Shop floor equipment exemption: factory-used steel cabinets and racks qualified as capital goods, defeating Revenue's demand.

Tailor-made steel cabinets, tables, benches, racks and tool holders used inside a factory as shop floor equipment were treated as capital goods eligible for exemption under Notification No. 67/95-C.E. because they were used in or in relation to manufacture and were not furniture for dwelling houses, offices or public buildings. As Chapter 94 was not excluded from the notification, the items fell within the covered tariff description and the Revenue's demand and denial of credit could not be sustained. The impugned order was upheld and the Revenue's appeal was rejected.

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Issues: Whether the disputed steel cabinets, tables, benches, racks and tool holders, used as shop floor equipment within the factory, were entitled to exemption as capital goods under Notification No. 67/95-C.E. and whether the Revenue's demand and denial of credit could be sustained.

Analysis: The goods were found to be tailor-made items used inside the factory for storing equipment and facilitating shop floor operations. They were not treated as furniture of the kind used for dwelling houses, offices or public buildings, but as equipment used in the manufacturing premises in or in relation to the production of final products. Since Chapter 94 was not excluded from the notification and the items answered the description of capital goods used within the factory, the exemption was held to apply.

Conclusion: The goods were held to be eligible shop floor equipment/capital goods, and the Revenue's challenge failed.

Final Conclusion: The impugned order was upheld and the Revenue's appeal was rejected, with the cross objection disposed of accordingly.

Ratio Decidendi: Goods used within the factory as shop floor equipment for facilitating manufacture can qualify as capital goods for exemption where the relevant tariff chapter is not excluded and the notification covers manufacture for use within the factory.

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