Strict exemption interpretation bars customs relief unless the machine specification and named sub-contractor conditions are both met.

The exemption under Notification No. 21/2002-Cus applied only to an electronic paver finisher with sensor device of 7 m size and above, and the relevant measure was the equipment's own pave width. Because the imported machine's basic and extendable widths did not bring it within that specification without bolt-on extensions, it fell outside the entry and exemption was not available. Condition 40 also required import by the contractor or a person specifically named as a sub-contractor in the original road construction contract. As the appellant was not so named in the concession agreement, and later arrangements could not cure that defect, the sub-contractor condition was not satisfied.

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Issues: (i) Whether the imported electronic sensor paver finisher satisfied the product specification of "7 m size and above" in Notification No. 21/2002-Cus and qualified for exemption; (ii) Whether the appellant was named as a sub-contractor in the road construction contract so as to satisfy Condition 40 of the notification.

Issue (i): Whether the imported electronic sensor paver finisher satisfied the product specification of "7 m size and above" in Notification No. 21/2002-Cus and qualified for exemption.

Analysis: The exemption entry covered only an electronic paver finisher with sensor device for laying bituminous pavement of 7 m size and above. The relevant measure was the pave width of the equipment itself. The product catalogue showed a basic width of 3 metres, extendable to 6 metres by telescopic tubing, and to 9.5 metres only with bolt-on extensions. Since the notification did not include the extensions for determining the specified size, the maximum pave width of the equipment remained 6 metres. Exemption notifications are to be construed strictly, and a claimant must fall clearly within the expressed terms of the notification.

Conclusion: The imported equipment did not satisfy the specified size requirement and the denial of exemption was justified.

Issue (ii): Whether the appellant was named as a sub-contractor in the road construction contract so as to satisfy Condition 40 of the notification.

Analysis: Condition 40 required the goods to be imported either by the contractor awarded the road construction work or by a person specifically named as a sub-contractor in that contract. The concession agreement between NHAI and the consortium did not name the appellant as a sub-contractor. The consortium MOU only regulated inter se rights and obligations of members and could not be treated as a sub-contract. The later EPC arrangement also could not satisfy a condition requiring the appellant to be named in the original NHAI contract. The earlier Supreme Court ruling in the appellant's own matter applied the same strict approach to the identical exemption language.

Conclusion: The appellant was not a named sub-contractor and did not satisfy Condition 40.

Final Conclusion: The appeal failed on both the product-specification issue and the contract-status issue, leaving the denial of customs exemption undisturbed.

Ratio Decidendi: A claimant to an exemption notification must strictly satisfy the exact terms of the relevant entry and conditions, and a person is not entitled to sub-contractor-based exemption unless specifically named as such in the contract contemplated by the notification.

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