Capital goods credit under tariff entry interpretation upheld where bracketed exclusion was confined to Heading 90.32.

Rule 57Q capital goods credit was available for testing equipment classified under CSH 90.31 because the bracketed exclusion in Entry 4 of the table applied only to Heading 90.32. The placement of the exclusion immediately after Heading 90.32, read with the structure of the entry, showed that goods of a kind used for refrigerating and air conditioning appliances and machinery were excluded only from that heading and not from the earlier headings in the range 90.24 to 90.31. On that interpretation, the goods remained eligible for credit and the credit denial was set aside.

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Issues: Whether testing equipment falling under CSH 90.31 was eligible for capital goods credit under Rule 57Q, and whether the bracketed exclusion in Entry 4 of the table applied only to Heading 90.32 or to the entire range of headings 90.24 to 90.32.

Analysis: Rule 57Q, as introduced by Notification No. 6/97-C.E. (N.T.) dated 01.03.1997, listed eligible capital goods in a table. Entry 4 covered goods under Headings 90.11 to 90.13, 90.16, 90.17, 90.22, 90.24 to 90.31 and 90.32, with the exclusion in brackets placed immediately after Heading 90.32. The placement and structure of the entry showed that the exclusion for goods of a kind used for refrigerating and air conditioning appliances and machinery qualified only Heading 90.32 and not the preceding headings. Since the impugned goods fell under CSH 90.31, they were within the eligible category.

Conclusion: The exclusion did not apply to CSH 90.31, and the goods were eligible for capital goods credit. The appeal succeeded.

Final Conclusion: The credit denial was set aside and the assessee's entitlement to capital goods credit was upheld.

Ratio Decidendi: Where an exclusionary bracket in a tariff entry is placed immediately after the last specified heading, it is construed as qualifying only that heading if the structure of the entry so indicates.

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