2018 (8) TMI 1304 - AT - Customs

Import of DVD/CD manufacturing machine - benefit of N/N. 25/2002 dated 01.03.2002 - denial of benefit on the ground that the exemption notification is meant for a complete line of DVD/CD manufacturing machine and they had not imported the complete line - Whether or not the appellant is entitled to the benefit of Sl.No.25 in Exemption Notification No.25/2002 since they have imported part of the machinery listed therein and not the entire replication line? Held that - The exemption notification provided exemption to CD/CD-R/DVD/DVD-R manufacturing machinery or replication lines. It is not in dispute that the replication line or manufacturing machinery comprises all the machines listed in the exemption notification and the appellant had imported some of the machinery and not others - there were case laws taking both views with respect to the benefit of exemption notification. Some took a liberal view while interpreting the entitlement of a beneficial exemption notification while others took a strict view. Constitutional Bench of the Hon ble Supreme Court in the case of CC Mumbai Vs M/s Dilip Kumar & Co and others 2018 (7) TMI 1826 - SUPREME COURT OF INDIA has held that When there is ambiguity in exemption notification which is subject to strict interpretation the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favor of the Revenue. The appellant is not entitled to the benefit of the exemption notification - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Interpretation of Customs Notification No.25/2002 regarding the benefit of exemption for imported machinery.
2. Whether the appellant is entitled to the benefit of the exemption notification despite not importing all the machines listed in the notification.

Issue 1: Interpretation of Customs Notification No.25/2002
The appellant imported machinery and claimed the benefit of Customs Notification No.25/2002. The lower authority denied the exemption, stating that it is meant for a complete line of DVD/CD manufacturing machines. The first appellate authority remanded the matter for a speaking order following the principles of natural justice. The lower authority, after following due process, denied the benefit of the notification. The appellant appealed, arguing that the exemption is for manufacturing machinery, not requiring the import of all listed machines. Citing various case laws, the appellant contended that the spirit of the exemption was to encourage industries. The Departmental Representative opposed, emphasizing that all listed machines must be imported for eligibility.

Issue 2: Entitlement to Exemption Notification
The central question was whether the appellant, who imported only part of the machinery listed in the exemption notification, was entitled to the benefit. The appellant argued that they could procure the remaining machinery from alternative sources and still qualify for the exemption. They relied on case laws highlighting the need to consider the spirit of the notification. The Tribunal noted conflicting views on interpreting exemption notifications. Referring to a Supreme Court judgment, the Tribunal held that exemptions should be strictly interpreted, with the burden on the assessee to prove eligibility. The decision clarified that ambiguity in exemptions should favor the revenue. Consequently, the Tribunal concluded that the appellant was not entitled to the benefit of the exemption notification.

In conclusion, the Tribunal rejected the appeal and upheld the Order-in-Appeal, emphasizing the strict interpretation of exemption notifications and the burden on the assessee to establish eligibility within the notification's parameters. The judgment highlighted the importance of considering the complete replication line or manufacturing machinery listed in the notification for claiming exemption benefits, ultimately ruling against the appellant's entitlement to the exemption.