'the
DGFT') for grant of advance licences for import of certain
components, a licence was issued by the DGFT with the
condition that the technical specification of the
components imported should conform to those utilised in
the manufacture of resultant product and should be
reflected in the export documents. The first consignment
was imported and was exported in December 2000. When
the second consignment of imports arrived, the same were
not allowed by the Directorate of Revenue Intelligence (for
short 'the DRI') and they were seized to conduct certain
enquiries.
6. The Directorate of Revenue Intelligence in its
investigation found that the respondent instead of
importing components (as declared by them under DEEC
scheme), in effect actually imported complete equipment
in CKD-SKD condition and the further processing,
manufacture claimed to have been carried out in India was
essentially a facade. It was found by the DRI that the
supporting manufacturer had no manufacturing facilities to
say the least.
7. The show-cause notice dated 30.07.2001 was issued
alleging that the Assembly and testing undertaken on the
goods imported by the first respondent was not adequate
to constitute 'Manufacture'. It was only done to
substantiate the value addition declared to the licensing
authority and a comparison of the packing list of the
imported goods and of the export goods reveal that except
for the addition of locally purchased items, the goods
imported were dispatched in their original packing, which
would reveal that no manufacturing was done to enhance
the intrinsic value of the goods exported. It was also said
that the 1st respondent had intentionally misrepresented
and made untrue declaration to the Joint Director of
Foreign Trade (for short 'the JDGFT') while obtaining the
advance license.
8. The show-cause notice was adjudicated by the
Commissioner of Customs vide the Order-in-Original
No.5/2002 dated 30.01.2002. The Commissioner noted
that Sri Ashish Oberoi, one of the Partners of the 1st
respondent - M/s. Lucky Exports Firm admitted that the
consignment in question imported under Bill of Entry
No.03581 dated 30.01.2001 was on provisional release
after payment of customs duty, transported by Air to New
Delhi and from the records furnished by M/s. Lucky
Exports, New Delhi, the goods imported under the Bill of
Entry were made Export worthy by utilising the services of
M/s. General Medical Equipments, B15, Sector 6 Noida,
Uttar Pradesh. This admission of one of the Partners of
the respondent Firm would show that no manufacturing
facility existed with the supporting manufacturer, M/s.
Ardent, Mechatronics Bangalore, as declared in the DEEC
Book. This also clearly demonstrates that M/s. Lucky
Exports, New Delhi, represented by their Partners, Sri.
Aashish Oberoi and Sri. Diwakar Mishra and Sri.H.R.
Gopinath, the supporting manufacturer and Sri. Ashok
Murthy, Partner of M/s. Erkadi International, together
among themselves, planned for their own gains, to
misrepresent JDGFT in taking the import licence of the
goods by evading payment of customs duty. Sri. Aashish
Oberoi had admitted that the supporting manufacturer
- 10 -
declared to JDGFT i.e., M/s.Ardent Mechatronics was not
financially sound, and had no technical experience in
manufacture of medical 1equipments and hence they
intended to look out for a supporting manufacturer, which
would satisfy the said criteria, in and around New Delhi.
9. The JDGFT, had issued Policy Circular No.50 (RE-99)/
99-2000 dated 28.01.2000 laying down the guidelines for
export of goods with value addition under paragraph 11.7
of the EXIM Policy against Rupee payment and while
drawing attention to paragraph 11.7 of EXIM policy 1997-
2002, it was said that the policy provided for export of
goods against payment in Indian Rupees subject to a
minimum value addition of 33% with conditions specified
there under. The customs authorities had brought to
notice of JDGFT that several imports were made in freely
convertible currency, and subsequently permission was
sought by importers from the customs for export of the
same goods directly to Russia against Rupee payment
under the above proviso of EXIM policy and with a view to
- 11 -
fulfilling the criteria of value addition, export documents
were manipulated to increase the FOB value on paper.
10. As there was no value addition to say upto 33% for
export of goods against payment in Indian Rupee as
mandated in paragraph 11.7 of the EXIM Policy, the
imports and exports were in violation of the EXIM Policy.
The Commissioner held that the goods were liable for
confiscation under Section 113(b) of the Customs Act,
1962 and penalty under Section 114 of the Customs Act,
1962 on the Partners of Export Firms i.e. respondents and
supporting manufacturer and Sri. Ashok Murthy.
11. It was further held that As Sri Aashish Oberoi,
Partner, M/s. Lucky Exports, New Delhi had
misrepresented facts and misled JDGFT authorities while
submitting the application for grant of advance duty free
advance licence (DEECA licence) and thereby enabling
respondent to import goods without payment of customs
duty, the goods would attract provisions under Section
112 of the Customs Act, 1962 and rendering the goods
- 12 -
liable for confiscation under the provisions of Section
111(m) and Section 111(o) of the Customs Act,1962.
12. In view of the aforesaid finding the Commissioner of
Customs, Bangalore, passed the Order-in-Original
No.5/2002 for confiscation of the goods valued at
Rs.5,87,92,657/- under Section 111(m) and Section
111(o) of the Customs Act, 1962, and passed the
following orders:-
a. Confiscation of goods valued at Rs.5,87,92,657/-
under Section 111(m) and 111(0) of Customs Tariff
Act, 1962 of the 1st respondent;
b. Demanded duty of Rs.1,40,84,474/- under Section
28(1) of the Customs Tariff Act, 1962, in respect of
the goods already cleared by the first respondent on
06.12.2000;
c. Demanded duty of 1,75,55,383/- under Section
28 of the CTA in respect of the goods cleared on
30.01.2001;
d. Appropriated duty of Rs.1,75,55,383/- paid by the
first respondent towards duty liability;
- 13 -
e. Demanded interest on the above;
f. Bank guarantee of Rs.1.25 crore was to be
enforced towards adjudicated levies;
g. Imposed penalty of Rs.3,16,40,251/- on the first
respondent under Section 114-A of CTA;
h. Imposed a penalty of Rs.15,00,000/- on the 3rd
respondent ie., Sri. Divakar Misra;
i. Imposed penalty of Rs.15,00,000/- on the 4th
respondent i.e, Sri. Ashish Oberoi;
j. Imposed a penalty of Rs.7,00,000/- each on
1st respondent-M/s. Lucky Exports and 5th
respondent-Sri. Ashok Murthy Partner of M/s. Erkadi
International.
13. Aggrieved by the said order passed by the
Commissioner of Customs in Order-in-Original No.5/2002
dated 30.01.2002 as mentioned above, the respondents
filed appeal before the CEGAT in Appeal Numbers C/25 to
28/02, C/85/02. The Tribunal by the impugned Final Order
Nos.30 to 34 dated 10.01.2003 had allowed the appeal,
filed by the respondents mainly relying on the judgment of
- 14 -
the Supreme Court in M/s. Titan Medical Systems (P) Ltd.,
Vs. Collector of Customs, New Delhi.
14. Initially the Civil Petition came to be dismissed by a
Division Bench of this Court vide order dated 10.04.2015
on the ground that under the provisions of Section 130A of
the Customs Act, the appeal would not be maintainable, in
view of the judgment in the case of COMMISSIONER OF
CUSTOMS, BANGALORE-1 VS. M/S. MOTOROLA
INDIA LTD., reported in 2012 (275) E.L.T 53 (KAR),
as to whether the goods were covered by any exemption
notification or not would not be a dispute, which would fall
within the jurisdiction of the High Court under Sections
130 or 130A of the Act.
15. Against the said judgment dated 10.04.2015 passed
in this Civil petition, Civil Appeal No.9245/2015 was filed
by the Department before the Supreme Court. The said
Civil Appeal along with Civil Appeal No.10083/2011 and
other connected Civil Appeals came to be decided by the
Supreme Court vide Judgment and Order dated
05.09.2019. The Supreme Court has been of the view
- 15 -
that the only question involved in the case is that whether
the assessee had breached the conditions, which were
imposed by the Notification for getting exemption from
payment of the customs duty or not. The case would not
involve any question of law of general public importance,
which would be applicable to a class or category of the
assessee as a whole. The question is purely inter se
between the parties and is required to be adjudicated
upon the facts available. The Supreme Court held that
the High Court was not justified in holding that the appeals
were not maintainable under Section 130 of the Customs
Act, but were tenable before the Supreme Court under
Section 130E of the Customs Act. The Supreme Court
allowed the appeals and set aside the order passed by this
Court dismissing the appeal in limine on the ground of
maintainability and remitted back the civil petition to the
High Court for de novo consideration of the appeals on
their own merits. Paragraphs 16, 17 and 18 of the said
judgment are extracted herein below:-
- 16 -
"16. We are of the considered view that the
Legislature has carved out only following categories
of cases to which it has intended to give a special
treatment of providing an appeal directly to this
court.
"(i) determination of a question relating to a rate of
duty;
(ii) determination of a question relating to the
valuation of goods for the purpose of assessment;
(iii) determination of a question relating to the
classification of goods under the Tariff and whether
or not they are covered by an exemption
notification;
(iv) whether the value of goods for purposes of
assessment should be enhanced or reduced having
regard to certain matters that the said Act provides
for."
17. Reverting to the present case, it could clearly be
seen that the only question that is involved is
whether the assessee had violated the conditions of
the exemption notification by not utilizing the
imported materials for manufacturing of the declared
final product and was, therefore, liable for payment
of duty, interest and penalty. Neither any question
with regard to determination of rate of duty arises
nor a question relating to valuation of goods for the
purposes of assessment arises in the present case.
The appeals also do not involve determination of any
question relating to the classification of goods, nor
- 17 -
do they involve the question as to whether they are
covered by the exemption notification or not.
Undisputedly, the goods are covered by the said
notification. The only question is as to whether the
assessee has breached the conditions which are
imposed by the notification for getting exemption
from payment of the customs duty or not. The
appeals do not involve any question of law of general
public importance which would be applicable to a
class or category of assessees as a whole. The
question is purely inter-se between the parties and is
required to be adjudicated upon the facts available.
18. In that view of the matter, we find that the High
Court was not justified in holding that the appeals
are not maintainable under Section 130 of the
Customs Act but are tenable before this Court under
Section 130E of the Customs Act."
16. Thus on remand, the matter has been taken up for
hearing on a number of dates. However, the parties have
either taken adjournment or have not appeared. This
Court dismissed this petition for non-prosecution vide
order dated 20.08.2025. The said order came to be
recalled vide order dated 22.09.2025, and the matter was
heard on merit, as we did not intend to adjourn the
- 18 -
matter, which has been pending on the files of this Court,
since 2003.
17. The only question which requires for consideration
before this Court is that "Whether the import effected by
the respondents under the licenses issued by DGFT and
the export obligations carried out by them were in
violation of the license conditions and policy decision of
the DGFT or not.
18. The JDGFT with Policy Circular No.50(RE-99)/99-
2000, dated 28.01.2000 gave guidelines for export of
goods with value addition under paragraph 11.7 of the
EXIM Policy against Rupee Payment. While drawing
attention to paragraph 11.7 of EXIM Policy 1997-2002, it
was stated that the said policy, provides for export of
goods against payment in Indian Rupees subject to a
minimum value addition of 33% with conditions
specified thereunder. (Emphasis supplied)
19. The said Policy Circular further stated that the
value addition norm had been formulated in Chapter VII
- 19 -
of the EXIM Policy relating to duty exemption scheme.
This would be implicit that the value addition had to be
achieved by subjecting the imported goods with some
kind of tangible processing or manufacturing process so
as to add to its intrinsic value in a realistic manner and
only, an increase in FOB value of exportable goods on
paper without any increase in its intrinsic value would be
against the policy. It was also clarified that Rupee Debt
Payment Scheme was envisaged to increase export of
Indian goods to Russia. If switch-trade of the form
described above takes place, the entire mechanism of
repayment of rupee debt to Russia by way of export of
Indian goods would be jeopardised. In the light of the
above facts, it was clarified that the minimum value
addition of 33% for export of goods against payment in
Indian Rupee under paragraph 11.7 of the EXIM Policy
Should be achieved by effecting an increase in intrinsic
value of export products and not mere increase in FOB
value of the export.
- 20 -
20. The Commissioner from the Bank documents
noticed that the bankers of M/s. Lucky Exports, New
Delhi, M/s. Syndicate Bank, Foreign Exchange Branch,
F-40, Connaught Place, New Delhi-110 001, vide their
letter dated 27.01.2001 have clarified that the original
export L/C No.0115 dated 09.08.2000 for INR
62,45,82,465/-, opened by BEFA Moscow, Russia for its
Government Party State Company Foreign Economic
Association (GOSCONSIM) in favour of M/s. Lucky
Exports for import of medical equipments for their
Government Hospitals. The irrevocable letter of credit
was established for export against payment in Indian
Rupees, on 09.08.2000 i.e., well after the deadline fixed
by JDGFT that is 28.01.2000.
21. The Commissioner having examined the evidence
and statements recorded by the Directorate of Revenue
inteligence, held that the goods imported were
subsequently exported without any intrinsic value
addition, and merely the FOB value of the goods was
- 21 -
backed up to show the value addition. In the light of
the clarification issued to paragraph 11.7 of the EXIM
Policy 1997-2002, some of the goods were liable for
confiscation under Section 113(d) of the Customs Act,
1962 and penalty under Section 114 of the Customs Act,
1962, on the partners of exporter firm and the
supporting manufacturer and Sri.Ashok Murthy.
22. Against the Order-in-Original, the appeals were
filed before the Tribunal as noted above. The Tribunal
considered the definition of 'Manufacture' as provided in
paragraph 3.31 of the EXIM Policy for the period 1997-
2002, which defined 'Manufacture' as under :-
"Manufacture" means to make, produce,
fabricate, assemble, process or bring into
existence by hand or by machine, a new
product having a distinctive name, character or
use and shall include processes, such as
refrigeration, repacking, polishing, labeling and
segregation. Manufacture, for the purpose of
this Policy, shall also include agriculture,
aquaculture, animal husbandry, floriculture,
- 22 -
horticulture, pisciculture, poultry, sericulture,
viticulture and mining."
23. The Tribunal held that the definition of
"Manufacture" in the case of exports, would be wide in
its application, which would be evident from Rule 12 and
13 of the Central Excise Rules, 1944, as they existed
prior to 01.07.2001, which defined a process of
manufacture for the purpose of exports, as including the
process of blending of any goods or making alterations
or any other operation thereon. The liberal
interpretation of 'Manufacture' in the case of export
would be required to be given which was evident from
the Circular No.314/30/97-CE dated 06.05.1997 issued
by the Central Board of Excise and Customs, while
interpreting the benefit of Notification No.1/95-CE dated
04.01.1995, applicable in the case of 100% Export
Oriented Units (E.O.Us).
- 23 -
24. The Tribunal had noted the activities undertaken by
the respondent before exporting the goods in paragraph
B1 to B10 which would read as under :-
"B.1 The imported material and the indigenous raw
material on receipt at the premises at No.5, Ist
Floor, Anjanadri Plaza, Girinagar 1 Phase,
Bangalore-85, were subjected to inspection.
B.2 The frame for the base unit consisted of
pneumatic and electromechanical components. The
pneumatic elements which figured at St. Nos. 2.3 &
4 of the invoice of ADVO LLC included Oxygen
Regulator, Oxygen Regulator Pressure Transducer
and Oxygen Solenoid Assembly. The PCBs figured at
Sl Nos. 5 to 8 of the said invoice and included the
PCB Controller. PCB Pressure Solenoid, PCB Battery
backup, and PCB Ul display. While the pneumatic
elements performed all the basic functions of the
ventilator, the electronic components viz., populated
PCBs performed the operation of measuring,
controlling and regulating the functions of the
ventilator. All the components mentioned above
were assembled to make the base unit. The process
of assembly involved the integration of items
mentioned above to the Base Unit
B.3 The other items mentioned at Sl. Nos. 9 to 22 of
the invoice of NOVO LLC were 8.3 items which were
- 24 -
in the nature of parts and accessories of the
ventilator. The items included filters, power cords,
humidifier system, humidifier chamber, adapter etc.
These items were also assembled on to the Base
Unit.
B.4 The next process involved replacing the EPROMs
loaded with the Russian software that were
contained in the components imported and
replacement with the EPROMs that were loaded with
the English language version of the software in the
Controller PCB.
B.5 The next process involved the testing of the
electrical and pneumatic parameters as per the
system specifications in which the consumables like
oxygen gas, purified air etc., were used as also a
system testing which consisted of verification of the
modes of ventilation, Set Alarm conditions, pressure
volume etc. These tests were carried out using
general purpose, and custom-built test equipment
like digital multimeter, oscilloscope etc.
B.6 In the next process, the assembly of locally
procured material was done in which the
communication panel of the Base Unit was removed
from the Base Unit and connector cutouts were
made using drilling machines. The cutouts were
then connected with the cables to transmit the
analog signals from the controller PCB of the Base
Unit to the display monitor. After testing the signals,
- 25 -
the display monitor was assembled to Base Unit.
Thereafter, the Base Machine, the display monitor
and the humidifier unit was fitted on to the trolley
and various tests were then carried out to check the
display functions like wave form of the flow volume
and pressure, the loops and communication with the
Base Machine etc.
B.7 The process of calibration which was then
carried out, involved the meas of the timing and
analysis of the signals, measurement of the set
values of sa parameters at the designated output
points since the basic function of a ventilate
essentially the delivery of the air-oxygen mixture at
pre-set pressure, volume and particular mode,
B.8 The ventilator became a complete system only
after completion of all the above processes.
B.9 After completion of the assembling, testing and
calibration processes, the Russian language
software was then reintroduced in the EPROMs in
the Base Unit.
B.10 After completion of the above process, the
parts and accessories were dismantled for packing.
While the Base Unit along with some parts and
accessories were packed in one box, the display
monitor with some imported as well as local parts
and acessories were packed in another box. The
trolley was packed in a third box."
- 26 -
25. The Tribunal itself noted that the actual value
addition that took place in India was only 5.18%. The
value of one unit for a ventilator after import was
Rs.12,91,926/-. The value of locally procured goods and
services was only Rs.67,000/-, and therefore, the
percentage of value addition was only 5.18%. However,
the rupee value of the exported machine was
Rs.24,49,393/- which was on account of the Rupee-
Rouble agreement, and would not constitute an intrinsic
value addition. The increase had come about because
the supplier quoted his price in US Dollars, which was
converted to roubles by Russian byer, anud in turn paid
in rupees under rupee-rouble agreement.
26. Despite the aforesaid finding, the Tribunal passed
the impugned order. Paragraph 11 of the impugned
order reads as under :-
"11. We have considered the submissions and find:
a) The facts in the Titan Medical System's case and
in the present case cannot be differentiated, the
attempts being made by the SDR not withstanding
- 27 -
Therefore following the law laid down by the Apex
Court, we would set aside the present order and the
Show-cause notice and allow the appeal with
consequential benefits to all the appellants.
b) In the present case we find that M/s GE Medical
Systems has provided for the certification by Central
Excise Officers of manufacture having taken place in
their premises. The DRI Officers have permitted
exports on and after verification. This would indicate
following the BPL case, that manufacture in this case
did take place and there was no case or cause to
have issued the Show-cause Notice.
c) Since no duty demands and show cause notice is
being upheld, there is no case for penalty on any
appellant."
27. When the value addition was only 5.18% as recorded
by the Tribunal, which was much below 33% for export of
goods against payment in Indian Rupee under paragraph
11.7 of the EXIM policy, it could not be said that there was
any increase in the intrinsic value of the export product by
the respondent.
28. The Supreme Court in EAGLE FLASK INDUSTRIES
LTD., Vs. COMMISSIONER OF CENTRAL EXCISE, PUNE,
reported in (2004 SCC 7 377) as well as in the STATE OF
- 28 -
JHARKHAND AND OTHERS VS. AMBAY CEMENTS AND
ANOTHER reported in [(2005) 1 SCC 368] has held that if
an exemption is available on complying with certain
conditions, the conditions have to be strictly complied
with. The exemption provision in a taxing Statute should
be construed strictly and it is not open to the Court to
ignore the conditions prescribed in the EXIM Policy and the
exemption notification.
29. In the STATE OF JHARKHAND AND OTHERS Vs. LA
OPALA R.G. LTD., reported in (2014) 15 SCC 136 it has
been held that it is for the assesse to establish clearly that
it is covered by the exemption notification and in case of
doubt, benefit must be given to the State. Strict and
liberal interpretation can be invoked at different stages of
interpreting it. The strict approach requires to be adopted
in determining its applicability to the assessee. Eligibility
clauses mentioned in the exemption notification have to be
interpreted in terms of its language. Paragraphs 15 to 19
of the said judgment are extracted hereunder :-
- 29 -
"15. We do not concur with the proposition put
forth by Shri S.D. Sanjay, learned Senior Counsel
that a notification which grants tax incentives
should to be liberally construed in support of his
submission. It is settled rule of construction of a
notification that at the outset a strict approach
ought to be adopted in administering whether a
dealer/manufacturer is covered by it at all and if
the dealer/manufacturer falls within the
notification, then the provisions of the notification
be liberally construed.
16. Literally speaking, an exemption is freedom
from any liability, payment of tax or duty. It may
assume different applications in a growing economy
such as provisioning for tax holiday to new units,
concessional rate of tax to goods or persons for a
limited period under specific conditions and
therefore, in Union of India v. Wood Papers Ltd,
this Court has observed that construction of an
exemption notification or an exemption clause in
contrast with the charging provision has to be
tested on different touchstone and held that the
eligibility clause in relation to an exemption
notification is given strict meaning and the
notification has to be interpreted in terms of its
language, however, once an assessee satisfies the
eligibility clause, the exemption clause therein may
be construed literally. This Court has explained the
- 30 -
rationale of adopting the said approach as under:
(SCC p. 260, para 4)
"4. ... In fact an exemption provision is like an
exception and on normal principle of construction
or interpretation of statutes it is construed strictly
either because of legislative intention or on
economic justification of inequitable burden or
progressive approach of fiscal provisions intended
to augment State revenue. But once exception or
exemption becomes applicable no rule or principle
requires it to be construed strictly. Truly speaking
liberal and strict construction of an exemption
provision are to be invoked at different stages of
interpreting it. When the question is whether a
subject falls in the notification or in the exemption
clause then it being in nature of exception is to be
construed strictly and against the subject but once
ambiguity or doubt about applicability is lifted and
the subject falls in the notification then full play
should be given to it and it calls for a wider and
liberal construction."
17. This Court in Gammon (I) Ltd. v. Commr. of
Customs [Gammon (I) Ltd. v. Commr. of Customs,
while rejecting the plea of the appellant that the
exemption notification should receive a liberal
construction to further the object underlying it
relied upon the decision of a three-Judge Bench of
this Court in Novopan India Ltd., which stated the
- 31 -
aforesaid principle and the object behind adopting
literal interpretation in determining eligibility for
claiming exemption or exception from tax as
follows: [Gammon (I) Ltd. case SCC p. 509, para
32]
"32. ... '16. ... The principle that in case of
ambiguity, a taxing statute should be construed in
favour of the assessee--assuming that the said
principle is good and sound--does not apply to the
construction of an exception or an exempting
provision; they have to be construed strictly. A
person invoking an exception or an exemption
provision to relieve him of the tax liability must
establish clearly that he is covered by the said
provision. In case of doubt or ambiguity, benefit of
it must go to the State. This is for the reason
explained in Mangalore Chemicals and other
decisions viz. each such exception/exemption
increases the tax burden on other members of the
community correspondingly. Once, of course, the
provision is found applicable to him, full effect must
be given to it. As observed by a Constitution Bench
of this Court in Hansraj Gordhandas v. CCE and
Customs that such a notification has to be
interpreted in the light of the words employed by it
and not on any other basis. This was so held in the
context of the principle that in a taxing statute,
there is no room for any intendment, that regard
must be had to the clear meaning of the words and
- 32 -
that the matter should be governed wholly by the
language of the notification i.e. by the plain terms
of the exemption.' (Novopan India Ltd. case, SCC
p. 614, para 16)"
(emphasis supplied)
18. In CCE v. Mahaan Dairies this Court has
observed that: (SCC p. 800, para 8)
"8. It is settled law that in order to claim benefit of
a notification, a party must strictly comply with the
terms of the notification. If on wording of the
notification the benefit is not available then by
stretching the words of the notification or by adding
words to the notification benefit cannot be
conferred."
19.CCE v. Bhalla Enterprises laid down a
proposition that notification has to be construed on
the basis of the language used. A similar view has
been expressed by a Division Bench of this Court
in TISCO Ltd. v. State of Jharkhand, Kartar Rolling
Mills v. CCE, Eagle Flask Industries Ltd. v. CCE,
Govt. of India v. Indian Tobacco Assn., Collector of
Customs (Preventive) v. Malwa Industries Ltd.
and CCE v. Rukmani Pakkwell Traders.
30. In SANGHVI RECONDITIONERS PRIVATE LIMITED
Vs. UNION OF INDIA AND OTHERS ((2010) 2 SCC 733) it
has been held that an assessee claiming benefit of
- 33 -
exemption notification must show that he satisfies the
conditions of exemption as prescribed in the exemption
notification. The exemption notification has to be strictly
construed being the foundation for availing the benefits to
the exemption notification, the conditions prescribed
therein had to be strictly complied with.
31. Thus, from the aforesaid judgments, it is evident that
when an assessee is claiming the benefit of exemption
notification, the assessee must show that he has satisfied
all the conditions of exemption as prescribed in the
notification. In the present case, the exemption from
payment of customs duty on import was on the condition
of value addition at the minimum rate of 33% made before
the exports could have been effected. As noted above,
the value addition was only upto 5.18% and there was no
change in the intrinsic value of the imported goods.
Therefore, the respondent-assessee was not entitled for
exemption of payment of customs duty under the
exemption Notification No.1/95-CE dated 04.01.1995 on
imported items.
- 34 -
32. The 1st respondent-Ms/.Lucky Exports had
misrepresented the JDGFT for the grant of an advance
license in terms of Chapter VII of the Handbook. The FOB
value of the exports was Rs.55,00,00,000/- as against the
CIF value of import of Rs.32,59,88,430/- and indicated
that the value addition would be to an extent of 68.71%.
However, in actual even as per the impugned order passed
by the Tribunal, the value addition was only up to 5.18%.
33. Section 111(m) and 111(o) of the Customs Act would
provide that any goods which do not correspond in respect
of value or any other particular, with the entry made
under this Act or in the case of baggage with the
declaration made under Section 77 would be liable for
confiscation. Sub-section (4) of Section 111 of the
Customs Act, provides that any goods exempted subject to
any condition from duty or any prohibition in respect of
the import thereof under this Act or any other law for the
time being in force, in respect of which the condition is not
observed unless the non-observation of the condition was
sanctioned by the proper officer would be liable for
- 35 -
confiscation. As the condition imposed under the JDGFT
licence and the exemption Notification 51/2000 dated
27.04.2000 were not complied with and in fact they had
misrepresented the JDGFT in obtaining the advance
license.
34. In view of the aforesaid discussion, we are of the
considered view, that the view taken by the CEGAT cannot
be sustained, and hence the instant Civil Petition is
allowed, we set aside the impugned order dated
10.01.2003 passed in C/25 to 28/02, C/85/02.
Sd/-
(D K SINGH)
JUDGE
Sd/-
(VENKATESH NAIK T)
JUDGE
NG
Download the LatestLaws.com Mobile App
LatestLaws.com presents: Lexidem Offline Internship Program, 2026
LatestLaws.com presents 'Lexidem Online Internship, 2026', Apply Now!
