Duty-free capital goods exemption cannot be denied by adding a software-development use beyond notification terms.

Duty-free procurement for a 100% EOU/STP unit was available under Notification No. 1/95-CE and Notification No. 140/91-Cus because the governing condition was installation or use of the capital goods within the bonded premises within the stipulated period. The notifications were read as pari materia, and no further requirement could be added that the goods must be used specifically for software development. Since installation or use in the unit's premises was not disputed, exemption could not be denied on that basis; Revenue's authorities were held inapplicable on the facts, while the respondent's authorities supported exemption on identical facts.

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Issues: Whether the goods procured by a 100% EOU/STP unit were eligible for exemption under Notification No. 1/95-CE dated 4/1/1995 and Notification No. 140/91-Cus dated 22/10/1991, and whether the exemption could be denied on the ground that the goods were not used in software development.

Analysis: The relevant conditions of the two notifications were read as pari materia. The controlling requirement was that the capital goods be installed or otherwise used within the bonded premises within the stipulated period. The conditions did not impose a further requirement that the goods must be used specifically for software development. Since the installation or use of the goods in the respondent's premises was not disputed, the exemption could not be denied on the Revenue's interpretation. The authorities cited by the Revenue were held to be inapplicable on the facts, while the decisions relied on by the respondent supported grant of the exemption on identical facts.

Conclusion: The exemption under Notification No. 1/95-CE dated 4/1/1995 and Notification No. 140/91-Cus dated 22/10/1991 was held to be admissible to the assessee.

Ratio Decidendi: Where a notification governing duty-free procurement for capital goods requires installation or use within bonded premises, exemption cannot be denied by reading into it an additional condition that the goods must be used for software development.

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