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2001 (5) TMI 373 - AT - Central Excise
Issues:
Benefit denial under Notification No. 123/81 for an Export Oriented Undertaking (EOU) engaged in software development. Analysis: The appellant, an EOU engaged in software development, was denied the benefit of Notification No. 123/81 by jurisdictional officers. The Commissioner (Appeals) concluded that the appellant's plea regarding the definition of "capital goods" under the Import Export Policy was not valid. It was held that items like furniture and screen panels, even if used as a special type of 'cluster arrangement,' could not be considered as directly or indirectly used in the manufacture of computer software. The Commissioner emphasized that the mere classification of items as capital assets did not automatically qualify them as "capital goods brought in connection with manufacture of goods" as per the notification. The appellant argued that the notification's scope extends to goods used "in connection with the manufacture and packing of goods," not just those with direct application in manufacturing. They contended that analogous notifications included items beyond office equipment, which the lower authority overlooked. The appellant stressed that the absence of these goods would hinder final product manufacturing, and the notification did not specify criteria for consumption in manufacturing. They criticized the narrow interpretation of "capital goods" by the lower authority and highlighted the necessity of a cluster arrangement in software production. During the hearing, no representation was made for the appellants, leading to the case being decided based on the appeal memo. The Tribunal examined whether the goods brought to the EOU were eligible under Notification No. 123/81. Referring to a previous case, the Tribunal noted the distinction between "in the manufacture of" and "in connection with the manufacture of," ruling that the goods in question did not qualify for the notification. Consequently, the Tribunal set aside the previous order and remanded the matter for reconsideration in light of the earlier decision. In conclusion, the Tribunal allowed the appeal and remanded the case to the original authority for a fresh decision after providing a hearing to the appellants. This comprehensive analysis highlights the interpretation of the notification's provisions, the significance of the goods in question, and the necessity for a broader understanding of their role in the manufacturing process.
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