Capacity-based exemption for rural automatic exchanges upheld where the supplied equipment stayed within the notified port limit.

Capacity-based exemption under Notification No. 73/90 applied to Digital Automatic Exchanges DATE-36 because the supplied exchanges had a 36-port capacity, well below the notified ceiling of Rural Automatic Exchanges up to 512 ports. In the absence of material showing that a 36-port exchange fell outside the notified description, denial of the exemption was unjustified. The differential duty demand was therefore not sustainable, and the exemption benefit was upheld.

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Issues: Whether Digital Automatic Exchanges DATE-36, cleared by the appellant, qualified for concessional duty under Notification No. 73/90 as Rural Automatic Exchanges up to 512 ports.

Analysis: The notification granted exemption to goods specified in the table, including Rural Automatic Exchanges up to 512 ports. The purchase order showed that the exchanges supplied had a capacity of 36 ports, which was well below the notified ceiling. No material was produced to show that a 36-port automatic exchange could not fall within the notified description. On the language of the notification and the undisputed capacity shown in the purchase order, the denial of the exemption was unjustified.

Conclusion: The appellant was entitled to the benefit of Notification No. 73/90 and the demand for differential duty was not sustainable.

Final Conclusion: The impugned order was set aside and the appeal succeeded on the exemption issue.

Ratio Decidendi: Where an exemption notification fixes a capacity-based limit, goods satisfying that limit cannot be denied the exemption in the absence of material showing that they fall outside the notified description.

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