Exemption for rubber inputs used in footwear parts upheld where later repair use did not defeat the notification condition.

Notification No. 18/95-C.E. granted nil duty to micro-cellular or non-cellular rubber plates, blocks, sheets and strips used in manufacturing soles, heels, or combined soles and heels for footwear. The record did not establish that the respondents' cleared goods were diverted to an impermissible use. Even if buyers later used the material in footwear repair, such repair ordinarily involves fixing soles or heels and did not by itself disprove compliance with the notification condition. The exemption was therefore correctly accepted as satisfied on the facts, and the duty demand was dropped.

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Issues: Whether the respondents were entitled to exemption under Notification No. 18/95-C.E. dated 16-3-1995 when the goods cleared by them were alleged to have been used by buyers for repair of footwear rather than for manufacture of soles, heels or soles and heels combined.

Analysis: The notification granted nil rate of duty to plates, blocks, sheets and strips of micro-cellular or non-cellular rubber when used in the manufacture of soles, heels or soles and heels combined for footwear. The record did not show that the goods cleared by the respondents were not used for making soles or heels. Even if the goods were later used in repairing footwear, repair of footwear ordinarily involves fixing soles or heels, and such use did not establish violation of the notification condition by the respondents. The authorities below were therefore correct in accepting that the condition of use stood satisfied.

Conclusion: The exemption under Notification No. 18/95-C.E. was rightly allowed and the duty demand was correctly dropped, in favour of the respondents.

Final Conclusion: The exemption condition was held to be satisfied on the facts, and the Revenue's challenge failed.

Ratio Decidendi: Where exempt goods are shown to have been used for making or fixing soles or heels for footwear, the exemption condition of use in manufacture is satisfied and cannot be denied merely because the footwear was repaired rather than newly manufactured.

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