Fiscal exemption classification must be uniform among similarly situated importers; unequal treatment without nexus is discriminatory.

A fiscal exemption notification must apply uniformly to all similarly situated importers within the same statutory class. The text explains that ships imported for breaking and validly subjected to customs duty under permissible methods under the Customs Tariff Act did not become a different class merely because the duty per LDT varied. An exclusion of one subgroup from full excise exemption lacked an intelligible differentia and rational nexus with the object of preventing double taxation and ensuring equal treatment. The operative relief was limited to exemption after crediting customs duty already paid, with excise duty payable only on the balance.

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Issues: Whether the exemption notifications restricting full excise exemption to ships on which customs duty had been paid at Rs. 1,400 per LDT violated Article 14 by creating an unreasonable classification among importers who had validly paid customs duty under the Customs Tariff Act.

Analysis: The notifications related to the same goods and the same statutory scheme. Customs duty on ships imported for breaking could be paid through permissible methods under the Customs Tariff Act, and the duty so paid was valid duty. Importers who chose a method resulting in a lower duty per LDT did not form a different class merely because the quantum differed. A fiscal notification may classify, but the classification must rest on an intelligible differentia having a rational nexus with the object sought to be achieved. No cogent explanation supported the exclusion of one subgroup from the full exemption, and the object of avoiding double taxation and equal treatment of similarly situated persons was not met by the impugned distinction. However, parity could be preserved by limiting the benefit to the balance amount after adjusting duty already paid.

Conclusion: The restriction in the exemption notifications was discriminatory to the extent it denied full exemption to similarly situated importers who had paid customs duty under a permissible method resulting in a lower LDT rate. The respondent was entitled to the exemption, but only after crediting the customs duty already paid, with excise duty payable on the balance.

Final Conclusion: The exemption notification could not be applied in a manner that created unjustified sub-classification within the same class of importers, and relief was limited to exemption after adjustment of duty already paid.

Ratio Decidendi: A fiscal exemption available to a class must operate uniformly among all similarly situated persons in that class, and any exclusion of a sub-category must be supported by a reasonable classification having an intelligible differentia and a rational nexus with the object of the notification.

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