Exemption notifications in separate fields cannot be substituted, and packing material is not dutyable as intermediate goods.

Two exemption notifications operated in different fields, and the department could not displace the exemption claimed by the assessee under Notification No. 06/2002-CE by forcing application of Notification No. 67/95-CE. The core pipe used for winding and packing kraft paper was also not established as a separate intermediate product arising first in the manufacturing sequence; the accepted facts showed that kraft paper came into existence first and the core pipe was then made for packing purposes. On that basis, the article was not liable to duty as captively consumed intermediate goods, and the demand was set aside.

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Issues: (i) Whether the exemption available under Notification No. 06/2002-CE could be displaced by Notification No. 67/95-CE in respect of the core pipe used for winding kraft paper; (ii) Whether the core pipe could be treated as an intermediate product captively consumed so as to attract duty.

Issue (i): Whether the exemption available under Notification No. 06/2002-CE could be displaced by Notification No. 67/95-CE in respect of the core pipe used for winding kraft paper.

Analysis: The two exemption notifications operated in different fields. The assessee had claimed exemption under Notification No. 06/2002-CE and had not sought benefit under Notification No. 67/95-CE. The two notifications were not shown to be linked by any provision of the Act or Rules, and one exemption could not be forced upon the assessee in place of the other.

Conclusion: The application of Notification No. 67/95-CE was unwarranted and the finding against the assessee on that basis was unsustainable.

Issue (ii): Whether the core pipe could be treated as an intermediate product captively consumed so as to attract duty.

Analysis: The core pipe was not shown to arise first as a separate intermediate product before manufacture of kraft paper. The factual sequence accepted by the Tribunal was that kraft paper came into existence first and the core pipe was then manufactured for packing purposes. The assessee had also included the weight of the core pipe within the clearances under the applicable exemption limit.

Conclusion: The core pipe was not an intermediate product captively consumed for duty purposes and no duty demand survived.

Final Conclusion: The demand was set aside and the assessee obtained full relief.

Ratio Decidendi: An exemption notification not claimed by the assessee cannot be imposed by the department where the assessee is governed by a different exemption scheme, and a packing article not constituting an intermediate product cannot be subjected to duty as captively consumed goods on that basis.

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