1991 (10) TMI 53 - HC - Customs

Plastics - Polymerisation and copolymerisation - Interpretation of fiscal statute - Exemption notification

Summary

Issues:
Challenge to levy of auxiliary duty, additional duty, and landing charges; Refusal to grant exemption under the notification dated August 2, 1976.

Analysis:
1. The petitioners, a partnership firm, imported High Density Polyethylene and filed bills of entries for home consumption. The challenge was to the levy of auxiliary duty, additional duty, landing charges, and the refusal to grant exemption under the notification dated August 2, 1976. The petitioners withdrew the challenge to auxiliary duty, additional duty, and landing charges based on previous decisions. The main issue was whether the petitioners were entitled to claim exemption from duty under the said notification for the import of High Density Polyethylene.

2. The exemption notification specified that polymerisation and copolymerisation products, including polyethylene, were entitled to exemption from duty. The petitioners argued that the imported goods fell within the scope of the exemption notification as they were from a specified country and fell under the relevant category. The Department contended that only specific items like polyvinyl chloride, polyvinyl acetate, and polystyrene were entitled to exemption, not all polymerisation products. The Court held that the plain reading of the notification included all polymerisation products, and the intention of the Central Government was to grant exemption to such products.

3. The Court rejected the Department's argument that the exemption was limited to specific items listed in the notification, emphasizing that every word in the notification must be given effect. The Court disagreed with a previous judgment that restricted the exemption to specific items, stating that the notification clearly intended to grant exemption to all polymerisation and copolymerisation products, including polyethylene. The Court highlighted the rule of interpretation favoring the taxpayer in taxing statutes.

4. Consequently, the Court declared that the petitioners were eligible for the exemption under the notification for the import of High Density Polyethylene. The petition partly succeeded, granting relief to the petitioners regarding the exemption but refusing other reliefs. The Department was permitted to enforce the bank guarantee for denied claims or recover the amount from the petitioners if the guarantee was not active. The bond related to the exemption claim was to be discharged after four weeks.

In conclusion, the Court upheld the petitioners' entitlement to exemption under the notification for the import of High Density Polyethylene, emphasizing the broad interpretation of the exemption notification to include all polymerisation and copolymerisation products, contrary to the Department's restrictive interpretation.