Conditional exemption and incorporation by reference: manufacturer treated as having availed the notification, and the later exclusion applied on its plain terms.

A manufacturer relieved of duty under a conditional exemption notification is treated as having availed that notification, even if the procedure operates through Chapter X conditions, so the exclusion in para 2 of Notification No. 71/78 applied. A later notification referring to Notification No. 101/71 was construed as incorporating that notification as it stood when the later instrument was issued, not only its original unamended form. The exclusion in para 2 could not be narrowed by importing an unstated condition that only manufacturers who also obtained raw materials duty-free were disqualified, and equity could not override the plain terms of a fiscal exemption. The exemption claim and consequential refund claims therefore failed.

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Issues: (i) Whether the appellants had availed themselves of the benefit of Notification No. 101/71 so as to attract the exclusion in para 2 of Notification No. 71/78; (ii) Whether the reference in Notification No. 71/78 to Notification No. 101/71 had to be read as confined to the unamended notification and not the notification as amended; (iii) Whether the exclusion in para 2 could be restricted by reading into it a condition that only manufacturers who also procured raw materials duty-free would be disqualified, or by invoking equity.

Issue (i): Whether the appellants had availed themselves of the benefit of Notification No. 101/71 so as to attract the exclusion in para 2 of Notification No. 71/78.

Analysis: Liability to duty on the pistons was fundamentally that of the manufacturer, and it was only by operation of Notification No. 101/71 that that liability stood relieved. The fact that the notification operated through a Chapter X procedure and imposed conditions to be fulfilled by the buyer did not alter the character of the benefit enjoyed by the manufacturer. Conditional exemption notifications may shift the mode of discharge of duty or make the benefit dependent on end-use, yet the manufacturer remains the person relieved of duty by the notification.

Conclusion: The appellants had availed themselves of Notification No. 101/71, and the exclusion in para 2 of Notification No. 71/78 applied against them.

Issue (ii): Whether the reference in Notification No. 71/78 to Notification No. 101/71 had to be read as confined to the unamended notification and not the notification as amended.

Analysis: The relevant reference in Notification No. 71/78 must be understood as referring to Notification No. 101/71 as it stood when Notification No. 71/78 was issued. A statutory or subordinate instrument that refers to another instrument is, absent contrary indication, taken to incorporate the latter as then in force. The argument that only the original unamended wording should be read into the later notification was rejected as inconsistent with the ordinary meaning of such reference and with the contemporaneous legal position.

Conclusion: Notification No. 71/78 referred to Notification No. 101/71 as amended, not merely to its original form.

Issue (iii): Whether the exclusion in para 2 could be restricted by reading into it a condition that only manufacturers who also procured raw materials duty-free would be disqualified, or by invoking equity.

Analysis: The language of para 2 did not justify importing a limitation that was not expressed therein. The equitable plea also could not control construction of a fiscal exemption provision, particularly where the manufacturer had made a commercial choice as to the class of buyers to whom goods were supplied. Fiscal provisions are construed on their terms, not on considerations of fairness or comparative hardship.

Conclusion: No such limitation could be read into para 2, and equity afforded no basis for relief.

Final Conclusion: The orders of the lower authorities were upheld and the exemption claim, as well as the consequential refund claims, failed.

Ratio Decidendi: A manufacturer who is relieved of duty by a conditional exemption notification is treated as having availed of that notification, and a later notification referring to an earlier notification is ordinarily construed as referring to the earlier notification as it stood when the later notification was issued, unless a contrary intention is shown.

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