2009 (3) TMI 108 - AT - Customs

Benefit of Exemption Not. no. 21/2002 Cus - 23. - In an appeal, the issues cannot be decided on hypothetical basis. That apart, the notification on the basis of which exemption is claimed nowhere relates to the class of persons who would be entitled for exemption thereunder. It essentially speaks of the goods designed for use in leather industry. Once the records nowhere disclose the goods imported were designed for use in leather industry, all other issues are rendered redundant. - Lastly, it is sought to be contended that though such benefit under the said exemption notification has been granted to some of the importers of similar type of machinery, it has been illegally denied to the appellant - assuming that the Department has granted such exemption in some of the cases either intentionally or otherwise, or negligently or carelessly or illegally that would not create any right in favour of the appellant to claim the benefit under the said exemption notification contrary to law.

Issues Involved:
1. Eligibility for exemption under Notification No. 21/2002.
2. Description and intended use of the imported machinery.
3. Interpretation of the term "designed for use" in the context of the exemption notification.
4. Consistency in granting exemption benefits to similar importers.
5. Applicability of legal precedents cited by both parties.

Detailed Analysis:

1. Eligibility for Exemption under Notification No. 21/2002:
The primary issue is whether the machinery imported by the appellant qualifies for exemption under Notification No. 21/2002, Serial No. 257, List No. 34, Serial No. 9. The appellant contends that the machinery is covered under this notification, while the Department argues otherwise, stating that the machinery does not meet the criteria specified in the notification.

2. Description and Intended Use of the Imported Machinery:
The appellant claims that the machinery is a button-making machine designed for use in the leather industry, specifically for leather jackets and coats. However, the Department argues that the machinery is for general button making and is primarily intended for the textile industry. The invoices and catalogues describe the machinery as "automatic milling and scoring machine" and "destinated to the textile industry," which does not align with the notification's requirement for use in the leather or footwear industry.

3. Interpretation of the Term "Designed for Use":
The notification specifies that the goods must be "designed for use in the leather industry or the footwear industry." The Tribunal emphasized that the term "designed" implies that the machinery must be specifically intended for these industries. The appellant failed to provide evidence that the machinery was designed for use in the leather industry, and the documents submitted (invoices and catalogues) indicated that the machinery was intended for the textile industry.

4. Consistency in Granting Exemption Benefits to Similar Importers:
The appellant argued that similar machinery imported by others had been granted the exemption. However, the Tribunal noted that no cogent material was presented to substantiate this claim. Moreover, even if exemptions were granted to others, it would not create a legal right for the appellant to claim the same benefit if it does not meet the criteria set forth in the notification.

5. Applicability of Legal Precedents Cited by Both Parties:
The appellant cited several legal precedents to support their claim for exemption. However, the Tribunal found that these cases were not applicable as they involved different facts and circumstances. For example, the decision in Rupa and Co. Ltd. dealt with the manufacture of garments and not the specific issue of machinery designed for use in the leather industry. Similarly, other cited cases dealt with the principal function of machines and additional functions performed by them, which were not directly relevant to the issue at hand.

Conclusion:
The Tribunal concluded that the machinery imported by the appellant did not meet the criteria specified in Notification No. 21/2002 for exemption, as it was designed for use in the textile industry and not the leather industry. The appeal was dismissed, and the Tribunal upheld the decision of the lower authorities to deny the exemption. The Tribunal also emphasized that hypothetical issues and inconsistencies in granting exemptions to others do not justify granting an exemption contrary to the law.

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