2006 (11) TMI 400 - AT - Central Excise

Summary

Issues involved: Interpretation of Notification No. 1/95-C.E. dated 4-1-95 regarding duty exemption for capital goods received by a 100% EOU engaged in manufacturing cotton yarn.

Summary:
1. The Department appealed regarding the dutiability of electronic fire diversion equipment and fire alarm system received by the respondent EOU without duty payment under Notification No. 1/95-C.E. The Commissioner (Appeals) deemed the goods eligible for exemption. The interpretation of the term "brought in connection with" in the notification was crucial. The appellate authority's analysis in the impugned order was upheld as the correct interpretation, emphasizing strict construction of exemption notifications without altering legislative intent.

2. The appellant argued that capital goods for the EOU must be used "in or in relation to" manufacturing or packing the final product to qualify for the notification's benefit. However, the expression "brought in connection with" should not be equated to "used in or in relation to" as per legislative intent. Exemption notifications must be strictly construed without additions or deletions to the language. The appellant's attempt to interpret the notification differently was deemed contrary to the notification's purpose.

3. The impugned order was upheld, and the appeal was dismissed, affirming the correct interpretation of the notification's language.