Excise exemption for Chapter 26 goods extended to imports for countervailing duty despite Modvat credit wording.

An exemption notification for Chapter 26 goods was treated as applicable to imported goods for countervailing duty purposes under Section 3 of the Customs Tariff Act, because imported goods are placed on par with like domestically manufactured goods for the limited purpose of additional duty. The benefit could not be denied merely because the notification referred to credit of duty on inputs under the Central Excise Rules, since an importer cannot take such credit on imported goods. A concurring line of authority was relied on to support parity between excise exemption and customs countervailing duty. A dissent would have remanded the matter for fresh consideration of classification, excisability, and natural justice.

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Issues: Whether the benefit of the exemption notification for Chapter 26 goods could be denied to imported goods for countervailing duty and special excise duty merely because the proviso referred to credit of duty on inputs taken under the Central Excise Rules.

Analysis: The operative question was whether an exemption from central excise duty, granted by notification to goods falling under Chapter 26, could also govern the additional duty of customs payable under Section 3 of the Customs Tariff Act, 1975. The reasoning accepted that imported goods are to be placed on the same footing as like goods manufactured in India for the limited purpose of countervailing duty. Reliance was placed on the principle that an exemption available to excisable goods does not cease to apply merely because the goods are imported, and that the importer cannot be denied the benefit on the ground that no Modvat or input credit could have been taken in respect of imported goods. The view taken was supported by the line of authority recognising parity between excise exemption and additional customs duty liability.

Conclusion: The exemption could not be denied to the importer on the stated ground, and the appeal succeeded.

Concurring Opinion: None.

Dissenting Opinion: S.K. Bhatnagar, Vice President, disagreed and would have set aside the order and remanded the matter for de novo consideration. The dissent proceeded on the basis that the lower authorities had not dealt with the foundational questions of proper classification, excisability, and natural justice, and therefore found the matter required fresh adjudication.

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