Captive consumption exemption under Notification 67/95-CE applies to intermediate goods unless specifically excluded.

Intermediate PP tapes/strips manufactured in the same factory and captively consumed in producing final goods were treated as eligible for exemption under Notification No. 67/95-CE. The Tribunal followed earlier decisions holding that the exemption is not denied merely because the final products are cleared under SSI exemption, and that such intermediate goods are outside duty only if they are not specifically covered by the notification's exclusions. On that basis, the duty demand on the intermediate products, along with interest and penalty, was held unsustainable.

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Issues: Whether the appellants were entitled to the benefit of Notification No. 67/95-CE in respect of intermediate goods captively consumed in the manufacture of final products, and whether the duty demand on such intermediate products was sustainable.

Analysis: The intermediate PP tapes/strips were manufactured within the factory and were captively consumed for production of the final goods. The issue was covered by earlier Tribunal decisions holding that such intermediate goods were not hit by the exclusionary clauses of Notification No. 67/95-CE and that exemption could not be denied merely because the final goods were cleared under SSI exemption. Following those decisions, the Tribunal found no basis to sustain the duty demand on the intermediate products.

Conclusion: The appellants were entitled to the benefit of Notification No. 67/95-CE, and the demand of duty, interest, and penalty was unsustainable.

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

Ratio Decidendi: Intermediate goods captively consumed in the manufacture of final products are entitled to exemption under Notification No. 67/95-CE unless they are specifically excluded by that notification.

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