TMI Blog1983 (3) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... ected a pilot plant in this department for R D work. They manufactured about 70% of the components of this pilot plant in their own factory and bought the remaining 30% or so of the components from outside. The point to be decided in these three appeals is whether the appellants are liable to pay any Central excise duty on the pilot plant or on the components of the said plant manufactured by themselves. In order to facilitate a proper understanding of the issue involved, we reproduce below the relevant exemption notification :- In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, and in supersession of the notification No, 58/75-C.E., dated 1-3-1975, the Central Govt. hereby exempts goods f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re just components and not complete machinery. These components were exempt under the main part of the exemption notification and the second proviso to the said notification was not applicable to these components since this proviso applied only to complete machinery. (3) Assuming that the components manufactured by them were to be considered as complete machinery, they were, in any case, not meant for producing or processing any goods as they had been used in the erection, of the subject pilot plant the designed or intended purpose of which was only research and development activity. No doubt, some quantity of the goods was produced in this pilot plant but that was incidental to the R D activity. In support of their argument, the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants and removed to their R D department for erection of the subject pilot plant. We agree with the appellants that these components were not complete machinery in terms of the second proviso nor were they meant for producing or processing any goods. The pilot plant was designed, intended or meant to undertake research and development work and the production of an insignificant quantity of goods in the course of three years in this plant was only incidental to the R D work. The second proviso to the notification is, therefore, not applicable to the facts of these appeals. As regards the appellants entitlement to exemption in respect of the components under the main part of the notification, we find no merit in the Department s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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