Strict construction of exemption notifications bars customs duty relief where prescribed eligibility conditions are not satisfied.

S. No. 332A of Notification No. 12/2012-CE was analysed as an exemption available only where the prescribed condition was met, namely use within the factory of manufacture for producing the listed goods or compliance with the concessional removal procedure when used elsewhere. On the stated facts, the imported goods were manufactured outside India and Condition 2 was not satisfied, so the exemption could not be extended for additional duty of customs. The note also records that an earlier final order was rectified by substituting paragraph 15, since the omitted finding on entitlement under S. No. 332A was treated as a mistake apparent on the record.

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Issues: (i) Whether the exemption under S. No. 332A of Notification No. 12/2012-CE dated 17.03.2012 was available to imported goods for additional duty of customs without compliance with Condition 2; (ii) whether the earlier final order required rectification by substituting paragraph 15.

Issue (i): Whether the exemption under S. No. 332A of Notification No. 12/2012-CE dated 17.03.2012 was available to imported goods for additional duty of customs without compliance with Condition 2.

Analysis: The exemption applied to goods falling under any Chapter, but only if they were used within the factory of manufacture for producing the listed goods, or, where used elsewhere, if the procedure under the relevant concessional removal rules was followed. The imported goods were manufactured outside India, were not used within the factory of production, and Condition 2 was not satisfied. The plea that import itself displaced the condition was rejected. Exemption notifications were held to require strict construction, and where eligibility was doubtful, the interpretation had to operate against the assessee. The earlier reliance on the cited authorities did not assist the appellant on these facts.

Conclusion: The exemption under S. No. 332A of Notification No. 12/2012-CE was not available to the appellant, and the issue was decided against the appellant.

Issue (ii): Whether the earlier final order required rectification by substituting paragraph 15.

Analysis: The order recorded that the earlier paragraph had omitted the finding on entitlement under S. No. 332A. Since that finding formed part of the reasoning and had to reflect the correct legal position on the exemption claim, the omission was treated as a mistake apparent on the record and was corrected by substitution of the paragraph.

Conclusion: Rectification was allowed and paragraph 15 of the final order was substituted.

Final Conclusion: The application succeeded only to the extent of correcting the earlier order, but the substantive exemption claim for additional duty of customs failed on merits because the statutory conditions were not fulfilled.

Ratio Decidendi: Exemption notifications must be strictly construed, and where the prescribed eligibility condition is not satisfied, the benefit cannot be extended to the assessee, especially when the exemption claim depends on a condition precedent.

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