Strict construction of fiscal exemption notifications bars indirect benefit for goods used in machinery serving the leather industry.

Exemption under Notification No. 224/85-Cus. was unavailable for felt sleeves imported as component parts for sammying machines because the notification covered goods imported for direct use in the leather industry. The fact that the machinery itself was used in that industry did not satisfy the notification's plain wording. Applying the strict construction rule for fiscal exemptions, the benefit could not be extended through an indirect or circuitous route. The exemption claim was therefore rejected, and the issue was decided against the assessee and in favour of Revenue.

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Issues: Whether goods imported as component parts or spares for sammying machines could claim exemption under Notification No. 224/85-Cus. on the footing that the machines were used in the leather industry.

Analysis: The exemption notification granted relief only to the specified goods when imported into India for use in the leather industry. The imported felt sleeves were admittedly brought in for use in sammying machines and not for direct use in the leather industry. The fact that the machines themselves were used in that industry did not satisfy the plain wording of the notification. Exemption provisions in fiscal law are to be strictly construed, and a benefit not directly available under the notification cannot be extended by an indirect or circuitous route.

Conclusion: The claim for exemption was not sustainable and the issue was decided against the assessee and in favour of Revenue.

Ratio Decidendi: A fiscal exemption notification must be construed strictly according to its express terms, and goods imported for use in manufacturing machinery cannot qualify merely because the machinery is ultimately used in the notified industry.

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