The court affirmed that strict adherence to exemption conditions under the Customs Act is crucial, and mere documentation without actual value addition does not suffice to qualify for duty exemptions.

ORDER :

1. The present Civil Petition has been filed impugning the final order passed by the Central Excise and Gold Appellate Tribunal (for short 'the CEGAT') in Appeal No.C/25 to 28/02, C/85/02. dated 10.01.2003, whereby the Tribunal has set aside the Order-in-Original No.5/02- COMMR/Cus.Adjn dated 30.01.2002 passed by the Commissioner of Customs, Bangalore.

2. The following questions of law have been framed in the petition by the Petitioner/Commissioner of Customs, which reads as under :-

"1) Whether in the facts and circumstances of the case the Hon'ble tribunal was right in Interpreting and observing that the facts of the present case cannot be differentiated from those of M/s. Titan Medical Systems?

2) Whether the tribunal has right in relying on the ratio of the Judgment of the Supreme Court in the case of M/s. Titan Medical Systems when the goods in the present case were unpacked, tested, calibrated and exported as such and when the judgment is clearly distinguishable?

3) Whether the Tribunal was correct in considering and interpreting the above activity as manufacture within the ambit of Para 3.31 of the Export Import Policy 1997-2002?

4) Whether the Tribunal was right in allowing the benefit of exemption notification on the pretext that the licencing authorities have no objection as regards misrepresentation of facts?

5) Whether the Tribunal was right in discarding the elaborate legal submissions and the ratios of several judgments of the Hon'ble Supreme Court made by the department and in arriving at a decision which is set with an apparent error in law?

6) Whether the Tribunal has travelled beyond the settled position of law and consistent judicial opinion in the matter of interpretation of exemption notifications?"

3. Brief facts relevant for the purposes of deciding the present Civil Petition are stated as under :-

(i) The First Respondent herein, a partnership firm was engaged at the relevant time in the export of medicines, engineering goods, medical equipment and agro products. As a Government recognized export house, they used to execute export orders mainly to Russia. The Ministry of Defence of the Government of Russia entered into a contract with the First Respondent for the supply of 255 Nos. of Complete Electronic Ventilation System to be used as life saving devices in the Hospitals in Russia. The First Respondent entered into a contract with M/s NOVO LLC, USA, for supply of equipments relating to the ventilator and also placed Purchase Orders with the fifth Respondent.

(ii) Pursuant to the same on a Application to the DGFT for grant of advance licence for the import of certain components, a licence was issued with the condition that the technical specification of the components imported should conform to those utilized in the manufacture of the resultant product and should be reflected in the export documents.

(iii) Subsequently, the First consignment was imported and was exported in December 2000. When the second consignment of the imports arrived the same were not allowed by the DRI and were seized to conduct certain enquiries.

4. The 1^st respondent herein was a Partnership Firm engaged in Export of Medicines, Engineering Goods, Medical Equipments and Agro Products. It was a government recognized Export House and they used to execute their export orders mainly to Russia. The Ministry of Defence of the Government of Russia entered into a contract with the first respondent for the supply of 255 numbers of Complete Electronic Ventilation System to be used as life-saving devices in the Hospitals in Russia. To fulfil