2005 (5) TMI 204 - AT - Central Excise

Summary

Issues: Interpretation of Notification No. 67/95-C.E. regarding exemption for captively consumed goods.

In this case, the Revenue appealed against the Order-in-Original passed by the Commissioner of Central Excise, Chennai, concerning the manufacturing and diversion of Iron & Steel castings for captive consumption without duty payment under Notification No. 67/95-C.E. The Revenue argued that the exemption under the notification should not apply to captively consumed goods as they were not cleared on payment of duty but used as capital goods within the factory. The Original Authority disagreed, stating that the proviso clause of the notification only covers cases where final products are cleared for home consumption, not for captive consumption within the factory. The Revenue contended that there was no distinction in the notification between goods used captively or cleared within the factory, leading to their appeal against the dropped proceedings. The Tribunal analyzed various case laws and held that the proviso applies only to inputs used in or in relation to the manufacture of final products exempted from duty, not to capital goods used within the factory. The Tribunal dismissed the Revenue's appeal, supporting the interpretation of the adjudicating authority and emphasizing that accepting the Revenue's interpretation would defeat the purpose of the notification. The decision was pronounced on 3-5-2005.

The key issue in this judgment revolves around the interpretation of Notification No. 67/95-C.E. concerning the exemption for captively consumed goods. The dispute arose from the Revenue's appeal against the Original Authority's decision regarding the diversion of Iron & Steel castings for captive consumption without duty payment under the said notification. The Revenue argued that the exemption should not apply to captively consumed goods used as capital goods within the factory. On the contrary, the Original Authority held that the proviso clause of the notification only applies when final products are cleared for home consumption, not for captive consumption within the factory. The Revenue contended that there was no distinction in the notification between captively consumed goods and those cleared within the factory, leading to their appeal against the dropped proceedings. The Tribunal analyzed various case laws and ultimately supported the interpretation of the adjudicating authority, stating that the proviso applies solely to inputs used in or in relation to the manufacture of final products exempted from duty, not to capital goods used within the factory. The Tribunal dismissed the Revenue's appeal, emphasizing that accepting the Revenue's interpretation would defeat the purpose of the notification. The decision was pronounced on 3-5-2005.