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v.   Parle   Exports   (Pvt.)   Ltd.,   (1989)   1   SCC   345;  Commissioner   of Customs   (Import),   Mumbai   v.   Konkan   Synthetic   Fibres,  (2012)   6 SCC 339;  Collector of Customs, Bombay v. Swastic Wollens (Pvt.) Ltd.   And  Ors.,   (1988)  Supp. SCC  796;  Commissioner  of  Customs (Preventive), Gujarat v. Reliance Petroleum Ltd., (2008) 7 SCC 220.

“Legislation   in   modern   State   is   actuated   with some   policy   to   curb   some   public   evil   or   to effectuate some public benefit.  The legislation is primarily   directed   to   the   problems   before   the Legislature   based   on   information   derived   from past   and   present   experience.     It   may   also   be designed by use of general words to cover similar problems   arising  in future.   But, from  the  very nature   of   things,   it   is   impossible   to   anticipate fully   the   varied   situations   arising   in   future   in which the application of the legislation in hand may   be   called   for,   and,   words   chosen   to communicate   such   indefinite   ‘referents’   are bound to be, in many cases lacking in clarity and precision   and   thus   giving   rise   to   controversial questions of construction.” 

35. In   the   judgment   of   two   learned   Judges   in  Union   of   India   v. Wood Papers Limited, (1990) 4 SCC 256 [hereinafter referred as ‘Wood Papers Ltd. Case’ for brevity], a distinction between stage of   finding   out   the   eligibility   to   seek   exemption   and   stage   of applying   the   nature   of   exemption   was   made.     Relying   on   the decision in  Collector of Central Excise vs. Parle Exports (P) Ltd., (1989) 1 SCC 345, it was held “Do not extend or widen the ambit at the stage of applicability. But once that hurdle is crossed, construe   it   liberally”.     The   reasoning   for   arriving   at   such conclusion is found in para 4 of Wood Papers Ltd. Case (supra), which reads­ “… Literally exemption is freedom from liability, tax or duty.     Fiscally,   it   may   assume   varying   shapes, specially,   in   a   growing   economy.     For   instance   tax holiday to new units, concessional rate of tax to goods or   persons   for   limited   period   or   with   the   specific objective   etc.     That   is   why   its   construction,   unlike charging   provision,   has   to   be   tested   on   different touchstone.   In fact, an exemption provision is like an exception   and   on   normal   principle   of   construction   or interpretation of statutes it is construed strictly either because   of   legislative   intention   or   on   economic justification   of   inequitable   burden   or   progressive approach of fiscal provisions intended to augment State revenue.   But   once   exception   or   exemption   becomes applicable   no   rule   or   principles   requires   it   to   be construed strictly.   Truly speaking liberal and strict construction   of   an   exemption   provision   are   to   be invoked at different stages of interpreting it.  When the   question   is   whether   a   subject   falls   in   the notification   or   in   the   exemption   clause   then   it being   in   nature   of   exception   is   to   be   construed strictly and against the subject, but once ambiguity or doubt about applicability is lifted and the subject falls   in   the   notification   then   full   play   should   be given   to   it   and   it   calls   for   a   wider   and   liberal construction…” (emphasis supplied)

45. In  Parle   Exports  Case  (supra),  a   bench   of two  Judges   of  this Court   considered   the   question   whether   non­alcoholic   beverage base like Gold spot base, Limca base and Thumps Up base, were exempted from payment of duty under the Central Government notification   of   March,   1975.     While   considering   the   issue,   this Court   pointed   out   the   Strict   interpretation   to   be   followed   in interpretation of a notification for exemption.  These observations are made in para 17 of the judgment, which read as follows:

“…   In   Collector   of   Central   Excise   v.   Parle Exports (P) Ltd., (1989) 1 SCC 345, this Court while accepting that exemption clause should be construed liberally   applied   rigorous   test   for   determing   if expensive items like Gold Spot base or Limca base of Thums Up base were covered in the expression food products and food preparations used in Item No. 68 of First Schedule of Central Excises and Salt Act and held ‘that it should not be in consonance with spirit and   the   reason   of   law   to   give   exemption   for   non­ alcoholic   beverage   basis   under   the   notification   in question’.  Rationale or ratio is same.  Do not extend or widen the ambit at stage of applicability.  But once that hurdle is crossed construe it liberally.  Since the respondent   did   not   fall   in   the   first   clause   of   the notification   there   was   no   question   of   giving   the clause   a   liberal   construction   and   hold   that production of goods by respondent mentioned in the notification were entitled to benefit.”