Captive intermediate goods exemption under Notification No. 16/97-CE remains available despite SSI exemption on finished products.

Plastic sheets cleared as intermediate goods and captively consumed in exempt final products remained eligible for exemption under Notification No. 16/97-CE so long as the aggregate clearances stayed within the prescribed limit. The restriction introduced by the amending notification affected computation of aggregate value of clearances and did not bar the substantive exemption on these facts. Captively consumed clearances of the finished plastic articles were excluded from the aggregate value calculation, and the disputed clearances were below the threshold. Availment of value-based SSI exemption on the finished goods did not, by itself, disqualify the intermediate goods from exemption.

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Issues: Whether plastic sheets emerging as intermediate goods and captively consumed in the manufacture of exempt final products were eligible for exemption under Notification No. 16/97-CE notwithstanding the assessee's availing of value-based SSI exemption on the finished goods.

Analysis: The exemption under Notification No. 16/97-CE was available to plastic sheets up to the prescribed limit of aggregate clearances for home consumption. The restriction introduced by the amending notification was directed to computation under the relevant paragraph dealing with aggregate value of clearances and did not bar the substantive exemption where the clearances of plastic sheets were within the limit. The captively consumed clearances of the finished plastic articles were excluded for computing the aggregate value, and the value of the plastic sheets during the disputed period was below the threshold. The issue had also been decided earlier in the assessee's own case on identical facts.

Conclusion: The plastic sheets were entitled to exemption under Notification No. 16/97-CE, and the demand was unsustainable in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Captively consumed intermediate goods are eligible for exemption under Notification No. 16/97-CE where the aggregate clearances remain within the prescribed limit, and availing SSI exemption on the final products does not by itself bar that exemption.

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