Capital goods exemption under customs notification depends on the notification's definition, not merely EPCG licence coverage.

Ion exchange resin, anthracite and rubber lining material imported for a membrane cell plant were held not to qualify as capital goods under Notification No. 160/92-Cus., because the notification used a narrower definition than the import policy. The Customs authorities could examine eligibility independently under the exemption notification, and a valid EPCG licence did not by itself create entitlement to exemption. As the imported items did not fall within the notification's restricted scope, the exemption was unavailable despite their coverage in the licence.

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Issues: Whether ion exchange resin, anthracite and rubber lining material imported for a membrane cell plant were capital goods eligible for exemption under Notification No. 160/92-Cus., and whether the EPCG licence compelled grant of the exemption.

Analysis: The notification defined capital goods in restrictive terms, whereas the import policy definition was wider. The goods were shown to be separately identified items for the plant, and the Customs authorities were entitled to test their eligibility under the exemption notification independently of the licence. A valid EPCG licence did not automatically establish entitlement to exemption where the imported items did not fall within the narrower notification definition.

Conclusion: The goods were not capital goods within Notification No. 160/92-Cus., and the exemption was not available merely because the EPCG licence covered them.

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