2002 (9) TMI 103 - SC - Central Excise

Whether the benefit of exemption under Notification No. 217/86 (as amended by Notification No. 82/87-C.E.) can be granted to assessee? Held that - A perusal of the Notification as amended by Notification No. 82/87, extracted above, shows that the description of inputs given in column (2) under Chapter 25, would be 'plaster of paris' and the final product given in column (3) under Chapter 69 would be 'ceramic goods'. It follows that plaster of paris which is used as inputs in relation to the manufacture of sanitaryware (final product), is exempt under Notification No. 217/86, dated April 2, 1986, as amended. In favour of assessee.

Summary

Issues:
1. Interpretation of Notification No. 217/86 and its amendment by Notification No. 82/87-C.E.
2. Classification of plaster of paris as inputs or final product under the Central Excise Tariff Act, 1985.
3. Entitlement to exemption under Notification No. 217/86 for the use of plaster of paris in manufacturing sanitaryware.

Issue 1: The court analyzed the interpretation of Notification No. 217/86 and its amendment by Notification No. 82/87-C.E. The original notification exempted specified goods used in the manufacture of final products within the factory. The amendment provided further details on the exemption for captive consumption of Modvat items, including plaster of paris as an input for ceramic goods.

Issue 2: The classification of plaster of paris was disputed as either an input or final product under the Central Excise Tariff Act, 1985. The Revenue argued that plaster of paris moulds should be considered final products, thus denying the exemption under Notification No. 217/86. However, the court disagreed, emphasizing that plaster of paris was used as an input for manufacturing sanitaryware, making it eligible for the exemption.

Issue 3: The court concluded that plaster of paris, utilized as an input in the production of sanitaryware, was exempt under Notification No. 217/86, as amended. The court highlighted that since the final product, sanitaryware, was not exempted, the exemption for plaster of paris as an input was valid. Therefore, the court dismissed the appeals and found no illegality in the orders under challenge, with no costs awarded in these circumstances.