Functional coverage under exemption notification upheld for ventilation equipment used in cold storage, defeating customs duty demand.

Imported ventilation equipment for a cold storage project was found to fall within List 7 of Notification No. 12/2012-CE, because the relevant entry covered air cooling units and air handling units of all types. On a plain reading, the Tribunal held that the functional scope of the exemption embraced the imported goods, so denial of countervailing duty exemption on a restrictive interpretation was unsustainable. The demand for customs duty with interest was therefore set aside, and the goods were treated as eligible for the claimed exemption.

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Issues: Whether equipment for ventilation system imported for a cold storage project was covered under List 7 of the relevant exemption notification so as to qualify for exemption from countervailing duty, and whether the demand of customs duty with interest was sustainable.

Analysis: The imported goods were described as equipment for ventilation system. The relevant entry in List 7 of Notification No. 12/2012-CE dated 17.03.2012 included air cooling unit and air handling unit of all types. On a plain reading of the entry, the Tribunal found that the imported equipment fell within the scope of air cooling and air handling system used for ventilation. Therefore, the goods were eligible for the claimed CVD exemption, and the denial of the exemption by the lower authorities was unsustainable.

Conclusion: The imported goods were held to be covered by List 7 and entitled to exemption from CVD. The demand of customs duty with interest was set aside, and the appeal succeeded.

Ratio Decidendi: Where the description of imported equipment corresponds to an entry in the exemption list, the exemption cannot be denied by taking a restrictive view that ignores the functional coverage of the tariff entry.

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