Captive-consumption exemption under Notification 217/86-CE applies to Chapter 39 inputs and final products despite an earlier claim under another notification.

Captively consumed HDPE tapes used to manufacture final products falling under Chapter 39 were covered by Notification No. 217/86-CE, because that exemption applied to both inputs and final products within the specified chapter. The fact that the assessee had earlier claimed a different notification did not bar it from relying on the more beneficial exemption once the statutory conditions were satisfied. On that basis, the duty demand for the period after 2.4.1986 was not sustainable and was deleted, while liability for the earlier period remained unaffected.

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Issues: Whether the assessee was entitled to the benefit of Notification No. 217/86-CE for captively consumed HDPE tapes used in the manufacture of final products falling under Chapter 39, and whether the duty demand for the period after 2.4.1986 was sustainable.

Analysis: Notification No. 221/86-CE extended exemption only where the final product fell under the specified heading, whereas Notification No. 217/86-CE granted exemption to a wide range of inputs and final products falling within the specified chapters, including Chapter 39. The captively consumed inputs and the final products both fell within Chapter 39, making the later notification applicable. The fact that the assessee had initially claimed a different notification did not bar it from being granted the more beneficial exemption when legally entitled to it. The duty demand for the period after 2.4.1986 therefore could not survive.

Conclusion: The assessee was entitled to the benefit of Notification No. 217/86-CE, and the duty demand for the period after 2.4.1986 was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded to the extent that the post-2.4.1986 demand was deleted, while the remaining liability prior to that date was unaffected.

Ratio Decidendi: An assessee is not precluded from claiming a more beneficial exemption notification at a later stage if the statutory conditions for that exemption are satisfied, and a captive-consumption exemption covering both inputs and final products within the specified chapter applies notwithstanding an earlier claim under a different notification.

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