Ambiguous exemption for effluent treatment units must be read to advance the relief where composite import is not clearly required.

Ambiguously drafted exemption entries for effluent treatment units were construed to advance the object of the notification rather than defeat it. Where the listed components were not clearly required to be imported only as a complete composite unit, the imported reverse osmosis equipment and related goods could qualify under the relevant exemption entry. The alternative claim was also supported because the goods had been installed in the factory for the intended unit, bringing them within the relief contemplated by the notification. The goods were therefore held entitled to exemption, and relief was granted to the assessee.

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Issues: Whether the imported reverse osmosis equipment and related goods were entitled to exemption under Sl. No. 150 of Notification No. 11/97-Cus., and alternatively whether the benefit under Sl. No. 151 of the same notification was available.

Analysis: Sl. No. 150 of List 10 was read in the light of the structure of the notification and the entries within the list. The competing interpretations were whether the listed items in the effluent treatment unit entry had to be imported as a complete set or whether any one of the listed machines could qualify. The notification was found to be not happily drafted, and the presence of multiple entries for effluent treatment units, together with the mutually exclusive nature of some of the components, created ambiguity. In that situation, a construction that would defeat the object of the exemption for effluent treatment units was avoided. The alternative claim under Sl. No. 151 was also supported by the fact that the goods were installed in the factory for the intended unit and the notification was intended to grant relief to such goods.

Conclusion: The imported goods were held entitled to the exemption, and the appeal was allowed in favour of the assessee.

Ratio Decidendi: Where an exemption notification relating to effluent treatment units is ambiguously drafted and the listed components are not clearly required to be imported only as a complete composite unit, the entry should be construed so as to advance the object of the exemption rather than defeat it.

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