Exemption for plastic ropes upheld where input yarn carried nil duty, and duty-free status did not defeat notification benefit.

Exemption under Notification No. 62/87 was held to apply to plastic ropes made from yarn purchased in the market, even where the intermediate synthetic monofilament carried a nil rate of duty and the finished goods were made from duty-paid plastic granules and reprocessed waste. The notification's condition requiring use of yarn on which appropriate excise or countervailing duty had been paid was treated as satisfied by the deeming explanation for market purchases. The principle applied was that exemption cannot be denied merely because the input yarn or related material was exempt or otherwise not exigible to duty. The benefit of the notification was therefore admissible.

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Issues: Whether the benefit of Notification No. 62/87 dated 01-03-1987 could be denied to plastic ropes when the intermediate yarn was chargeable to nil rate of duty and the finished goods were manufactured from duty-paid plastic granules and reprocessed waste.

Analysis: The notification granted exemption to ropes made from yarn on which appropriate duty of excise or countervailing duty had been paid, and the explanation deemed the condition satisfied where the yarn was purchased from the market. The relevant synthetic monofilament under Heading 54.06 was chargeable to nil rate of duty during the period in question, and the polymers granules were also treated as exempt under Notification No. 53/88. The principle applied was that exemption cannot be denied merely because the input goods were exempt from duty, carried nil rate of duty, or were otherwise not exigible to excise duty, and that such goods may still satisfy the condition of duty payment for the purpose of the notification.

Conclusion: The benefit of Notification No. 62/87 was admissible and the exemption could not be denied; the appeal was allowed.

Ratio Decidendi: Where a notification requires use of yarn on which appropriate duty has been paid, the condition is satisfied even if the relevant input is exempt from duty or chargeable to nil rate of duty, and exemption to the finished goods cannot be denied on that ground.

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