Notional domestic manufacture principle supports customs exemption for Nepal imports despite the home consumption condition.

Imported paper and paper board from Nepal were treated as liable to additional customs duty on a notional domestic-manufacture basis under Section 3 of the Customs Tariff Act, 1975. In that setting, Notification No. 6/2000-C.E. was construed purposively to maintain parity between imported and Indian-made goods, and the phrase "cleared for home consumption" was not read as defeating the exemption. A Supreme Court ruling on a different condition tied to proof of prior excise duty payment was distinguished, and the importer was held entitled to the concession; the confirmed additional duty was therefore unsustainable.

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Issues: Whether Notification No. 6/2000-C.E. dated 1-3-2000, granting exemption from additional duty of customs under Section 3 of the Customs Tariff Act, 1975, applied to imported paper and paper board from Nepal despite the condition that the goods be cleared for home consumption from a factory.

Analysis: The imported goods were liable to additional customs duty under Section 3 of the Customs Tariff Act, 1975, and for that purpose had to be assessed as if they were manufactured in India. The exemption notification was construed in light of the object of maintaining parity between imported goods and domestically manufactured goods. The phrase "cleared for home consumption" was held not to defeat the exemption in the case of imports where the levy itself operates on a notional domestic manufacture basis. The cited Supreme Court decision on a different condition tied to proof of prior excise duty payment was distinguished, and the earlier Tribunal view treating the importer as entitled to the concession was followed.

Conclusion: The notification was held applicable to the imported goods, and the demand confirmed against the appellants was unsustainable.

Final Conclusion: The appeals succeeded, and the appellants obtained consequential relief against the confirmed additional duty.

Ratio Decidendi: For the purpose of additional customs duty under Section 3 of the Customs Tariff Act, 1975, imported goods are to be treated as if manufactured in India, and an exemption notification framed with reference to goods cleared for home consumption may apply to imports where the statutory scheme requires such notional domestic equivalence.

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