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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether locomotive and rolling stock placed on rails in the factory could be treated as "machinery installed" within Notification No. 281/86-Central Excises dated 24-4-1986, so as to extend exemption to spare parts manufactured in the appellant's workshop and used for their repair and maintenance.
Analysis: The exemption under the notification applied to excisable goods manufactured in a workshop within a factory and intended for use in the same factory or another factory of the same manufacturer for repairs or maintenance of machinery installed therein. The decisive question was whether locomotives and rolling stock, though movable, could still be regarded as machinery installed when placed and used on rails within the factory premises. The record showed that the spare parts in dispute were in fact manufactured for and intended to be used in locomotives and rolling stock, and the show cause notices themselves proceeded on that basis. The expression "installed" was held to mean positioned or put in place for use, and not necessarily fixed to the earth. The reasoning that items falling under Chapter 86 could never be machinery was rejected as too narrow.
Conclusion: Locomotive and rolling stock were held to be machinery installed for the purposes of the notification, and the appellant was entitled to the exemption, with consequential relief from the denial of licence and from the duty demand and penalty.
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