2001 (2) TMI 721 - AT - Central Excise

Summary

Issues:
- Interpretation of Notification No. 16/97-C.E. regarding exemption of specified goods used as inputs in the manufacture of other specified goods
- Impact of explanation (f) added to Notification No. 16/97 on the exemption status of lay flat tubes

Analysis:
1. The appellants manufactured lay flat tubes used in producing Polypropylene bags exempted from duty under Notification No. 4/97. Lay flat tubes were exempt under Notification No. 16/97-C.E. as specified goods used in manufacturing other specified goods within the factory, not counted towards aggregate clearances for duty calculation.

2. Explanation (f) added to Notification No. 16/97 on 3-12-1997 stated that if specified goods used as inputs were already duty-exempt, their clearances wouldn't be considered exempt under clause (c) of paragraph 3. A show cause notice demanded duty on lay flat tubes consumed post this amendment, leading to penalty imposition.

3. The Tribunal considered the disputed issue after reviewing the relevant notification clauses. Lay flat tubes were exempt under Notification No. 16/97 as specified goods, with paragraph 3(c) deeming them duty-exempt when used as inputs, not affecting the exemption status.

4. The introduction of explanation (f) aimed to prevent double exemptions for duty-exempt specified goods used as inputs. However, it didn't alter the exemption status of lay flat tubes under Notification No. 16/97, as they remained specified goods under the notification.

5. The Tribunal concluded that explanation (f) didn't impact the small scale exemption for lay flat tubes, as their value wasn't considered to have exceeded limits under Notification No. 16/97. The impugned order demanding duty and penalty was set aside, granting relief to the appellants.