Conditional exemption notifications require strict compliance: prototype car denied duty-free import as capital goods and under the residuary entry.

Duty-free import under a conditional exemption notification was denied because the imported prototype car did not fall within the table entry for capital goods; it was imported for software testing and not for the type of production use required by the notification. The residuary entry also did not apply because the relied-upon no-objection letter related to hardware on loan basis and did not evidence the specific prior approval of the Inter-Ministerial Standing Committee for the car. Strict compliance with the notification's specific entry and approval condition was therefore required, and the exemption claim failed on both grounds.

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Issues: (i) whether the imported prototype car could be treated as capital goods eligible for duty-free import under Notification No. 140/91-Cus. dated 22-10-91; (ii) whether the car was covered by the residuary entry for other items required in relation to production of export goods with prior approval of the Inter-Ministerial Standing Committee.

Issue (i): Whether the imported prototype car could be treated as capital goods eligible for duty-free import under Notification No. 140/91-Cus. dated 22-10-91.

Analysis: The exemption was available only to goods falling within the table to the notification. The car was imported as a prototype for testing software and not for rendering services or for direct manufacture in the sense urged by the importer. The earlier Settlement Commission ruling relied on was distinguished because it turned on a different notification containing its own definition of capital goods. On the facts, the car did not answer the description of capital goods under the notification.

Conclusion: The car was not eligible for exemption as capital goods.

Issue (ii): Whether the car was covered by the residuary entry for other items required in relation to production of export goods with prior approval of the Inter-Ministerial Standing Committee.

Analysis: The importer produced a letter granting no objection for import of hardware on loan basis, and that letter did not refer to the Peugeot car. It also did not establish the specific prior approval of the Inter-Ministerial Standing Committee for the car as required by the notification. The document therefore could not support duty-free clearance of the prototype car.

Conclusion: The car was not covered by the residuary entry and the required approval was not established.

Final Conclusion: The exemption claim failed on both the asserted grounds, and the redemption fine issue was not pressed at hearing.

Ratio Decidendi: A claim for duty-free import under a conditional exemption notification must strictly satisfy the specific entry and any stipulated prior approval, and a document issued for a different import cannot establish eligibility for another item.

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