2002 (9) TMI 571 - AT - Central Excise

Summary

Issues:
Admissibility of Notification No. 67/95-C.E., dated 16-3-1995 for exemption under capital goods manufactured in a factory and used within the factory of production.

Analysis:
The appeal filed by M/s. Jaypee Bela Plant raised the issue of the admissibility of Notification No. 67/95-C.E., dated 16-3-1995, concerning the exemption under capital goods manufactured in a factory and used within the factory of production. The Appellants, engaged in cement and clinker manufacturing, sought exemption under the said notification for machinery parts manufactured by them. The Assistant Commissioner initially denied the exemption, a decision upheld by the Commissioner (Appeals). However, the Tribunal allowed their appeal in Final Order No. 486/2000-C dated 20-12-2000. Despite subsequent show cause notices disallowing the exemption, the Assistant Commissioner confirmed the demand of Central Excise duty and imposed penalties. The Commissioner (Appeals) rejected their appeal based on the interpretation of the term "factory of production" under Section 2(e) of the Central Excise Act.

The learned Consultant representing the Appellants argued that the goods in question should be considered capital goods manufactured in a factory and used within the factory of production to qualify for the exemption under Notification No. 67/95. They emphasized that the term "factory of production" refers to items produced in the factory, which, in this case, are the capital goods used in cement manufacturing. The Consultant highlighted a previous Tribunal decision in the Appellants' favor, stating that the benefit of the notification cannot be denied based on the Revenue's interpretation.

On the other hand, the Departmental Representative reiterated the findings of the Commissioner (Appeals), contending that since the capital goods were not captively used in a factory for producing goods, the Appellants were not eligible for the notification's benefit. The Tribunal examined the notification's language, which exempts capital goods manufactured in a factory and used within the factory of production. It clarified that the Appellants were indeed manufacturing excisable goods, thus falling under the definition of a "factory" as per the Central Excise Act. The Tribunal referenced its previous decision in the Appellants' case, where it upheld the interpretation that the notification grants exemption to capital goods manufactured and used within the factory of production.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, affirming that the Appellants met the conditions stipulated in Notification No. 67/95 for exemption, as the capital goods were manufactured in a factory and used within the factory of production. The decision was in line with the Tribunal's consistent interpretation of the notification's provisions.