Capital goods exemption for parts and components survives Chapter 73 classification where the rule and notification extend coverage.

Parts and components used with capital goods were examined for eligibility under Notification No. 67/95-C.E. read with Rule 57Q of the Central Excise Rules, 1944. The analysis states that goods manufactured in the factory and used in the manufacture of final products could qualify as capital goods or parts of capital goods when the notification and rule extend the benefit to such items. Classification under Chapter 73 did not by itself bar exemption, particularly where the Board's circular clarified that parts, components and accessories used with capital goods remained eligible. The Revenue's classification-based objection was rejected and the capital goods exemption was sustained.

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Issues: Whether components and parts of capital goods, though classifiable under Chapter 73, were eligible for the benefit of Notification No. 67/95-C.E. when manufactured in the factory and used in the manufacture of final products.

Analysis: The exemption was examined in the light of Rule 57Q of the Central Excise Rules, 1944, under which specified goods as well as parts of specified goods are treated as capital goods. The notification also covered goods specified in the relevant table when manufactured in the factory and used in the factory of production in or in relation to the manufacture of the final product. The classification of the components under Chapter 73 did not by itself exclude them from the benefit, especially when the Board's circular clarified that parts, components and accessories used with capital goods are eligible irrespective of classification.

Conclusion: The benefit of the notification was available to the goods in question, and the Revenue's objection based on classification under Chapter 73 was rejected.

Final Conclusion: The appeal failed as the disputed goods were held to be covered by the capital goods exemption and the impugned order was sustained.

Ratio Decidendi: Parts and components used with capital goods are eligible for capital goods exemption when the governing rule and notification extend the benefit to such goods, and mere tariff classification does not defeat the exemption.

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