Exclusive use test governs capital goods credit; predominant use for exempt products is not enough

Credit of duty on capital goods could be denied only where the goods were used exclusively in the manufacture of exempt goods or goods chargeable to nil rate of duty. The rule's language was treated as clear and unambiguous, and it did not permit a broader test based on predominant, substantial or principal use. On that construction, credit could not be denied merely because the capital goods were used mainly, but not exclusively, for exempt final products.

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Issues: Whether credit of duty paid on capital goods could be denied on the ground that they were used predominantly, but not exclusively, in the manufacture of exempted final products.

Analysis: Rule 57R(1) permits denial of credit only where the capital goods are used exclusively in the manufacture of exempt goods or goods chargeable to nil rate of duty. The rule does not use broader expressions such as predominantly, substantially, or principally. The language was treated as clear and unambiguous, and the introduction of an intention-based or predominance test was held to be unsupported by the text of the rule.

Conclusion: Credit could not be denied, because the statutory condition of exclusive use was not satisfied.

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