Pass book scheme credit must follow the scheme-specific notification and tariff basis, not a different customs exemption regime.

Interpretation of customs exemption notifications under the pass book scheme turned on whether the Tribunal had competence to decide the rate of credit and whether a notification governing duty payment in convertible foreign currency could control credit under a separate scheme. The Tribunal held the jurisdiction objection failed because the dispute concerned interpretation of exemption notifications under Section 25(1) of the Customs Act. It also held Notification No. 117/94-Customs was inapplicable, as its conditions differed from Notification No. 104/95-Customs and were not satisfied. Credit had to be computed under the scheme-specific notification on the tariff basis, and the assessee's credit entitlement was restored.

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Issues: (i) Whether the Tribunal had jurisdiction to decide the dispute concerning the rate of credit under the relevant exemption notifications. (ii) Whether Notification No. 117/94-Customs could be applied for determining the rate of credit under Notification No. 104/95-Customs in the pass book scheme.

Issue (i): Whether the Tribunal had jurisdiction to decide the dispute concerning the rate of credit under the relevant exemption notifications.

Analysis: The dispute involved interpretation of exemption notifications issued under Section 25(1) of the Customs Act, 1962, both of which prescribed nil or concessional rates of duty. The matter therefore fell within the Tribunal's competence.

Conclusion: The preliminary objection to jurisdiction was rejected.

Issue (ii): Whether Notification No. 117/94-Customs could be applied for determining the rate of credit under Notification No. 104/95-Customs in the pass book scheme.

Analysis: Credit under the pass book scheme was to be granted in Indian currency and utilised for payment of duty on imports. Notification No. 117/94-Customs contemplated payment of duty on gold in convertible foreign currency and operated on a different factual premise. The required conditions for its application were not satisfied in the present case. The reasoning also showed that import of gold under the pass book scheme was not confined to special import licence or baggage channels, and the lower authorities were in assuming otherwise. The applicable credit had to be worked out with reference to the tariff rate of 50% of the value of gold as basic customs duty, along with other leviable customs duties, under Notification No. 104/95-Customs.

Conclusion: Notification No. 117/94-Customs was inapplicable for fixing the credit entitlement, and the assessee was entitled to credit on the tariff basis under Notification No. 104/95-Customs.

Final Conclusion: The impugned order was set aside and the assessee's credit entitlement was restored on the basis of the pass book scheme under the applicable exemption notification.

Ratio Decidendi: An exemption notification governing duty payment in a different mode and on different conditions cannot be applied to determine credit entitlement under a separate pass book scheme unless its conditions are actually satisfied; credit must be computed according to the scheme-specific notification and the applicable tariff rate.

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