Exemption for metallised plastic films upheld where duty-paid inputs were used and an intermediate bare film stage did not defeat eligibility.

Metallised plastic films manufactured from duty-paid bare plastic films falling under Headings 39.01 to 39.15 remained eligible for the concessional rate under Notification No. 14/92-C.E. The emergence of bare film at an intermediate stage did not defeat the exemption, because the final goods were still produced from the specified duty-paid inputs required by the notification. The Board's circular supported this interpretation and, as a binding departmental instruction, had to be followed by the Revenue. The exemption was therefore sustained and the Revenue's challenge failed.

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Issues: Whether metallised plastic films were entitled to the concessional rate of duty under Notification No. 14/92-C.E. when they were manufactured from bare plastic films which were themselves produced from duty-paid goods falling under Heading 39.01 to 39.15.

Analysis: The condition in the notification required that the goods falling under Heading 39.20 be produced out of goods under Headings 39.01 to 39.15 on which duty had been paid. The mere emergence of bare plastic film at an intermediate stage before metallisation did not alter the character of the final goods for the purpose of the exemption. The circular issued by the Board also supported the view that metallised films made from duty-paid bare films remained eligible, and such circulars were binding on the Department.

Conclusion: The metallised plastic films were not entitled to be denied the concessional benefit on the ground that bare film emerged as an intermediate product, and the Revenue's challenge failed.

Final Conclusion: The order granting exemption to the assessee was sustained and the Revenue's appeal was rejected.

Ratio Decidendi: Where an exemption notification conditions eligibility on manufacture from duty-paid inputs, the existence of an intermediate product does not defeat the benefit if the final goods are shown to have been derived from the specified duty-paid materials, and binding departmental circulars supporting that interpretation must be followed.

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