Concessional duty for bulbs upheld where Cenvat credit was confined to inputs for exempt intermediate filaments, not final goods.

Concessional duty under the exemption notification was available for bulbs where Cenvat credit had been taken only on common inputs used in manufacturing captively consumed exempt filaments, and no credit had been taken on inputs used for the final bulbs. The assessee had also debited 8% of the value of the captively consumed filaments in lieu of separate account maintenance. On these facts, the credit condition in the notification was treated as satisfied because the credit was not linked to inputs used for the dutiable bulbs. The concessional rate was therefore allowed, and the demand and penalty were not sustainable.

---

---

Issues: Whether the assessee was entitled to concessional rate of duty on bulbs under the notification when Cenvat credit had been taken only on inputs used in the manufacture of exempt intermediate filaments cleared captively, and no credit had been taken on inputs used in the bulbs.

Analysis: The intermediate filaments were manufactured and cleared for captive consumption in the production of bulbs. Credit had been availed on common inputs used in the filament section, but the assessee had debited 8% of the value of such captively consumed filaments in lieu of separate account maintenance. The findings also showed that no credit had been taken on nitrogen gas and other inputs used in the bulbs. On these facts, the condition of the notification was satisfied because the credit taken was not in relation to the inputs used for the final dutiable bulbs, and the exempt status of the intermediate product did not defeat the benefit.

Conclusion: The assessee was entitled to the concessional rate of duty, and the demand and penalty were not sustainable.

---