Exemption notification exclusions must be read with tariff classification; resin-coated glass tape was denied relief, with earlier demand limited.

An exemption notification linked to Heading 7014.00 was held inapplicable to resin-coated glass tape because the exclusion for goods impregnated, coated, covered, or laminated with plastics or varnish had to be read in the tariff context; resin fell within Chapter 39, so the notification benefit was denied on merits. The demand for the earlier period up to 20-3-1990 was set aside because the classification had been approved when the exemption was allowed, but the demand for the later period was sustained for lack of evidence to displace it. The appeal succeeded only to that limited extent.

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Issues: (i) Whether resin-coated glass tape was excluded from the concessional exemption under Notification No. 52/86 as amended by Notification No. 145/86. (ii) Whether the demand for the disputed period was sustainable in view of the approved classification and the limitation objection.

Issue (i): Whether resin-coated glass tape was excluded from the concessional exemption under Notification No. 52/86 as amended by Notification No. 145/86.

Analysis: The exemption entry covered goods under Heading 7014.00 except those impregnated, coated, covered, or laminated with plastics or varnish. The decisive question was not the independent chemical identity of resin, but its treatment under the tariff scheme linked to the notification. Since resin was classifiable under Chapter 39 dealing with plastics and articles thereof, the notification had to be read with the tariff heading and the exclusion could not be ignored by separating resin from the tariff classification context.

Conclusion: The assessee was not entitled to the exemption on the merits, and the denial of the notification benefit was upheld.

Issue (ii): Whether the demand for the disputed period was sustainable in view of the approved classification and the limitation objection.

Analysis: The classification had been approved while allowing the benefit of the notification, which made the demand up to 20-3-1990 unsustainable. For the later period, the record did not furnish evidence sufficient to dislodge the demand confirmed thereafter. The limitation objection therefore succeeded only for the earlier period.

Conclusion: The demand up to 20-3-1990 was not sustainable, but the confirmation for the subsequent period was maintained.

Final Conclusion: The appeal succeeded only to the limited extent of setting aside the demand for the earlier period, while the denial of exemption on merits and the remaining demand were sustained.

Ratio Decidendi: Where an exemption notification is tied to a tariff heading, its exclusionary wording must be read in that tariff context and the goods cannot be taken out of the exclusion merely by relying on their independent chemical description.

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