Intra-factory use of fabricated pipes qualifies for exemption under Notification No. 67/95-C.E., defeating the duty demand.

Pipes and fittings fabricated in the customer's factory premises and used for circulation of water within that same factory satisfied the condition in Notification No. 67/95-C.E., because the goods were manufactured in a factory and used within the factory of production. The Tribunal treated the location of manufacture and intra-factory use as decisive, and not any separate factual requirement that the goods be used elsewhere. The exemption was therefore available, the duty demand could not be sustained, and no penalty survived.

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Issues: Whether the pipes and fittings fabricated in the customer's factory premises and used within that factory were eligible for exemption under Notification No. 67/95-C.E.

Analysis: The Tribunal proceeded on the admitted fact that the pipes and fittings were fabricated in the factory premises of the customer for circulation of water within that factory. The notification exempts capital goods manufactured in a factory and used within the factory of production. Since the fabricated pipes and fittings were made in the factory premises and were also used within that very factory, the condition of the notification was satisfied. The Tribunal also relied on its earlier view that the requirement is use within the factory of production, and not that the goods must be used by the same customer in some different factual setting.

Conclusion: The exemption under Notification No. 67/95-C.E. was held to be available, and the duty demand could not be sustained.

Final Conclusion: The appeals succeeded on the exemption issue, with the entire duty liability negated and no penalty surviving.

Ratio Decidendi: Where capital goods are manufactured in the factory premises of the recipient and are used within that factory, the exemption for goods manufactured in a factory and used within the factory of production is .

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