TMI Blog2004 (7) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the 100% exemption is only to manufacturers of garments. So long as the imported machinery is used by a person who manufactures garments, which are then used to meet the export obligation, the importer will be entitled to benefit of 100% exemption under the Notification. Appeal dismissed. - 5944 of 2002 - - - Dated:- 21-7-2004 - S.N. Variava and Arijit Pasayat, JJ. [Judgment per : S.N. Variava, J.]. - All these Appeals are being disposed of by this common judgment as the facts are identical and they all involve a common point. 2.In all these Appeals the Respondents are manufacturers of textile garments. By Notification bearing No. 29/97-Cus. dated 1st April, 1997 exemption from custom duty was granted to capital goods, components and spares thereof etc. imported under the Export Promotion Capital Goods Scheme (for short EPCG Scheme). The relevant portion of the Notification reads as follows : "Exemption to capital goods, components and spares thereof etc. imported under EPCG Scheme. - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of clauses (a), (b), (d), (e), (f) and (g) of paragraph 10.2 of the Export and Import Policy; and xxxxxxxxx xxx"xxxxxx 3.Thus capital goods imported under the EPCG Scheme were exempted from payment of customs duty and so much of additional duty as was in excess of 10% of the value of the goods. Under the proviso if the capital goods were imported for manufacture of items mentioned therein then they were exempted from payment of whole of the additional duty. Thus, if the capital goods were imported for manufacture of textile garments then, under this Notification, the importer would be exempted from payment of customs duty and additional duty. 4.Parties are agreed that cutting and stitching machine would be capital goods required for manufacture of garments. The Respondents, in this batch of Appeals, had however imported machines required for processing of fabric/yarn, fabric inspection machines, machines for knitting and dying fabrics and other such machines. The Respondents were denied benefits of 100% exemption on the ground that the machines imported by them were not required for the purposes of manufacture of textile garments. The Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s out that a list of machines which could be Imported as capital goods for manufacture of "textile products" has been set out in this Annexure. He submits that the list does not contain cutting and stitching machines as that list is for machines required for manufacture of "textiles products". He submits that the same Notification uses the words "textile products" in respect of exemption being granted under the first part of the Notification and the words "textile garments" when 100% exemption is to be granted under the proviso. He submits that it is significant that 100% exemption is granted only to capital goods used for manufacture of "textile garments", whereas for capital goods used for manufacture of ""textile products" the exemption is restricted only to whole of custom duty and so much of the additional duty as is in excess of 10% of the value of the goods. He submits that the words "textile products" would include fabric, yarn etc. He submits that the term "textile garments" would not include fabric, yarn etc. He submits that the use of the words "textile garments" clearly show that the capital goods required for manufacturing of yarn or fabric do not fall within the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in the case of Oblum Electrical Industries (supra), whilst considering another exemption Notification wherein also the words used were "raw material and components required for manufacture" held that the purpose and object of the Notification were to encourage export by granting exemption from the custom duty on material required to be imported for manufacture of the resultant product. It has been held that the manufacture of the resultant product has to be for execution of the export orders. It has been held that the term "capital goods required for purposes of manufacture" cannot be construed as referring only to materials which are used in the manufacture of that product. It was held that the term must be given its natural meaning to also include materials which would be required in order to manufacture the resultant product. It has been held that the term would also include materials which are not directly used in the manufacture of resultant product but are still required for the purposes of manufacturing the resultant product. It is held that the term was wide enough to include not just products which are directly involved in the process of manufacturing but also products ..... X X X X Extracts X X X X X X X X Extracts X X X X
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