Consumable tile-manufacture components are not excluded appliances or equipment, preserving exemption under Notification No. 217/86-C.E.

Refractory containers made of pillars, bases, settings and bats used captively in tile manufacture were not excluded as appliances or equipment under Notification No. 217/86-C.E. The components were separate parts assembled to stack raw tiles, and by themselves could not perform the function of a container. Because the parts were consumed in the baking process, they operated as inputs in manufacture rather than as machinery or equipment. The exclusion clause therefore did not apply, and the exemption for inputs was available.

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Issues: Whether refractory containers made of pillars, bases, settings and bats, used captively in the manufacture of tiles, were excluded from the benefit of Notification No. 217/86-C.E. as appliances or equipment.

Analysis: The goods were described as separate parts assembled for stacking raw tiles and were not a container in the ordinary sense. By themselves, the parts could not perform the function of a container, nor could they be treated as appliances or equipment. The components also got consumed in the course of use for baking tiles, showing that they functioned as inputs in manufacture rather than as excluded machinery or equipment.

Conclusion: The exclusion clause did not apply and the benefit of Notification No. 217/86-C.E. was wrongly denied; the issue is decided in favour of the assessee.

Ratio Decidendi: Goods used in manufacture that consist of consumable component parts incapable of independently performing the function of a container are not to be classified as excluded appliances or equipment for denying an exemption meant for inputs.

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