Exemption for machinery parts denied where roofing structure was not a bio-gas plant and was not consumed within the factory.

Roofing structure fabricated for digester tanks was treated as only a machinery part, not a complete bio-gas plant or bio-gas engine under Notification No. 205/88-C.E. The assessee's own classification under Heading 8485 supported the view that the goods were parts and not the exempted plant itself. The alternative claim for exemption as parts consumed within the factory also failed because the parts were not consumed within the factory of production, and erection of the digester at site did not meet that condition. The exemption was therefore not available, and the benefit granted below was set aside.

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Issues: Whether the roofing structure fabricated by the assessee for digester tanks was eligible for exemption under Notification No. 205/88-C.E. as a bio-gas plant or as parts consumed within the factory of production.

Analysis: The product manufactured in the factory was only the roofing structure of the digester, while the digester itself came into existence at the site. The assessee's own classification list described the goods as "bio-gas plant equipment" and placed them under Heading 8485, which covered machinery parts and not the complete machinery. On that basis, the goods were not bio-gas plants or bio-gas engines covered by the notification. The alternative plea under the entry for parts consumed within the factory also failed because the parts were not consumed within the factory of production, and the site erection of the digester could not satisfy that requirement.

Conclusion: The exemption under Notification No. 205/88-C.E. was not available. The issue was decided against the assessee and in favour of Revenue.

Final Conclusion: The appeal succeeded and the exemption benefit granted by the lower authority was set aside.

Ratio Decidendi: Exemption notifications are not available to goods that are only machinery parts, unless they squarely satisfy the specific entry, including any requirement that the parts be consumed within the factory of production.

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