Petitioners granted customs duty exemption on imported machines under Notifications 114/80 and 113/87.

The Court held that the Petitioners were entitled to the benefits of exemption Notifications No. 114/80 and 113/87, allowing them to pay a reduced customs duty of 35% on the imported machines. The petition was disposed of accordingly, with no order as to costs.

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Issues Involved:
1. Whether Customs Authorities can deny the benefits of exemption Notifications No. 114/1980 and 113/1987 to goods falling under Chapter 84 of the Customs Tariff Act, 1975 (C.T.A.) due to their registration under Chapter 98 as project imports.
2. The classification and duty applicability for machinery imported by the Petitioners under Chapter 84 versus Chapter 98 of the C.T.A.
3. The interpretation of Notification No. 132/85 and its impact on the applicability of other exemption notifications.

Detailed Analysis:

Issue 1: Denial of Exemption Benefits Due to Registration Under Chapter 98
The primary issue in this petition is whether the Customs Authorities are justified in denying the benefits of exemption Notifications No. 114/1980 and 113/1987 to goods falling under Chapter 84 of the C.T.A. merely because the Petitioners registered their contract to import these goods as project imports under Chapter 98. The Petitioners argued that the exemption benefits should still apply despite the registration under Chapter 98.

Issue 2: Classification and Duty Applicability
The Petitioners, engaged in printing and publication, imported four Web Fed high Speed Offset Rotary machines classified under Chapter 84 of the C.T.A. Due to their registration under the Project Import Regulations, these machines were reclassified under Chapter 98. The Customs Authorities at Delhi allowed the clearance of one machine at a 35% duty under the exemption Notifications No. 114/80 and 113/87. However, the Customs Authorities at Bombay objected to the same benefit for the remaining three machines, insisting on a 45% duty under Chapter 98.01 of the C.T.A., citing Notification No. 132/85 which provided a different exemption framework for project imports.

Issue 3: Interpretation of Notification No. 132/85
The Petitioners relied on the clause in Notification No. 132/85 stating, "Nothing contained in this notification shall affect the exemption granted under any other notification of the Government of India for the time being in force." They argued that this clause allowed them to avail the benefits of Notifications No. 114/80 and 113/87 despite the registration under Chapter 98. The Petitioners supported their argument with the Supreme Court judgments in Abrol Watches Pvt. Ltd. v. Collector of Customs, Bombay and Collector of Customs, Bombay v. Mahavir Aluminium Ltd., which upheld the applicability of other exemption notifications even when goods were registered under Chapter 98.

The Respondents countered by interpreting the clause in Notification No. 132/85 to mean that exemptions under other notifications would only apply if issued under Chapter 98. They cited the Supreme Court decision in Tamil Nadu Newsprint & Papers Ltd. v. Appraiser, which held that once goods are classified under Chapter 98, they cannot avail exemptions under other chapters.

Court's Analysis and Judgment
The Court examined the conflicting Supreme Court decisions and distinguished the present case based on the non obstante clause in Notification No. 132/85, which was absent in the Tamil Nadu Newsprint case. The Court followed the precedents set in Abrol Watches and Mahavir Aluminium, where the Supreme Court had interpreted similar clauses to allow exemptions under other notifications regardless of Chapter 98 registration.

The Court rejected the Respondents' reliance on a Ministry of Finance letter dated 8-8-1987, which attempted to restrict exemptions to Chapter 98 notifications. The Court held that such a letter could not override a statutory notification issued under Section 25 of the Customs Act, 1962.

Conclusion
The Court concluded that the Petitioners were entitled to the benefits of exemption Notifications No. 114/80 and 113/87, allowing them to pay a reduced customs duty of 35% on the imported machines. The petition was disposed of accordingly, with no order as to costs.

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