2003 (11) TMI 195 - AT - Central Excise

Summary

Issues: Central Excise duty liability on "Tools and Dies" used captively for manufacturing exempt final products.

In the instant appeal, the issue pertained to the Central Excise duty liability on "Tools and Dies" used captively for manufacturing bicycle parts and rims for mopeds and motorcycles. The appellants manufactured these tools and dies and used them in the production of goods chargeable to nil rate of duty. An audit objection alleged that duty on these tools and dies was leviable since the finished goods were cleared without payment of duty. The appellants paid the duty demanded but contested the issue without success.

The Tribunal considered the classification of "Tools and Dies" as capital goods under Notification No. 67/95-C.E. The notification defines capital goods as per Rule 57Q, covering goods under Heading Nos. 82.02 to 82.11. As "Tools and Dies" fall under Heading No. 82.07, they are deemed capital goods under the notification. The Tribunal noted that the disqualification for duty exemption on captively used goods applies to inputs, not capital goods. Since "Tools and Dies" are classified as capital goods, the duty concession is applicable even when used in manufacturing fully exempt final products.

Based on the above analysis, the Tribunal agreed with the appellants and allowed the appeal, ruling in favor of the appellants regarding the Central Excise duty liability on "Tools and Dies" used captively for manufacturing exempt final products.