Conditional customs exemption turns on strict compliance with the notification's express no-credit requirement.

A conditional customs exemption must be applied strictly according to its express terms. Where Notification No. 15/1994-C.E. required that credit on inputs used in manufacture of the goods not be availed, imported goods could not qualify for the concessional excise rate used to compute additional customs duty if that condition was not satisfied. The earlier view that the benefit could still be granted because credit was not practically available was rejected as unsustainable. The exemption was therefore unavailable, and the denial of the benefit was restored.

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Issues: Whether exemption from additional customs duty under Notification No. 15/1994-C.E. was available in respect of imported goods when the notification was conditional upon non-availment of credit on inputs used in manufacture of the goods.

Analysis: The exemption was contingent on satisfaction of the condition that credit of duty paid on inputs had not been availed. The imported goods could not meet that condition, and the notification was construed as deliberately framed so that such goods would not obtain the concessional excise rate for determining additional customs duty. The earlier appellate order allowing the exemption on the ground of no possibility of availing credit was therefore unsustainable.

Conclusion: The exemption was not available, and the order allowing it was set aside.

Final Conclusion: The appeal succeeded and the original denial of exemption was restored.

Ratio Decidendi: A conditional exemption notification must be applied according to its express condition, and imported goods cannot claim the benefit where the prescribed condition is not satisfied.

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