2017 (5) TMI 135 - AT - Central Excise

SSI Exemption - availing Benefit of N/N. 67/95-CE against captive consumption - intermediate goods - whether the intermediate PP strips manufactured by the SSI appellant falling under Chapter 38 of the CETA,75 ultimately used in the manufacture of woven sacks which were finished goods is exempted in terms of N/N. 67/95-CE dated 16.03.1995? - Held that - the goods are neither exempt nor subject to nil rate of duty by virtue of appellant s status as SSI whose clearances were otherwise dutiable - It is mandate of the notification that when conditions attached to column 2 and 3 of the Table appended to the Notification are satisfied, grant of the notification is undeniable - The input was thereby an intermediate manufactured in the factory of the appellant and was not at all covered by the barring clauses contained in (i), (ii) and (iii) and (iv) of Col.2 of the Table appended to the N/N. 67/95-CE dated 16.03.1995 - benefit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the intermediate PP strips manufactured by the SSI appellant, used in the manufacture of woven sacks, are exempted under Notification No.67/95-CE dated 16.03.1995.

Analysis:
The appellant, a Small Scale Industry (SSI), contends that the PP strips manufactured as intermediate goods for woven sacks, being input for the final product, qualify for exemption under Notification No.67/95-CE. The appellant argues that the intermediate goods, not falling under specific tariff headings, were used in its own factory for the final product, meeting the conditions of the notification. The appellant relies on the clear mandate of manufacturing the intermediate input in its factory and using it for the final product to claim exemption.

The notification exempts capital goods and inputs consumed within the factory of production, provided they are not exempt or subject to nil rate of duty due to the appellant's SSI status. The appellant successfully demonstrates that the PP strips used as intermediate goods for woven sacks were not covered by the barring clauses in the notification. As the conditions of the notification regarding the input and final product are met, the grant of exemption is deemed undeniable. The Revenue's argument that the intermediate goods should not be exempted due to the final product's exemption status is rejected, as the appellant's clearances were dutiable, not exempt.

In conclusion, the Tribunal allows the appeal, emphasizing that the appellant is entitled to the benefit of Notification No.67/95-CE for using intermediate goods in the manufacture of finished goods, as per the conditions specified in the notification. The judgment highlights the importance of meeting the criteria laid out in the notification for claiming exemptions on intermediate goods used in the production process.