2015 (4) TMI 806 - AT - Customs

Exemption from Customs duty under Sl. No. 56 - Notification No.25/99-CUS dated 28.02.1999 - whether specific grant of the notification can be interpreted to expand the scope of the grant when duty exemption is granted at the public cost - Held that - If the interpretation suggested by the appellant that degaussing coil is inductor that shall defeat the spirit of the public grant and also run counter to the legislative mandate. Both goods being distinct by their character and utility and recognised by two different entries at different serial numbers of the notification, to serve their different purpose, one is not substitute of the other. Once a benefit is confined to a particular grant, that cannot be interpreted to be meant for any other purpose for which the legislature did not extend such grant. So also, the inductor specified in column 4 under Sl. No. 56 of the notification is confirmed to use of the raw-material mentioned in column 3 thereof. Therefore grant of Sl. No.56 is not extendable to any other goods under any fiction which otherwise shall result in abuse of the public grant. - Denial of benefit of notification justified - Decided against assessee.

Summary

Issues:
Interpretation of Notification No.25/99-CUS for duty exemption on imported goods for manufacturing inductors, distinction between inductor and degaussing coil, violation of bond condition, abuse of notification benefit.

Analysis:
The appellant imported PVC electrical tape and PVC wire harness for manufacturing inductors under Notification No.25/99-CUS. Customs found the goods were used in manufacturing degaussing coil instead of inductors as per bond condition. Appellant argued that degaussing coil is the same as inductor, relying on technical literature and a previous court decision. Revenue contended that degaussing coil is distinct from inductor as per the notification, and bond violation disentitles the appellant from the exemption.

The notification grants duty exemption for imported goods used in manufacturing specific finished goods listed in the columns. The controversy arose due to the distinction between inductor and degaussing coil in the notification. The entry at Sl.No.56 pertains to insulating material for inductors, while Sl.No.107 relates to wire for different finished goods. The terms "inductor" and "degaussing coil" are materially different, precluding the appellant from expanding the scope of the exemption beyond the intended purpose.

The judgment emphasized that the specific grant of duty exemption cannot be interpreted to extend to unrelated goods, as it would defeat the legislative intent and public purpose of the grant. Recognizing the distinct character and utility of inductors and degaussing coils, the court held that one cannot be substituted for the other. Misinterpreting the notification to include degaussing coil under the exemption for inductors would amount to an abuse of the public grant. The authorities rightfully denied the appellant the benefit of the notification, leading to the dismissal of the appeal.

In conclusion, the court's analysis focused on upholding the integrity of the duty exemption notification by strictly interpreting the intended scope of the exemption and preventing its misuse through misinterpretation or abuse. The judgment clarified the distinction between inductors and degaussing coils, highlighting the importance of adhering to the conditions and purpose of such notifications to prevent exploitation and ensure fair application of customs duties.