1995 (7) TMI 171 - AT - Central Excise

Summary

Issues:
1. Eligibility of the appellants to claim exemption under Notification 118/75 for steel tanks manufactured within their sugar factory.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi revolved around the question of whether the appellants were entitled to claim exemption under Notification 118/75 for steel tanks produced within their sugar factory for storing molasses, a by-product. The notification exempts goods manufactured in a factory and intended for use in the same factory or another factory of the same manufacturer from excise duty. The Assistant Collector of Central Excise, Surat-II Division initially denied the exemption, stating that the molasses tank was not a component part or intermediate product used in the manufacture of final excisable goods. This decision was upheld by the Collector of Central Excise (Appeals), Bombay.

Upon review, the Appellate Tribunal found the lower authorities' interpretation of the exemption terms to be incorrect. The Tribunal highlighted that the tanks were indeed manufactured in the appellants' factory and intended for use within the same factory as storage for molasses. The notification did not require the tanks to be used as a component part in the production of final goods. The proviso to the notification excluded only complete machinery meant for producing or processing goods, which did not apply to the storage tanks in question. The tanks were not involved in production activities or manufacturing processes. Consequently, the denial of exemption by the lower authorities was deemed unjustified based on the exemption's conditions. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the appellants.