Strict construction of exemption notifications denied relief for imported silver conductor paste used in manufacturing.

An exemption notification confined relief to parts consumed within the factory of production for manufacture of the specified goods. Silver conductor paste imported for use in manufacturing did not satisfy that textual condition, and the word "consumed" could not be read expansively to override the factory-use requirement. The goods were also treated as not being in the nature of parts, and any ambiguity was resolved strictly in favour of revenue. The imported silver conductor paste was therefore held ineligible for exemption under the notification.

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Issues: Whether silver conductor paste imported by the appellant was entitled to exemption under Notification No. 12/2012-CE as "parts consumed within the factory of production" for manufacture of the specified goods.

Analysis: The exemption under the notification was confined to parts consumed within the factory of production for manufacture of the goods specified in List 8. The expression "consumed" could not be read in isolation to override the textual condition that the parts must be consumed within the factory. The imported silver conductor paste did not satisfy that condition. The notification was also viewed as not clearly extending the benefit to the imported goods, and in case of doubt the exemption had to be construed strictly in favour of the revenue. The reasoning that the goods were not in the nature of parts was also accepted.

Conclusion: The silver conductor paste was not eligible for exemption under the notification, and the issue was decided against the appellant.

Ratio Decidendi: An exemption notification must be strictly construed, and where its text confines relief to parts consumed within the factory of production, imported goods that do not satisfy that condition cannot claim the benefit on an expansive reading of the word "consumed".

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