Vending machine exemption covers only aerated water dispensed from the machine, not soft drink concentrate supplied for processing.

Exemption under Sl. No. 15 of Notification No. 6/2002-C.E. applied only to aerated waters actually prepared and dispensed by vending machines. Canistered goods supplied for use in such machines were treated as soft drink concentrate or beverage base, not as the exempt commodity itself, even if the final product emerged only after mixing with carbon dioxide in the machine. Their description as semi-finished goods did not expand the exemption entry. The appeals were rejected and the denial of exemption was sustained.

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Issues: Whether aerated water supplied in canisters for use in vending machines was entitled to exemption under Sl. No. 15 of the Table to Notification No. 6/2002-C.E. for "aerated waters prepared and dispensed by vending machines".

Analysis: The notification granted exemption only to aerated waters actually prepared and dispensed by vending machines. The goods supplied to the vending machines were canistered inputs which, on use in the machine with carbon dioxide, resulted in aerated water being dispensed. On the clear wording of the entry, the goods supplied were only soft drink concentrate and not the exempted commodity itself. The fact that the goods were described as semi-finished or were not marketed in that form did not assist the claim, particularly when they were being subjected to sales tax and were also treated as excisable in the trade. The circular relied upon also supported classification of such preparations as soft drink concentrate or beverage base.

Conclusion: The exemption under Sl. No. 15 of Notification No. 6/2002-C.E. was not admissible to the goods in question, and the appeals were rejected.

Final Conclusion: The demand and denial of exemption were sustained because the notification covered only aerated water actually prepared and dispensed by vending machines, not the concentrate supplied for use in them.

Ratio Decidendi: An exemption entry for goods "prepared and dispensed by vending machines" applies only to the aerated water emerging from the vending machine and not to the soft drink concentrate or beverage base supplied to the machine for further processing.

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