Strict construction of exemption notifications excludes complete machinery capable of producing or processing goods, even if used only for training.

Exemption under Notification No. 118/75 was denied for complete machinery manufactured in a factory for training or experimental use because the proviso excluded machinery meant for producing or processing goods. The exclusion was construed by reference to the class and nature of the machinery, not the manufacturer's subjective intention, and complete, operative machinery was treated as covered even if sub-standard or non-marketable. Exemption notifications were held to require strict construction, so machinery capable of producing or processing goods fell outside the exemption notwithstanding its actual use in the factory. Duty liability therefore remained payable.

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Issues: Whether complete machinery manufactured in a factory and used for training or experimental purposes falls within the exclusion in Notification No. 118/75 as goods meant for producing or processing goods, and is therefore not entitled to exemption.

Analysis: The notification exempted goods falling under Item 68 manufactured in a factory for use in the same factory, but its proviso excluded complete machinery meant for producing or processing any goods. The machines in question were found to be functionally complete and operative, even if sub-standard and not of marketable quality. The Court held that the proviso is to be read by reference to the class or nature of the machinery and not the subjective intention of the particular manufacturer. Exemption notifications are to be strictly construed, and the expression "meant for producing or processing any goods" was treated as descriptive of complete machinery capable of such use.

Conclusion: The machines were not entitled to the exemption under Notification No. 118/75, and the duty demands were upheld.

Ratio Decidendi: Under a strict construction of an exemption notification, complete machinery capable of producing or processing goods falls within the exclusion regardless of the manufacturer's professed intention or the machinery's use for training or experimental purposes.

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