Retrospective application of substituted condition cures drafting omission, allowing exemption where installation occurred on importer premises.

Whether a substituted condition adding "premises" to an exemption notification operates retrospectively: the substitution of condition (6) cured an obvious drafting omission by expanding installation locus from "factory" to "factory or premises"; substitution in subordinate legislation can repeal and replace the earlier text and, where it advances the benevolent purpose of an exemption notification, may be given retrospective effect. Consequently, authorities issuing show cause notices after the substituted text came into force were required to apply the amended wording, resulting in entitlement to the exemption under the amended notification in the circumstances described.

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Issues: Whether the substitution of condition (6) of Notification No. 110/95-Cus dated 05.06.1995 by Notification No. 42/98-Cus dated 30.06.1998 (adding the word "premises") operates with retrospective effect and thereby entitles the appellant to the benefit of exemption despite installation of imported capital goods at a testing laboratory rather than the registered factory premises.

Analysis: The substituted text of condition (6) replaces the earlier requirement that capital goods be installed in the importer's "factory" with installation in the importer's "factory or premises", thereby curing an omission in the original notification. Substitution in subordinate legislation can effect repeal of the earlier provision and introduce the new provision in its place; where the substitution corrects an obvious omission and advances the benevolent purpose of an exemption notification, it may be given retrospective effect. Exemption notifications are to receive a beneficent construction so that eligible parties are not deprived of benefits by a drafting omission. The show cause proceedings were issued after the substituted notification was in force and the authority was therefore required to consider the substituted wording adding "premises" when determining entitlement to exemption.

Conclusion: The substituted condition (6) introduced by Notification No. 42/98-Cus dated 30.06.1998 applies with retrospective effect in the circumstances of this case; the appellant is entitled to the benefit of the exemption under Notification No. 110/95-Cus as amended by Notification No. 42/98-Cus, and the impugned orders confirming duty are quashed in favour of the appellant.

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