Captive clinker exemption under Notification No. 67/95-CE extends to cement cleared duty-free to SEZ units.

Clinker used captively in the manufacture of cement and cleared without payment of duty to units in a Special Economic Zone was examined for exemption under Notification No. 67/95-CE. The Tribunal's earlier interpretation of "exempted goods" was applied, treating the proviso to the notification as an exception and understanding the term to cover final products exempted under the Central Excise regime, including by notification. On that basis, clinker used in the captive manufacture of cement cleared to SEZ units without duty was regarded as meeting the exemption conditions. The assessee was therefore eligible for exemption, and the associated demand, interest, and penalties were held unsustainable.

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Issues: Whether clinker used captively in the manufacture of cement cleared without payment of duty to units in a Special Economic Zone was eligible for exemption under Notification No. 67/95-CE dated 16.3.1995.

Analysis: The issue was held to be covered by the Tribunal's earlier decision on the scope of "exempted goods" for purposes of the notification. The relevant proviso to Notification No. 67/95-CE was treated as an exception, and the expression "exempted goods" was understood to mean final products exempted under the Central Excise regime, including by notification. On that basis, clinker used captively in cement cleared to SEZ units without payment of duty was held to satisfy the conditions for exemption.

Conclusion: The assessee was eligible for exemption under Notification No. 67/95-CE, and the demand, interest, and penalties were not sustainable.

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