Capital goods exemption under Notification 67/95-C.E. applied, defeating the duty demand and penalty.

Notification No. 67/95-C.E. exempted capital goods manufactured in a factory and used within the factory of production. The Tribunal held that the impugned goods, treated as capital goods under Chapter 84, qualified for the exemption because they were used in the relevant factory through the manufacturing arrangement adopted. It further held that the exemption could be claimed at the appellate stage and that the issue was covered by an earlier decision approved by the Supreme Court. On that basis, the duty demand and penalty could not survive.

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Issues: Whether the appellant was entitled to the benefit of Notification No. 67/95-C.E. dated 16.03.1995 in respect of the impugned capital goods and, if so, whether the duty demand and penalty could be sustained.

Analysis: The appellant abandoned the challenge on movability, leaving only the exemption issue. The Notification exempts capital goods manufactured in a factory and used within the factory of production. The goods were treated as capital goods falling under Chapter 84, and the Tribunal held that the benefit of the notification was available even where the goods were used in the relevant factory through the manufacturing arrangement adopted. The Tribunal further held that the exemption could be raised at the appellate stage and that the issue was covered by the earlier decision approved by the Supreme Court.

Conclusion: The appellant was entitled to the benefit of Notification No. 67/95-C.E. dated 16.03.1995, and the duty demand and penalty could not survive.

Ratio Decidendi: Where capital goods are covered by Notification No. 67/95-C.E. and are used within the factory of production, the exemption is available and may be claimed even at the appellate stage; no duty demand can survive once the exemption applies.

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