Handicrafts exemption under excise law sustained where no clear finding showed the goods fell outside the notification.

Exemption for handicrafts under Notification No. 76/1986-CE was construed to allow some tolerance in the use of machinery during manufacture. The record did not contain a clear finding that the disputed goods ceased to be handicrafts, and the adjudicating authority had not relied on expert opinion or the Ministry's guidelines when separating the goods. In the absence of material showing that the goods fell outside the handicrafts exemption, the demand could not be sustained; the impugned order was set aside and the assessee's appeal was allowed.

---

---

Issues: Whether the goods manufactured by the assessee were entitled to exemption as handicrafts under Notification No. 76/1986-CE dated 10.02.1986.

Analysis: The exemption circular permitted some tolerance to the use of machinery in the production of handicrafts. The record did not contain a clear finding that the goods were not handicrafts, and the adjudicating authority had not relied on expert opinion or the Ministry's guidelines while segregating the goods. In the absence of material establishing that the disputed goods fell outside the handicrafts exemption, the demand could not be sustained.

Conclusion: The goods were not established to be outside the scope of the handicrafts exemption; the impugned order was set aside and the assessee's appeal was allowed.

---