1993 (11) TMI 126 - AT - Central Excise

Summary

Issues Involved:

1. Eligibility for exemption under Notification No. 217/86-C.E.
2. Interpretation of the term "inputs" in the context of the notification.
3. Applicability of Supreme Court decisions and Tribunal precedents.

Summary:

1. Eligibility for exemption under Notification No. 217/86-C.E.:
The primary issue in this appeal is whether gauges/templates (measuring instruments), lifting tackles, trolleys, conveyors, and carriers (material handling equipment) manufactured by the appellants and used for captive consumption qualify for exemption under Notification No. 217/86-C.E., dated 2-4-1986. This notification exempts "inputs" used in or in relation to the manufacture of goods notified under MODVAT. The Collector held that these items are excluded by the explanation in the notification and thus do not qualify for exemption.

2. Interpretation of the term "inputs" in the context of the notification:
The appellants argued that the items in question should be considered as "inputs" used in or in relation to the manufacture of final products within the factory, and thus should be eligible for exemption. They contended that these items do not bring about any change in any substance in relation to the manufacture of the final product and should not be excluded from the exemption. The respondents countered that the items fall under the exclusion clause of the notification, which excludes machinery, apparatus, etc., used for producing or processing goods or bringing about any change in any substance in relation to the manufacture of the final products.

3. Applicability of Supreme Court decisions and Tribunal precedents:
The appellants relied on the Supreme Court decision in the case of M/s. J.K. Cotton Spinning and Weaving Mills Ltd. and the Tribunal's decision in WS Industries (India) Ltd. v. Collector of Central Excise, arguing that the items in question do not bring about any change in any substance and thus should not be excluded from the exemption. The respondents referred to the Supreme Court decision in Collector of Central Excise v. Rajasthan State Chemical Works, which held that processes integrally connected with the manufacture of goods are covered by the term "in relation to manufacture."

Judgment:
The Tribunal, considering the arguments and precedents, concluded that the items in question are used in relation to the manufacture of final products and are not excluded by the explanation in Notification No. 217/86-C.E. The majority opinion, led by the Vice President, held that measuring instruments and material handling equipment do not produce or process goods or cause any change in any substance and thus qualify for exemption. The appeal was accepted, and the impugned order was set aside.

Final Order:
In light of the majority opinion, the appeal is accepted, and the items in question are deemed eligible for exemption under Notification No. 217/86-C.E.