Power-use exemption for LPG stoves upheld where final assembly was done without power, despite powered component manufacture.

The exemption under Notification No. 179/77-Central Excise continued to apply to LPG stoves assembled without the aid of power, even though some components were manufactured with power by a sister unit. The reference to power in the notification was held to concern the manufacture of the final goods under assessment, not the source of raw materials or components. The attempted distinction between raw materials and components was rejected, and prior Tribunal and Government of India views supported the same approach. The departmental challenge therefore failed and the exemption was upheld.

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Issues: Whether LPG stoves assembled without the aid of power were entitled to exemption under Notification No. 179/77-Central Excise dated 18-6-1977 when some components used in their assembly were manufactured with the aid of power by a sister unit.

Analysis: The principle laid down in Jain Soap Mills was applied to hold that the reference to power in the exemption notification is concerned with the manufacture of the goods under assessment and not with the source from which raw materials or components are obtained. The distinction sought to be drawn between raw materials and components was rejected. The view was reinforced by later Tribunal and Government of India decisions which treated the use of power in making components as not defeating the exemption where the final goods were assembled without the aid of power.

Conclusion: The exemption remained available and the departmental challenge failed.

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