2003 (12) TMI 211 - AT - Central Excise

Summary

Issues:
- Stay application on the ground of undue hardship and prima facie case on merits
- Interpretation of Notification No. 67/95-CX regarding exemption for capital goods manufactured using duty paid inputs
- Whether the inputs used in the manufacture of capital goods should be considered as used in the manufacture of dutiable final products

Analysis:
The judgment by the Appellate Tribunal CESTAT, Mumbai dealt with a case where the appellant, engaged in manufacturing capital goods using duty paid inputs, sought a stay on the grounds of undue hardship and prima facie case on merits. The Tribunal noted the absence of the appellant during the hearing but proceeded to consider the case based on the written request. The learned DR opposed the stay and appeal, arguing against the grant of stay. However, the Tribunal decided to allow the stay application and proceeded to hear the appeal on its merits.

Upon reviewing the case records, the Tribunal observed that the appellant was involved in manufacturing capital goods using duty paid inputs, which were fully exempted from duty payment as per Notification No. 67/95-CX dated 16-3-1995. The appellants claimed that since the capital goods were used in the manufacture of their final products, the inputs should be considered as used in the manufacture of dutiable final products. However, the lower authorities disagreed with this proposition, stating that while the capital goods were used in manufacturing finished excisable goods on which duty was paid, the inputs used in making the capital goods were transformed into a new product, i.e., capital goods, and not in the finished goods cleared from the factory.

Ultimately, the Tribunal found no merit in the appeal filed by the appellants. It upheld the orders of the lower authorities, dismissing the appeal and confirming their decision. The judgment emphasized the distinction between the use of inputs in manufacturing capital goods and their subsequent use in the production of dutiable final products, highlighting that the transformation of inputs into capital goods altered their nature and purpose, precluding their classification as used in the manufacture of finished goods cleared from the factory.