2006 (5) TMI 375 - AT - Central Excise

Summary

Issues:
Exemption under Notification No. 67/95 for copper products manufactured from unrefined copper - Duty demand on unrefined and rejected cathodes - Interpretation of proviso to the notification.

Analysis:
The appellant manufactured copper cooling elements and copper launders in its factory from unrefined copper and rejected cathodes, claiming exemption under Notification No. 67/95. The notification exempted capital goods and inputs manufactured in a factory and used within the factory of production. The duty demand was made on unrefined and rejected cathodes as the final products had not discharged duty liability, citing the proviso to the notification.

The proviso to Notification No. 67/95 excluded inputs used in the manufacture of final products exempt from duty. The appellant argued that exemption applied to both the final products and the inputs. The Revenue contended that since the final products were exempt, the exemption did not apply due to the proviso.

The Tribunal analyzed the notification and held that captively consumed capital goods could not be considered as excluded final products under the proviso. This interpretation was to avoid multiple stages of taxation and unnecessary credit claims within the same factory. Upholding the lower authorities' view would lead to redundant duty payments and complex credit processes, defeating the purpose of the exemption.

Therefore, the Tribunal allowed the appeals, setting aside the duty demand on unrefined copper and rejected cathodes. The decision was based on the understanding that the exemption intended to provide direct benefits without the need for indirect Cenvat credit claims, promoting a straightforward tax regime within the factory.

This judgment clarifies the scope of exemption under Notification No. 67/95 for captively consumed capital goods and inputs, emphasizing the importance of avoiding unnecessary tax burdens and credit complexities within the manufacturing process.