Order
1. This civil appeal is directed against the judgment and order passed by the Customs, Excise and Service Tax Appellate Tribunal (for short “Cestat”), Mumbai in Konkan Synthetics Fibres Ltd. v. CCE 2003 157 ELT 443 (Tri). By the impugned judgment and order, Cestat has granted relief to the assessee by giving a liberal interpretation to the beneficial Notification No. 17/01-Cus dated 1-3-2001, as amended by Notification No. 44/01-Cus dated 26-4-2001.
2. The assessee is an importer. It has imported one unit of equipment which was declared as “Karl Mayer high speed draw warping machine with 1536 ends along with essential spares”. On such importation, it had presented Bill of Entry No. 207814 dated 25-9-2001 before the Customs Authorities, inter alia, seeking clearance of the same by extending the benefit of Notification No. 17/01-Cus dated 1-3-2001, as amended by Notification No. 44/01-Cus dated 26-4-2001.
3. The Customs Authorities had refused to accept the request of the assessee and accordingly, had directed the assessee to pay the duty under the provisions of the Customs Act, 1962 (“the Act”, for short). Therefore, the assessee was constrained to pay the duty in order to clear the goods. The said payment was made under protest so that it could carry the matter further in appeal before the first appellate authority.
4. In the appeal filed, the first appellate authority has confirmed the view of the Customs Authority. Dissatisfied with the order so passed, the assessee had carried the matter in appeal before Cestat and Cestat has granted relief to the assessee. The Revenue, being aggrieved by the same, is before us in this appeal.
5. We have heard Shri V. Shekhar, learned Senior Counsel assisted by Smt B. Sunita Rao for the Revenue and Shri S.K Bagaria, learned Senior Counsel for the assessee.
6. Shri Shekhar, learned Senior Counsel for the Revenue, after bringing to our notice the notification under which the assessee had claimed benefit for the imported goods, would submit that, what was imported by the assessee was not in consonance with the exemption notification and, therefore, the authorities under the Act were justified in denying the benefit available under the notification to the assessee. The learned Senior Counsel further submits that what is imported by the assessee is high speed draw warping machine with yard tensioning without the pneumatic suction device but with a drawing machine. The learned counsel would submit, since what was imported is not in accordance with Entry 8 of the Table appended to the notification, the assessee is not entitled to the benefit of the exemption notification.
7. Per contra, Shri Bagaria, learned Senior Counsel would submit that the beneficial notification should be given a liberal construction and if it is done, then, what is imported by the assessee would fall within Entry 8 of the Table appended to the exemption notification.
8. The Central Government, in exercise of its power under Section 25(1) of the Act, has issued an exemption notification in public interest, exempting certain articles notified under the Table appended to the notification from payment of the duty under the Act. Several items are enumerated under the Table. Entry 130 of the Table speaks of drawing machine. Entry 8 of the notification speaks of the high speed warping machine with yarn tensioning, pneumatic suction devices and accessories. A reading of the said entry would indicate that the said machine is a composite machine. The pneumatic suction devices are machines used for the purpose of sucking of vapour/gas, while the high speed warping machine is activated or warped.
9. There is no dispute that the assessee has imported high speed warping machine but without pneumatic suction device, but with drawing unit. The Textile Commissioner, who is well-conversant with these machines, has stated vide his letter dated 27-9-2001 that the goods imported by the assessee are covered under Entry 8 of the Table appended to the notification. He further stated vide his letter dated 24-10-2001 that drawing unit is just an essential accessory to the machines imported by the assessee and, therefore, is covered under the said entry. The opinion so furnished was taken note of by the Tribunal while granting relief to the assessee.
10. It is a settled proposition that in a fiscal or taxation law while ascertaining the scope of expressions used in a particular entry, the opinion of the expert in the field of trade, who deals in those goods, should not be ignored, rather it should be given due importance.
11. In Collector of Customs v. Swastic Woollens (P) Ltd. 1988 Supp SCC 796 this Court has observed thus:
“4. We are of the opinion that when no statutory definition is provided in respect of an item in the Customs Act or the Central Excise Act, the trade understanding, meaning thereby the understanding in the opinion of those who deal with the goods in question is the safest guide. [See Union of India v. Delhi Cloth & General Mills Co. Ltd. AIR 1963 SC 791, South Bihar Sugar Mills Ltd. v. Union of India AIR 1968 SC 922, Dunlop India Ltd. v. Union of India (1976) 2 SCC 241, Colgate Palmolive (India) (P) Ltd., In re 1979 4 ELT 567 (GOI), CST v. S.N Bros. (1973) 3 SCC 496 and also the famous observations of Cameron, J. in R. v. Planters Nut and Chocolate Co. Ltd. 1951 CLR 122]”
12. Before we discuss the issue involved, we intend to notice how this Court has construed beneficial notifications issued under the Act. In Commr. of Customs (Preventive) v. M. Ambalal and Co. (2011) 2 SCC 74 (in which one of us was the party) this Court has observed that the beneficial notification providing the levy of duty at a concessional rate should be given a liberal interpretation:
“16. It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. The rule regarding exemptions is that exemptions should generally be strictly interpreted but beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted. This composite rule is not stated in any particular judgment in so many words. In fact, majority of judgments emphasise that exemptions are to be strictly interpreted while some of them insist that exemptions in fiscal statutes are to be liberally interpreted giving an apparent impression that they are contradictory to each other. But this is only apparent. A close scrutiny will reveal that there is no real contradiction amongst the judgments at all. The synthesis of the views is quite clearly that the general rule is strict interpretation while special rule in the case of beneficial and promotional exemption is liberal interpretation. The two go very well with each other because they relate to two different sets of circumstances.”
13. In CST v. Industrial Coal Enterprises (1999) 2 SCC 607, this Court has observed:
“11. In CIT v. Straw Board Mfg. Co. Ltd. 1989 Supp (2) SCC 523 this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. v. CIT (1992) 3 SCC 78 it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision.”
14. In CCE v. North-Eastern Tobacco Co. Ltd. (2003) 1 SCC 161 this Court has held:
“10. The other important principle of interpreting an exemption notification is that as far as possible liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed.”
15. In Associated Cement Companies Ltd. v. State of Bihar (2004) 7 SCC 642 this Court while explaining the nature of the exemption notification and also the manner in which it should be interpreted has held:
“12. Literally ‘exemption’ is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking, liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. (See Union of India v. Wood Papers Ltd. (1990) 4 SCC 256 and Mangalore Chemicals and Fertilisers Ltd. v. CCT 1992 Supp (1) SCC 21 to which reference has been made earlier.)”
16. In G.P Ceramics (P) Ltd. v. CTT (2009) 2 SCC 90 this Court has observed thus:
“29. It is now a well-established principle of law that whereas eligibility criteria laid down in an exemption notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally. [See CTT v. DSM Group of Industries (2005) 1 SCC 657 (SCC para 26); Tisco Ltd. v. State of Jharkhand (2005) 4 SCC 272 (SCC paras 42-45); State Level Committee v. Morgardshammar India Ltd. (1996) 1 SCC 108; Novopan India Ltd. v. CCE & Customs 1994 Supp (3) SCC 606; A.P Steel Re-Rolling Mill Ltd. v. State of Kerala (2007) 2 SCC 725 and Reiz Electrocontrols (P) Ltd. v. CCE (2006) 6 SCC 213.]”
17. Since the Tribunal has taken note of the correct principles enunciated by this Court while granting relief to the assessee, we cannot find fault with the impugned judgment. Accordingly, the appeal requires to be rejected and it is rejected. No costs.
18. Ordered accordingly.