2004 (2) TMI 594 - AT - Central Excise

Summary

Issues:
Appeal against denial of benefit of notification No. 175/86-C.E. for manufacturing terminal connectors used in relays for refrigerators.

Analysis:
The appeal was filed against the Order-in-Appeal denying the benefit of notification No. 175/86-C.E. to the appellants who were manufacturing flat terminal and pin terminal and availing small-scale exemption notification. The issue arose when a show cause notice was issued, contending that the connectors manufactured by the appellants were used in the production of relays, which were further utilized in manufacturing refrigerators. The authorities denied the benefit of small-scale exemption on the grounds that refrigerator parts were not specified goods under the exemption notification.

The appellants argued that they were solely producing terminal connectors, which were then used by their customers in relay manufacturing. These relays, in turn, were utilized in making refrigerators. The appellants maintained that they were not directly manufacturing refrigerator parts. The Revenue, represented by the SDR, supported the lower authorities' findings.

The Tribunal examined the situation and concluded that parts of refrigerators were not eligible for small-scale exemption. It was established that the appellants were only involved in manufacturing terminal connectors, which were subsequently used by their customers in relay production. The relays, not the refrigerator parts, were then utilized in manufacturing refrigerators. Therefore, the Tribunal agreed with the appellants that they were not manufacturing parts of refrigerators directly. Merely producing terminals, not directly utilized in refrigerator manufacturing, did not disqualify the appellants from the Small Scale Industries (SSI) exemption notification.

Consequently, based on the above analysis, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellants.