Exemption for HDPE sacks upheld where duty-paid granules were used and intermediate strips did not defeat notification benefit.

HDPE sacks were treated as eligible for exemption under Notification No. 132/86-C.E. because the manufacture began with duty-paid HDPE granules and the emergence of intermediate HDPE strips did not, by itself, defeat the exemption. The operative test was whether the substantive conditions of the notification were satisfied in relation to the final goods, and that requirement was met. The Revenue's objection based on the intermediate process was rejected, and the exemption was upheld.

---

---

Issues: Whether HDPE sacks were entitled to exemption under Notification No. 132/86-C.E. despite the emergence of intermediate HDPE strips in the manufacturing process.

Analysis: The exemption was examined in light of the admitted position that the raw material, HDPE granules, suffered duty and that the sacks were manufactured through an intermediate stage of HDPE strips. The reasoning accepted that the emergence of an intermediate product does not by itself defeat the benefit of the notification when the final goods are produced from duty-paid plastic material and the substantive conditions of the exemption are satisfied.

Conclusion: The goods were held eligible for exemption under Notification No. 132/86-C.E., and the Revenue's challenge failed.

---