2003 (3) TMI 522 - AT - Central Excise

Issues: Classification of goods under Chapter sub-heading 8528.00 and denial of benefit of Notification, Interpretation of exemption based on specific use or function, Rule of strict construction of exemption Notification, Denial of benefit based on change in facts or law, Coverage of television with computer facility under Serial No. 18 of Notification No. 87/89.

Classification of Goods and Denial of Benefit of Notification:
The appellants argued that the goods fell under Chapter sub-heading 8528.00 and met the description of T.V. receivers under Serial No. 18 of the Notification. They contended that the benefit of the Notification could not be denied based on the incidental functions of the goods, such as audio amplifier and computer features. The Tribunal cited previous decisions to support the principle that exemption based on a specific use or function cannot be denied if the goods meet the description in the Notification. The rule of strict construction of an exemption Notification was also discussed to emphasize that the full effect of an exemption should be given without convoluted interpretations. The Tribunal noted that previous Classification Lists had approved the benefit of the Notification for similar goods, and there were no changes in facts or law to justify denying the benefit.

Interpretation of Exemption Based on Specific Use or Function:
The Tribunal analyzed the arguments presented by the department, which adopted the reasoning of the impugned order passed by the Commissioner (Appeals). The Commissioner's order highlighted the specific features covered under different Serial Numbers of the Notification and argued that the goods with computer facility did not fall under Serial No. 18. The Commissioner differentiated previous cases where exemption was granted based on identical descriptions in the Notification and the tariff heading. However, in the present case, the tariff heading had sub-headings with different rates for TVs with added features, leading to the denial of the concessional rate under Serial No. 18. The Tribunal examined the specific provisions of the Notification and the tariff heading to determine the eligibility of the goods for the exemption.

Rule of Strict Construction of Exemption Notification and Denial of Benefit:
The Tribunal considered the principle of strict construction of an exemption Notification and discussed how the exemption should not be denied based on a circuitous interpretation. Previous judicial decisions were cited to emphasize the importance of giving full effect to an exemption Notification without unnecessary restrictions. The Tribunal examined the facts of the case and the provisions of the Notification to ensure that the benefit of the exemption was not unjustly denied.

Coverage of Television with Computer Facility under Serial No. 18 of Notification No. 87/89:
After hearing both parties and reviewing the case records, the Tribunal concluded that the impugned goods, classified as television receivers with a computer facility under Heading 8528.00, should be eligible for the exemption under Serial No. 18 of the Notification. The Tribunal noted that the Notification did not have a separate entry for television sets with a computer facility, leading to a drafting mistake. As there was no exclusion under Serial No. 18 for television sets with additional attachments, the impugned goods could not be denied coverage under Serial No. 18. Therefore, the Tribunal set aside the lower authorities' orders and allowed the appellants' exemption under Serial No. 18 of the Table annexed to Notification No. 87/89.

Conclusion:
The Tribunal allowed the appeal and granted consequential relief to the appellants, emphasizing the correct interpretation of the Notification provisions and ensuring that the benefit of the exemption was not unjustly denied based on the incidental functions of the goods.

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