Exemption entry construed disjunctively where literal reading of "and" created anomaly and narrowed intended customs concession.

The commentary explains that an exemption entry in Notification No. 125/86-Cus. for FFS machines with vacuumising and inert gas flushing was construed in light of the import policy, commercial description, and later clarificatory amendment. Because a literal reading of "and" would create anomaly and narrow the concession beyond the apparent legislative intent, the expression was treated as disjunctive. The analysis states that, in fiscal exemption provisions, where two reasonable constructions are possible, the one favouring the assessee may be adopted if it better fits the scheme of the notification. On that basis, an FFS machine fitted only with inert gas flushing was regarded as eligible for the concessional duty benefit.

---

---

Issues: Whether the expression "FFS with vacuumising and inert gas flushing" in Serial No. 17 of Notification No. 125/86-Cus. was to be read conjunctively or disjunctively, and whether an FFS machine fitted only with inert gas flushing was entitled to the concessional duty benefit.

Analysis: The exemption notification under Section 25 of the Customs Act, 1962 had to be construed in the setting of the import policy and the commercial description of the machine. The machine imported was an FFS packaging machine with gas flushing and without vacuumising. Reading "and" literally would restrict the concession to a machine having both accessories even though the later amendment in Notification No. 65/89-Cus. expressly clarified the position by allowing FFS machines with either vacuumising or inert gas flushing or both. In a fiscal exemption, where the wording is capable of more than one reasonable construction and a literal reading would create anomaly, the construction favourable to the assessee may be adopted. The term was therefore read in a manner that gave effect to the evident legislative intent and commercial reality.

Conclusion: The word "and" was held to be read as "or" in the relevant entry, and the imported machine was held entitled to the benefit of Notification No. 125/86-Cus.

Ratio Decidendi: Where an exemption entry is reasonably capable of a construction that avoids anomaly and accords with the scheme of the notification, a conjunctive expression may be read disjunctively to extend the intended fiscal benefit.

---