Exemption notification interpretation: machine to be manufactured must fit the tariff heading, not the imported parts themselves.

Notification No. 35/79-Cus. was construed to require that the machine proposed to be manufactured, and not the imported parts by themselves, should fall within one of the specified tariff headings. The contrary view taken by the lower authorities was rejected as an incorrect reading of the exemption condition. The matter also required compliance with the notification's procedural requirements, including production of the prescribed certificate and affidavit of end-use, before the benefit could be worked out. The interpretation issue was answered in favour of the assessee, while final relief depended on fresh consideration after fulfilment of the stated conditions.

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Issues: Whether, for the purpose of Notification No. 35/79-Cus., the relevant requirement was that the machine to be manufactured should fall under one of the specified tariff headings, or whether the imported parts themselves had to fall under those headings.

Analysis: The dispute turned on the construction of the exemption notification. The lower authorities had proceeded on the basis that the imported parts must themselves fall within the tariff headings named in the notification. That approach was accepted as incorrect, and the proper reading was that the machine intended to be manufactured must be one which falls within the specified headings. The appeal was therefore not finally decided on merits of classification, because the matter required a fresh decision after compliance with the notification conditions, including production of the requisite certificate and affidavit of end-use.

Conclusion: The interpretation adopted by the lower authorities was rejected, and the issue was answered in favour of the assessee.

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