Transport use of refrigerated trucks did not qualify as production use under the exemption notification

Benefit under Notification No. 13/81 was unavailable for refrigerated trucks and their spares because their dominant and actual use was transportation of raw materials into the factory and finished goods to the export point. The requirement to maintain frozen conditions during carriage did not convert the vehicles into equipment used in production. As the notification was limited to goods used in production of export goods, use for carriage outside the production process fell outside its scope, and the exemption claim failed.

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Issues: Whether benefit of Notification No. 13/81 was admissible in respect of refrigerated trucks and their spares used for transporting raw materials into the factory and finished goods to the export point in frozen condition.

Analysis: The notification was claimed on the footing that the goods were used in connection with production of export goods in a 100% EOU. The relevant finding was that the refrigerated trucks were used for carriage of raw materials into the factory and for transport of the final product out of the factory, and that the mere requirement of maintaining frozen conditions during carriage did not convert the trucks into equipment used for production. On that basis, the use was treated as transportation and not production within the scope of the notification.

Conclusion: The benefit of Notification No. 13/81 was not available and the claim failed.

Final Conclusion: The exemption was denied because the equipment was found to be used for transport, not for production of export goods.

Ratio Decidendi: Where the dominant and actual use of the goods is transportation, a requirement to preserve the goods in frozen condition during carriage does not by itself bring them within a notification limited to goods used in production.

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