Limited processing on castings does not defeat exemption where only permitted heat treatment and finishing are shown.

Castings subjected only to heat treatment, shot blasting and grinding/fettling remained eligible for exemption under Notification No. 223/88-C.E. because the notification permitted limited processes and did not exclude goods merely for being made to customer specifications or capable of use as finished goods. The record did not show any machining or any grinding beyond removal of excess material, and the Revenue failed to disprove that the processing stayed within the permitted stage. The principle applied was that castings do not lose that character merely because they undergo limited processing before becoming identifiable machine parts, so denial of the exemption was unsustainable.

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Issues: Whether castings subjected only to heat treatment, shot blasting and grinding/fettling were entitled to exemption under Notification No. 223/88-C.E., dated 23-6-1988.

Analysis: The notification exempted castings and cast articles of iron falling under the relevant tariff chapters, so long as they were not subjected to machining or surface treatments beyond the limited processes expressly permitted. The record did not show that the appellant had carried out any process other than heat treatment to improve the metal, shot blasting for descaling, and grinding to remove excess material. The Revenue also did not establish that the grinding exceeded the permitted stage of removing excess material. The fact that the goods were made to customers' specifications, or were capable of use as finished goods, did not by itself disqualify them from the exemption. The earlier view recognising that castings do not cease to be castings merely because they undergo limited processing before becoming identifiable machine parts was applied.

Conclusion: The exemption under Notification No. 223/88-C.E. was available to the appellant, and the denial of benefit was unsustainable.

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