Captive use exemption for steel goods used in plant expansion structures was upheld under the manufacturing facility principle.

Steel HR plates and sheets captively consumed for fabrication of structures supporting an integrated steel plant's expansion were treated as eligible for exemption under Notification No. 67/1995-C.E. The applicable principle was that steel items used to fabricate structures supporting plant and machinery, and structures embedded in the earth for installation of capital goods, qualify when used in relation to the manufacturing facility. Earlier departmental reliance on a reversed view could not displace later binding decisions recognising such captive use. The records also supported accounting and actual use in plant expansion, so the duty demand was not sustainable and consequential relief followed.

---

---

Issues: Whether HR plates/sheets captively consumed in the fabrication of steel structures for expansion of an integrated steel plant were eligible for exemption under Notification No. 67/1995-C.E. dated 16.03.1995.

Analysis: The exemption claim was examined in the light of the settled position that steel items used in fabrication of structures supporting plant and machinery, and structures embedded in the earth for installation of capital goods, are treated as eligible for the benefit when used in relation to the manufacturing setup. The demand had been confirmed by relying on an earlier view that was later reversed, and the departmental stand could not survive once the later binding decisions recognized the eligibility of such captive use. The records produced also showed accounting of the goods and their use in the captive plant expansion.

Conclusion: The goods captively consumed by the appellant were held eligible for the benefit of Notification No. 67/1995-C.E. dated 16.03.1995, and the demand could not be sustained.

Final Conclusion: The appeal succeeded and the duty demand was set aside with consequential relief in accordance with law.

Ratio Decidendi: Steel goods captively consumed for fabrication of structures used in the expansion of a plant and embedded in the earth for supporting capital goods are eligible for the notified exemption when they are used in relation to the manufacturing facility.

---