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1986 (12) TMI 133 - AT - Central Excise
Issues:
1. Interpretation of Notification No. 118/75 for excise duty exemption on machines. 2. Determination of whether machines qualify as complete working units for excise duty purposes. 3. Assessment of whether machines were intended for production or processing of goods. 4. Evaluation of evidence regarding the quality and use of machines in the factory. 5. Consideration of marketability and training purposes of the machines. 6. Burden of proof for claiming exemption under the notification. Analysis: 1. The judgment by the Appellate Tribunal CEGAT, New Delhi involved the interpretation of Notification No. 118/75 for excise duty exemption on machines. The appellants, manufacturers of machines, sought exemption for a vertical drilling machine and a De Vlieg Jigmil, claiming they were made from defective components and used for training purposes. 2. The issue revolved around whether the machines qualified as complete working units for excise duty purposes. The Excise authorities demanded duty on the machines, arguing they were capable of use in production or processing of goods, while the appellants contended they were entitled to exemption under the notification due to being made from sub-standard parts and used for training. 3. The Tribunal considered whether the machines were intended for production or processing of goods. The appellants argued that since the machines were not used in the assembly line and were made from rejected components, they did not fall under the proviso of the notification for complete machinery meant for production or processing. 4. The judgment evaluated the evidence regarding the quality and use of the machines in the factory. The appellants claimed the machines were not in working condition and were used for training and discussions, while the Excise authorities questioned the lack of evidence showing the machines did not meet quality control requirements. 5. Marketability and training purposes of the machines were also scrutinized. The appellants emphasized that the machines were not marketable and used for training, while the Department argued that the training implied some level of production, making them dutiable. 6. The burden of proof for claiming exemption under the notification was discussed. The Department stressed that exemption notifications should be strictly construed, and the burden of establishing the claim rested on the appellants, who failed to provide concrete evidence regarding the machines' quality and use for production. In conclusion, the Tribunal rejected the appeals, determining that the machines were functionally complete and capable of producing or processing goods, thus not qualifying for the exemption under Notification No. 118/75. The judgment highlighted the importance of interpreting the notification based on the class of machines rather than the intention of the manufacturer, ultimately upholding the lower authorities' decisions regarding excise duty liability on the machines.
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