TaxTMI 
TaxTMI 
2014 (8) TMI 980
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...., Snap Fasteners and Safety Pins, etc., classifiable under Chapters 73, 76 and 90 of the CETA'85. They received duty paid Aluminium Ingots and used in the manufacture of finished products and availed Cenvat credit. It is stated that about 10% of Aluminium Ingots were used in the manufacture of jig wires and rods, which were captively consumed in the manufacture of above dutiable final products. Jig Rods and Wires were used during the process of manufacture of Knitting Pins for anodizing, being a support for the needles by holding the same in the wires so as to allow electricity to pass through the needles for electrolysis to react with the chromic acid. The final products cannot be manufactured without these goods. It is stated that jig wir....
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....e, jig rods and jig wires classifiable under Heading 7616.90 of CETA'1985, can be treated as "capital goods". But, they are not eligible for benefit of Exemption Notification No. 67/95 as it is not specified in Rule 57Q of Central Excise Rules. We reproduce below the relevant portion of the Exemption Notification No. 67/95 :- "In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts - (i) capital goods as defined in Rule 57Q of the Central Excise Rules, 1944 manufactured in a factory and used within the factory of production; (ii) ....
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....goods" as defined in Rule 57Q of CER manufactured in a factory and used within the factory of production. 3.3 Ld. Consultant submitted that these goods were partly consumed during the process of manufacture of final product. The jig wires were used only once and jig rods were used 2/3 times. The main contention of the appellant is that these are intermediate products captively consumed in the dutiable final product and they are eligible Cenvat credit. In support of their contention, the ld. Consultant drew the attention of the Bench to Order-in-Appeal No. 47/2005-C.E. (SLM), dated 20-4-2005 (Appeal No. E/437/2005) which reads as under :- "5.6 Captive consumption itself shows that the products, which are captively consumed, are i....
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....vat credit was not admissible as the final goods, i.e. the parts were cleared without payment of duty. In this scenario, the Hon'ble Supreme Court held as under :- "10. Mr. Lakshmikumaran relied upon the decision of this Court in the case of Collector of Central Excise, New Delhi v. Hindustan Sanitaryware & Industries reported in 2002 (145) E.L.T. 3 (S.C.), wherein, in respect of this very Notification, this Court has held that so long as duty is paid on the final product, the mere fact that duty was not paid on the intermediate product would not disentitle the manufacturer from the benefit of Notification No. 217/86-C.E., dated 2nd April, 1986. In that case, the input was plaster of paris, the intermediate product was moulds made out....
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....cts, paints. The term "intermediate product" is a relative concept and is to be understood in the context of the use of such products in the manufacture of the final product. If the alkyd resins, etc., are cleared from the factory where they are produced, they are final products and the Tariff classification and Tariff becomes relevant for its assessment and clearance. But where such goods are not cleared outside but are captively consumed in the manufacture of the final products, they are intermediate products. Because they are classifiable under a Tariff Heading and are otherwise final products themselves is not inconsistent with their identity as intermediate products vis-a-vis the final product, paints. Rule 57D(2) specifically provides....
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.... were four kinds of inputs which could be said to be ingredients (i) those which retain their dominant individual identity and character throughout the process and also in the end-product, (ii) those which, as a result of interaction with other chemicals or ingredients, might themselves undergo chemical or qualitative changes and in such altered form find themselves in the end-product, (iii) those which like catalytic agents, while influencing and accelerating the chemical reactions themselves remain uninfluenced and unaltered and remain independent of and outside the end-products; and (iv) those which might be burnt up or consumed in the chemical reactions." In the present case, we find that the jig wires and jig rods were consumed in the....