Strict construction of exemption notifications bars auxiliary duty relief for project imports classified under Heading 98.01.

Goods imported under Heading 98.01 for project import purposes could not claim auxiliary duty exemption under Notification No. 187/86-Cus. because the notification applied only to goods falling within the specified tariff chapters and did not expressly cover Heading 98.01. Auxiliary duty was treated as an independent levy, so an exemption available for basic customs duty could not be extended by implication. The existence of a separate notification covering Heading 98.01 reinforced that the earlier notification did not apply. The governing principle is that an exemption notification must be construed strictly according to its express terms, and relief cannot be granted where the relevant tariff heading is not included.

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Issues: Whether goods imported and classified under Heading 98.01 of the Customs Tariff Act, 1975 could claim exemption from auxiliary duty under a notification that applied only to goods falling under Chapters 84 or 85, and whether the project import classification could be altered for the purpose of auxiliary duty.

Analysis: Chapter Note 1 of Chapter 98 treats goods satisfying the conditions of that chapter as classifiable thereunder even if they are otherwise more specifically covered elsewhere in the tariff. For project imports, machinery and connected items are brought together under Heading 98.01 for tariff purposes. The exemption under Notification No. 187/86-Cus. was issued for specified goods falling within the chapters mentioned in the table and did not refer to Heading 98.01. The notification had to satisfy both the description of goods and the tariff heading condition. The auxiliary duty is an independent levy, and the exemption available for basic customs duty under Notification No. 132/85-Cus. could not be extended by implication to auxiliary duty. A separate notification, Notification No. 189/86-Cus., specifically covered goods under Heading 98.01, showing that the appellant's goods did not fall within Notification No. 187/86-Cus. The decision relied on by the appellant did not assist because the later Division Bench view supported the requirement that the notification must expressly cover the relevant heading.

Conclusion: The goods classified under Heading 98.01 were not entitled to the benefit of Notification No. 187/86-Cus. for auxiliary duty, and the denial of exemption was correct.

Final Conclusion: The appeal failed and the refusal of the claimed auxiliary duty exemption was sustained.

Ratio Decidendi: An exemption notification must be construed according to its express terms, and where it links relief to specified tariff headings, goods classified under a different heading cannot claim the benefit unless that heading is also expressly covered.

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