Factory-use exemption under Notification 67/95 applied to assembled spray pre-treatment set-up used for manufacturing at customer premises.

Notification No. 67/95 was applied to a spray pre-treatment set-up assembled at the customer's factory from purchased components and used there for manufacture. The Tribunal relied on its earlier view that exemption is not denied merely because the goods are used by another person in the factory, provided they are manufactured in a factory and used within the factory of production. On that basis, the set-up was treated as capital goods within the exemption framework, and the duty demand and penalty were set aside.

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Issues: Whether the assessee was entitled to the benefit of Notification No. 67/95 in respect of the spray pre-treatment set up assembled at the customer's factory and used there for manufacture.

Analysis: The set up was assembled from purchased components at site pursuant to a contract and was treated as capital goods falling within the exemption framework. The Tribunal followed its earlier decision applying the same notification to a similar paint shop set up and relied on the view that the benefit is not denied merely because the goods are used by another person in the factory, so long as they are manufactured in a factory and used within the factory of production.

Conclusion: The assessee was held entitled to the benefit of Notification No. 67/95 and the duty demand and penalty were set aside.

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