The New Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has pointed out that an exemption notification must be read holistically, and the scope of a broad description of goods is not to be restricted by a term placed in parenthesis unless there is clear legislative intent to do so. The CESTAT held that the presence of two different tariff headings corresponding to the description in the notification indicates that the parenthetical term ‘ventilator’ does not control the entire reach of the description.
Relying on the principle laid down in Zamil Steel Buildings India Pvt Ltd v. State of Maharashtra, the CESTAT affirmed that the specificity of a parenthetically enclosed expression does not override the generality of the main description. Therefore, any apparatus that conforms to the broader description ‘artificial respiration or other therapeutic respiration apparatus’, is entitled to the exemption. Accordingly, the Tribunal held that the impugned order erred in restricting the benefit of Notification No. 20/2020-Cus only to ‘ventilators’.
The Division Bench comprising Justice Dilip Gupta (President) and CJ Mathew (Technical Member) was surprised of the first appellate authority’s approach, noting that it was an unreasoned and unreasonable assessment. It observed that the appellate authority improperly relied on a subsequent notification (No. 28/2021-Cus) and a press release to interpret the earlier notification, which is not a credible method.
The Bench expressed repugnance at the insensitivity shown by the authorities in strictly applying rules during a ‘humankind crisis’ like the pandemic, stating that relief measures should be interpreted in the broadest terms. Furthermore, the Bench pointed out a significant procedural lapse, noting that the assessing authority failed to issue a ‘speaking order’ as mandated by Section 17(5) of the Customs Act, 1962, and the first appellate authority wrongly overlooked this failure.
Accordingly, the CESTAT observed that if the government’s intent was to exempt only ‘ventilators’, the generic description in the notification would have been unnecessary and superfluous.
Briefly, the appellant imported a consignment of ‘oxygen concentrators’ under Bill of Entry No. 7630674/11.05.2020 and claimed the benefit of a ‘nil’ rate of customs duty under Notification No. 20/2020-Cus dated 9th April 2020. The customs authorities, however, denied this exemption, leading to a differential duty demand of Rs. 36.66 Lakh. The denial was based on the interpretation that the exemption for ‘artificial respiration or other therapeutic respiration apparatus (ventilators)’ was limited only to the parenthetically mentioned ‘ventilators’ and did not extend to ‘oxygen concentrator’.
The Commissioner of Customs (Appeals) upheld this denial, referencing a subsequent notification (No. 28/2021-Cus) that mentioned ‘Ventilators’ and ‘Oxygen Concentrators’ separately as a basis for interpreting the earlier notification’s intent. The appellant challenged this, contending that the assessment was unreasoned and that they had to pay the duty under protest due to the urgency of the pandemic.
Appearances:
Advocates B L Narasimhan, Anurag Kapur and Kausal Jaisalmeria, for the Appellant/ Taxpayer
Authorised Representative Nikhil Mohan Goyal, for the Respondent/ Revenue
