Exemption under tariff notification cannot be denied merely because it was not claimed during a live classification dispute.

When classification of special purpose motor vehicles was finally settled under heading 87.05, the exemption under Notification No. 242/86-C.E. became available, and it could not be denied merely because it had not been claimed in the classification list while the classification dispute was pending. The notification's substantive condition regarding duty-paid chassis and equipment was treated as satisfied on the basis that goods available in the market are presumed duty paid unless shown otherwise. On that footing, the exemption was held admissible and the denial of relief was unsustainable.

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Issues: (i) whether the assessee could claim exemption under Notification No. 242/86-C.E. at a later stage despite not having claimed it in the classification list; (ii) whether the condition in the notification requiring duty-paid chassis and equipment was satisfied.

Issue (i): whether the assessee could claim exemption under Notification No. 242/86-C.E. at a later stage despite not having claimed it in the classification list.

Analysis: The product was earlier in dispute on classification between headings 84.30 and 87.05, and the classification controversy was resolved only by the higher court in favour of heading 87.05. Once the goods were held classifiable under 87.05, the exemption notification applicable to that heading became available. The absence of a claim in the classification list did not bar the assessee from seeking the benefit later, as exemption eligibility is not lost merely because it was not asserted at the initial stage when classification itself was contested.

Conclusion: The later claim for exemption was maintainable and could not be rejected solely on the ground that it was not claimed in the classification list.

Issue (ii): whether the condition in the notification requiring duty-paid chassis and equipment was satisfied.

Analysis: The notification granted exemption to special purpose motor vehicles falling under heading 87.05 if appropriate duty had been paid on the chassis and the equipment used in manufacture. There was no effective dispute that the chassis and equipment were non-duty-paid, and the law proceeded on the basis that goods available in the market are deemed duty paid unless shown otherwise. On that footing, the notification condition stood complied with.

Conclusion: The notification condition was fulfilled and the assessee was entitled to the exemption.

Final Conclusion: The denial of exemption was unsustainable, and the assessee was entitled to consequential relief.

Ratio Decidendi: Where classification is finally settled in favour of a tariff heading to which an exemption notification applies, the exemption cannot be denied merely because it was not claimed in the classification list, provided the notification's substantive conditions are otherwise satisfied.

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