Exemption for water filters cannot be denied by adding an on-line attachment restriction absent from the notification.

A water filter falling within Notification No. 155/86-C.E. was held eligible for nil duty because the exemption covered water filters of capacity not exceeding 40 litres and contained no exclusion for an on-line design or attachment. The denial of benefit rested only on the product's characterisation as an on-line water filter, but the notification did not import such a restriction, and a similar product had earlier received the same benefit. The exemption denial was therefore unsustainable, and the assessee succeeded.

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Issues: Whether the water filter manufactured by the appellants was entitled to the benefit of Notification No. 155/86-C.E. at Serial No. 4(II), which granted nil rate of duty to water filters of a capacity not exceeding 40 litres.

Analysis: The notification expressly exempted water filters of a capacity not exceeding 40 litres and did not impose any exclusion for an on-line water filter. The product was not disputed to be a water filter, and the denial of exemption rested only on the characterisation of the item as an on-line attachment. The Tribunal also noted that a similar product had earlier been granted the same benefit.

Conclusion: The water filter manufactured by the appellants was eligible for exemption under Notification No. 155/86-C.E., and the denial of benefit was unsustainable.

Final Conclusion: The exemption denial was set aside and the assessee succeeded.

Ratio Decidendi: Where an exemption notification grants nil duty to a specified class of goods without excluding a particular design or mode of use, the benefit cannot be denied by importing a restriction not found in the notification.

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