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Issues: (i) Whether the demand could be avoided on the ground that the matter was still pending after remand in earlier proceedings. (ii) Whether gauges, being measuring and checking instruments, qualified as inputs used in or in relation to the manufacture of final products for the purpose of Notification No. 217/86.
Issue (i): Whether the demand could be avoided on the ground that the matter was still pending after remand in earlier proceedings.
Analysis: The remand relied upon related to an earlier order and to a different stage of proceedings. The impugned demand was held to arise from a separate order, so the pendency of the earlier de novo proceedings did not bar consideration of the present demand on merits.
Conclusion: The objection based on the earlier remand failed.
Issue (ii): Whether gauges, being measuring and checking instruments, qualified as inputs used in or in relation to the manufacture of final products for the purpose of Notification No. 217/86.
Analysis: The expression "inputs" in the notification was applied to articles used in or in relation to manufacture. Gauges were found to be used only for measuring or testing the dimensions of the job and not as a part of the manufacturing process. Testing of a product was treated as distinct from a process in or in relation to manufacture, so the gauges did not satisfy the notification requirement.
Conclusion: Gauges were not inputs and the benefit of Notification No. 217/86 was not available.
Final Conclusion: The demand was sustained and the appeal failed on merits.
Ratio Decidendi: An article used only for measuring or testing the product, and not in or in relation to the manufacturing process, does not qualify as an input for exemption under the notification.
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