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2023 (12) TMI 1206 - AT - Central ExciseExemption to goods manufactured in a factory workshop and used for the maintenance of machinery installed in the factory - Exemption to capital goods and inputs captively consumed within the factory of production - applicability of N/N. 65/95-CE and 67/95-CE - denial of benefit on the ground that acetylene gas has not been manufactured in the workshop - denial also on the ground that acetylene gas has been used for repair and maintenance of machineries that are not used for the manufacture of final goods, the exemption will not be applicable. HELD THAT:- The Appellant claimed the exemption of captively consumed acetylene gas under the Notification 65/95 as well as under 67/95. The adjudicating authority has denied the exemption for the acetylene gas consumed within the factory for repair and maintenance of railway track, railway wagon, loco and in certain shops and departments for repair and maintenance of machineries under the Notification 65/95. However, it is observed that they are eligible for the exemption under the notification 67/95, since the said railway track, rail wagons, and locomotives are integral to the manufacture of the goods - The inability to transport the inputs and intermediate products in the absence of rail traffic will cause stoppage of production and can also result in damage of the plant and machinery. The said railway track, rail wagons, and locomotives are integral to the manufacture of the goods of the Appellant and are therefore they can be considered as machineries installed in the factory for the manufacture of the goods. It is observed that Notification 67/95 exempts from payment of duty all goods specified therein manufactured in a factory and used within the factory of production in or in relation to manufacture of final products. The scope of this notification is wide enough to cover the acetylene gas manufactured by the Appellant and used in the traffic department for repair and maintenance of railway track, wagons etc., and the acetylene gas used in 26 shops/departments for repair and maintenance of machineries. The issue of whether railway tracks used in the plant form a part of manufacture is no longer res-integra since the Hon’ble Supreme Court in the case of M/S JAYASWAL NECO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [2015 (4) TMI 569 - SUPREME COURT] held the use of railway tracks inside the plant not only form the process of manufacturing, but it is inseparable and integral part of the said process inasmuch as without the aforesaid activity for which railway tracks are used, there cannot be manufacturing of pig iron. Thus, the use of railway tracks are meant for production of goods. The acetylene gas used in 26 shops/departments for repair and maintenance of machineries was also used in connection with the manufacture of the finished goods for the Appellant - the Appellant is eligible for the benefit of exemption notification no. 67/95-CE. Hence, the demand confirmed in the impugned order by denying the benefit of exemption notifications 65/95 or 67/95 is not sustainable. The impugned order set aside - appeal allowed.
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