Exemption notification interpretation: benefit allowed despite intermediate product use across factory units in tyre manufacture.

Notification No. 95/83-C.E. was construed as allowing exemption where the specified inputs were used in manufacturing tyres, tubes and flaps, even if those inputs were first consumed in making an intermediate product transferred between factory units. The Tribunal held that the notification imposed no requirement of a direct nexus between the inputs and the final goods beyond their use in producing the specified articles, and no duty-paid or nil-rate condition could be read into it. The exemption could therefore not be denied merely because manufacture was completed through an intermediate product across different units, and the benefit under the notification was available.

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Issues: Whether the appellants were entitled to exemption under Notification No. 95/83-C.E. in respect of inputs used in the manufacture of tyres, tubes and flaps when those inputs were first consumed in the manufacture of an intermediate product transferred between factories.

Analysis: Notification No. 95/83-C.E. was read as containing no condition requiring a direct nexus between the listed inputs and the final products beyond the use of the specified inputs in the manufacture of the specified goods. The Tribunal held that the benefit could not be denied merely because the raw materials were consumed in making an intermediate product, where that intermediate product was in turn used in producing the final excisable goods, and where the manufacturing process was carried on across different factory units. The absence of any stipulation in the notification comparable to the duty-paid or nil-rate restrictions found in other exemption provisions supported the claim for exemption.

Conclusion: The appellants were entitled to the benefit of Notification No. 95/83-C.E.; denial of exemption was unsustainable.

Ratio Decidendi: Where an exemption notification specifies the inputs and final products but does not impose a direct-nexus or duty-paid condition, the benefit cannot be denied solely because the inputs were consumed through an intermediate product transferred within the assessee's manufacturing network.

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