COMMISSIONER OF CUSTOMS, KOLKATA versus M/S. RUPA AND CO. LTD.

Citation: [2004] SUPP. 3 S.C.R. 99 · Decided: 21-07-2004 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Disposed off

Judgment (excerpt)

_ 
... 
COMMISSIONER OF CUSTOMS, KOLKATA 
v. 
MIS. RUPA AND CO. LTD. 
JULY 21, 2004 
[S.N. VARIAVA AND ARIJJT PASAYAT, JJ.] 
Customs Act, 1962; Notification No. 29197-Cus. Dated 1st April, 1997 
and its Proviso : 
A 
B 
Exemption Notification-Payment of custom duty/additional duty on C 
goods/spare parts imported under Export Promotion Capital Goods 
Scheme exempted-Machines for inspection and processing of fabric/yarn, 
for knitting and dyeing of fabrics imported by assessees-Benefits of 
exemption denied by authorities on ground that the machines so imported 
not required for manufacture of garments Appeals dismissed by Appellate 
Authorities Tribunal held that the machines could be treated as goods and D 
covered under the Proviso to the Notification and thus assessees entitled 
to the benefits of the exemption On appeal, Held: Though an exemption 
Notificution has to be construed strictly but not to the extent that its object 
and purpose lost sight of-Jn terms of Proviso benefit of 100% exemption 
available to manufacturer of garments Since machinery imported so used E 
for the purpose of manufacturing garments to meet export obligations, the 
importerlassessee would be entitled to the benefit of 100% exemption under 
the Notification-Tribunal rightly allowed exemption under the Notifica-
tion. 
Respondent-assessees, manufacturers of garments imported ma- F 
chines required for the purpose of processing of fabric/yam, for 
inspection of fabric, for knitting and dyeing of fabrics and other such 
purposes, and claimed benefits of 100% exemption from payment of 
custom duty/additional duty in terms of exemption Notification No. 29/ 
97-Cus. dated April I, 1997 Revenue denied the benefit of exemption G 
on the ground that the machines so imported were not required for the 
purpose of manufacture of textile garments. Appellate Authorities 
dismissed the appeals. Custom, Excise and Gold (Control) Appellate 
Tribunal allowed the appeals holding that the machines in question 
were goods required for manufacture of garments, thus, covered under H 
99 
100 
SUPREME COURT REPORTS (2004] SUPP. 3 S.C R. 
A Proviso to the Notification. Hence the present appeals by the Revenue. 
It was contended for the Revenue that a Notification must be 
strictly construed; that the term 'textile garment' would not include 
fabric, yarn etc.; that the machines imported by the assessee do not 
B fall in the list of machines which could be imported as capital goods 
and entitled to exemption under the Notification; and that in terms of 
various Circulars of the Revenue, 100% exemption would not be 
available to machines used for knitting/dyeing. 
Dismissing the appeals, the Court 
c 
HELD : I.I. An exemption Notification has to be construed 
strictly but that does not mean that the object and purpose of the 
Notification is to be lost sight of and the wordings used therein ignored. 
Where the wordings of the Notification are clear and unambiguous 
they have to be given effect to. Exemption cannot be denied by giving 
D a construction not justified by the wordings of the Notification. The 
Notification has been issued pursuant to the Expert Promotion Capital 
Goods Scheme. The import of goods was under a licence which 
contains an export obligation. In all these cases, the obligation is to 
export garments and it is fairly admitted that the Respondents 
E manufacture garments. The Notification grants an exemption to capital 
goods imported under the EPCG Scheme. The Notification is very 
clear. 100% exemption is given to capital goods required for manu-
facture of, amongst others, "textile garments". The term "capital 
goods" has been defined in the Notification. The term "Capital good" 
F means goods which are used in the manufacture of that product and 
also goods which would be required for manufacture or production of 
other goods including packaging machinery and equipments. The term 
also includes instruments for testing, research and development. The 
term includes machines for pollution control, refrigeration, power 
G generating sets etc. 1106-F-G; 107-E-F-G] 
Ob/um Electrical Industries Pvt. Ltd. v. Collector cf Customs, [1997] 
7 sec 581, relied on. 
1.2. For the purposes of manufacture of garments it cannot be 
H said that only stitching and knitting machines are required. Apart from 
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COMMR. OF CUSTOMS v. RUPA AND CO. LTD. 
101 
stitching and cutting the manufacturer may himself manufacture the A 
yarn or fabric. The quality of t

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