2016 (1) TMI 99 - AT - Central Excise

Captive Consumption - Exemption under Notification No. 67/95-CE dated 16.3.1995 - Manufacture of full exempted final product - Held that - Dobby cards are accessories of weaving machine. Weaving machine being capital goods under the Cenvat Credit Rules and accessories of weaving machine also become capital goods in terms of definition of capital goods given under the Cenvat Credit Rules. In view of the above, we find that the aforesaid decisions of the Tribunal are applicable. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues involved:
1. Interpretation of Notification No. 67/95-CE regarding exemption for captively consumed capital goods and inputs.
2. Classification of dobby cards as capital goods or inputs for availing exemption benefits.

Analysis:
1. The case involved the appellants manufacturing manmade fabrics and using dobby cards within their factory, availing exemptions under Notification No. 30/2004-CE and Notification No. 67/95-CE. The Order-in-Original denied the benefit of Notification No. 67/95-CE on the grounds that the final product was fully exempted. The appellant cited precedents like Hero Cycles Ltd. and Siemens Ltd. to argue that captively manufactured capital goods like dobby cards should not be disqualified for duty exemption even if used in manufacturing fully exempt final products. The Tribunal agreed that dobby cards, as accessories of weaving machines (capital goods), were eligible for the exemption under Notification No. 67/95-CE.

2. The learned Assistant Commissioner argued that dobby cards should be classified as inputs, not capital goods, making them subject to the conditions of Notification No. 67/95-CE. However, the Tribunal determined that weaving machines, including their accessories like dobby cards, were considered capital goods under the Cenvat Credit Rules. Therefore, the dobby cards were also classified as capital goods, allowing the appellants to avail of the exemption benefits under the notification. The Tribunal set aside the impugned order and allowed the appeal, granting consequential benefits to the appellants.